Value Chain Analysis - to understand the value system

One way of defining a value system is:
"A connected series of organizations, resources, and knowledge streams involved in the creation and delivery of value to end customers."

A Value Chain describes and quantifies this. 

As we start to analyse a product cost, we sometimes see that a major part of the cost is generated outside the study limitations we started with. If it is also outside the company(ies) initially involved, we need to understand also that part of the Value Chain.

Once again we are faced with a process, but on a more "macro-level".

The onTrack Value Chain Analysis is a repetitive process intended to create an enough detailed understanding of the resources consumed and their cost in the value chain.

The process:

1. Supply chain mapping where the flow of material, information and money is described

2. The largest costs are split into smaller part

3. Step 2 is repeated until the level of details is high enough

4. The knowledge is used to decide how and where to focus cost reduction efforts

5. The resulting strategy is integrated in the overall cost reduction project