Digital Value Chain Slide

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Digital Value Chain

Transformasi Bisnis Digital

Kelompok Keahlian Sistem Informasi dan Keputusan Fakultas Teknologi Industri Institut Teknologi Bandung

Andreas Meier & Henrik Stormer. E-Business and e-commerce: Managing the Digital Value Chain. 2009. Springer.

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Value Chain Analysis

Transformasi Bisnis Digital

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Value and the Value Chain

• Value

• The performance characteristics, features and attributes, or any other aspects of goods and services for which customers are willing to give up resources.

• Value chain

• The entire series of organizational work activities that add value at each step beginning with the processing or raw materials and ending with a finished product in the hands of end users.

• Value chain analysis

• Analyzing activities to find those that are most valuable.

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Value Chain vs. Supply Chain

Value Chain:

• Defining value from the customer’s perspective

• Two critical factors to be clarified:

• Who is the customer?

• What do they value?

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The Goals Of Value Chain Management

• Creating customer-defined value by:

• Providing a unique combination that truly meets customer needs and at a price that can’t be matched by competitors.

• Having a sequence of participants work together as a team, each adding a component of value to the overall process.

It’s all about providing value, not bargains, to the customer

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Value Chain (Porter, 1985)

Management of these

activities and their linkages give an organization

competitive advantage

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Primary Activities

• Primary activities are directly concerned with the creation or delivery of the product or service

1. Inbound Logistics: the activities that receive, store, and handle materials. They include warehousing, inventory, scheduling, and vendor returns.

2. Operations: all the activities to build or develop the end product including assembly, testing, labeling, packaging, and overall facility operations.

3. Outbound Logistics: Once developed, it’s time to distribute the product. Identify activities such as order processing, scheduling, warehousing finished goods, and delivery.

4. Marketing and Sales: Activities include branding, advertising, promotion, sales force management, pricing, and quoting.

5. Service: Maintenance of the product, installation, repair, and training are all part of this function.

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• Each of the primary activities is linked to support activities which help to improve their effectiveness or efficiency

1. Firm Infrastructure: These are the activities that are interwoven throughout the entire business structure including finance, legal, quality, government affairs, general management, and accounting.

2. Human Resources Management: HR is responsible for providing methods of hiring, training, compensation, and motivation for personnel in all areas of the business.

3. Technology Development: This area is more than research and development. It includes uses of technology for overall business support such as phones and plans, office automation, order processing methods, and procedures.

4. Procurement: This activity includes purchasing raw materials and supplies, as well as vendor qualification, building or leasing, info system development, and fleet management.

Support Activities

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Drivers of Value Creation

1. Cost percentage

2. Relative cost compared to the competition

3. Factors influencing the cost 4. Sources of value

differentiation

5. Value differentiation

compared to the competition

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Digital Value Chain

Andreas Meier & Henrik Stormer. E-Business and e-commerce: Managing the Digital Value Chain. 2009. Springer.

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Digital Value Chain Model

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e-Products & e-Services

Classification of Business Web (Tapscott)

Agora B-web / Marketplace Example: eBay, OLX

Aggregator B-web Example: Amazon, Gojek

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e-Products & e-Services

Integrator B-web Example: Cisco

Alliance B-web Example : Linux

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e-Products & e-Services

Distributor B-web

Example : Telecommunication Provider

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E-Procurement

• eProcurement refers to all of connective processes between companies and suppliers that are enabled by electronic

communication networks.

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e-Marketing

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• Online Surfers

• Increase reputation

• Website must be known and clear

• Need media promotion

• Online Consumer

• Interested in the service and dialog offered.

• Important factors: information content & dialog interfaces

• Online Prosumer

• Not simply a normal consumer, also a partial producer who is willing to contribute to the value chain

• Important factor : trust

• Online Buyer

• Requires more detailed information of the product/service and price offered.

• Customer retaining. Important factor : purchase experience

• Online Key Customer

• Intend to repurchase

• Customer relationship management : exclusive offers, etc.

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e-Contracting

Involves the following actions:

• Valid recording of the negotiating positions

• Administration and electronic filing of the contract

• Agreement of rights

• Legal conclusion of a contract (with digital signature)

• Monitoring the fulfillment of the terms of the contract

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e-Distribution

• Online distribution: the distribution of a digital product/service with the aid of an electronic communication network or Internet.

• Offline distribution: the outlet chain can be supported and improved with information- related channels.

• Example : order delivery status

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Hybrid distribution: provide the flexible solution for different customer

segments with different demand

e-Distribution

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E-Payment solution can be classified :

• By amount : size of the amount to be paid

• By the time of payment : prepaid, pay now, or pay later

• By technological concept : electronic money, virtual coins, etc.

• By the degree of anonymity : e-payment provide solution for not anonymous transaction

E-payment solution:

• Credit Card

• PayPal

• Secure Electronic Transaction (SET) : VISA, Mastercard

• E-cash/E-money

e-Payment

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e-Customer Relationship Management

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Digital Business Value Co-creation

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Value Creation in Traditional Enterprise

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Value Co-creation

• co-creation—the practice of developing systems, products, or services through collaboration with customers, managers, employees, and other company stakeholders.

• Value co-creation—each stakeholder must be able to work together (collaborate) in creating shared value.

• building platforms that engaged not only the firm and its customers, but also the entire network of

suppliers, partners, and employees.

• extending their resource to crowdsourcing, mass collaboration, and open innovation.

• tapping into user communities and social networking among customers.

• allowing their customers to personalize products.

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Six Faces of Value Co-creation

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https://www.youtube.com/watch?v=BSWeAUA4uVk

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Value Co-creation Nike+

• Nike+ is a great example of a co-creative engagement platform that allows Nike to:

• learn directly from the behavior of its customers;

• generate new ideas rapidly;

• experiment with new offerings quickly;

• get direct input from customers on their running preferences;

• build deeper relationships and trust with the community; and

• generate “stickier” brand collateral.

• For Nike, the benefits of Nike+ include:

• Reducing the cost of marketing through the positive word of mouth created

• Sharing the risk of product/service development with partners such as Apple by getting them to co-invest and participate

• Mitigating the risk of capital investment through enlightened experimentation, because it can now test major investments through its engagement platform

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Value Co-creation Nike+

Nike+ expands value as a function of new types of experiences of value to individuals:

• Allows runners to track their runs with unparalleled precision

• Enhances their productivity

• Enables them to integrate music and running

• Propels their motivation

• Makes it easier for them to make and state running resolutions

• Connects them with running buddies and events happening locally and globally

• Encourages them to take part in a new social network of runners, trainers, and coaches specifically focused on the running experience

The Nike+ platform also reduces risk and cost for individuals engaged with the Nike+ system:

• De-risks the initial cost of equipment for runners, by giving them access to people who have already experienced that equipment

• Reduces the runner’s risk of training, by giving them access to professional trainers and experienced runners

• Reduces the runner’s search cost of finding local buddies and events through the web