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Value Chain Management Chemical Industry

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Question:

Discuss About The Value Chain Management Chemical Industry?

 

Answer:

Introduction

Telstra is one of the leading telecommunication companies in Australia. It was founded in June 1975 under Australian Telecommunication commission .The name Telstra comes from the word telecom Australia which was used domestically when trading while internationally the company used Telstra. A uniform branding was established to Telstra in 1995. They have concentrated their business on entertainment and Telecommuinicaion.The Company ensures customer satisfaction at the same time reducing operation cost. Michael porter came up with the best definition of Value chain management (Gereffi 2014). According to his definition he referred it as a whole series of activities that is involved in creation and building of value at each single step.

Michael porter’s value chain consist of several activities which include inbound logistics, outbound and sales and marketing Telstra have retained their market share by optimizing on marketing the products and services. They have a large network hence they are able to reach as many potential customers as they can. Telstra value chain management have followed porter laws of value chain management to ensure they have increased sales.

 

Inbound logistics

 Inbound logistics is the process that unstintingly incorporates the steps of receiving, storing and the internal distribution of raw stuff or primary ingredients to a service or product. With Porter this an essential process to the creation of value for a product. It involves arranging the movement of materials from suppliers to assembly plants or the manufactures. The operations are concern of management in three process of conversion from raw materials to finished goods (Kannegiesser 2008).

Telstra limited applies this process through to acquisition and exploration of materials for the production process of the product, this is exerted through the adoption of a disciplined advance to coping with risk at the same time increasing stockholder value. The exploration process itself is centered on establishing a material parity global portfolio to allow a growth in the future opportunities to the business.

Outbound logistics

Outbound logistics. This is concerned with movement of products or finished goods and their storage. Sales and marketing entails the process of selling services or products in exchange of offerings that is valuable for clients, customers and the community at large. To make their exploration process easier the company has segmented the cognitive process into different areas marketing, telecommunication, data and IP networks managing and unifying networks. Telstra exploration apart from Australia like Canada, Asia, and Indonesia. The company has laid down exploration strategies to facilitate this process which include among them growing portfolio profundity and optionality, detection of other commercial entertainment areas together with consistency in expatriate and commercial excellence. Finally service entails all activities which are essential to be put in place for effective working of the product (Poirier 2009).

Support activities

This involves Infrastructure, legal, financial, quality assurance, public relations, general statistics and quality assurance. Technological development which comprises of hardware, procedures, software and knowledge in transformation of inputs and outputs of affirm. Human resource management which comprises activities of hiring, firing, training recruiting and compensation and where necessary dismissing personnel. Lastly procurement involving acquisition of goods work or services from external sources.

It is clear that the essence of supply chain management is definitely a representation of Telstra network of organization s involved through downstream and upstream of linkages, in process of making quality value of products to the customers. A supply chain can also be referred as inter organizational supply chain, in broad sense we can say it is an interlink of more than one companies. The activities of generic value adding in an organization can be further be categorized into two main category of activity sets (Beamon 2009).

Traditional or physical value chain they are activities performed with an aim of enhancing a product. This leads to achievement of goals by a company. Virtue value chain-they are computer based systems that has led to totally new horizons of market space kin today’s business. Also known as cyber market space.

Marketing and sales

The company is constantly coming up with new trends and adopting technology in order to boost sales in the market. Customer trends and the ever changing environment is a constant problem to the company. Competition has also affected the sales of the company services around the globe. In the last financial year the company the company had a total revenue of 27.1 billion dollars and a total profit of 5.8 billion dollars in all its products which include fixed line, internet, and network services, pay TV and data services.

Marketing, trading, and shipping is another value chain according to Porters, which is the process of ordering products and services into commercialization involving management of customer relationships. Telstra bolsters their trading and marketing capabilities plus establishing their reputation as the dependable supplier. The process has been successfully through transitioning of seller based portfolio, their strong relationship with customers from Asia also based on established track record of authentic delivery. For example in 2011, Telstra limited established a merchandising group in Asia to extend marketing, shipping, trading capabilities.

The objective which is in control of all undevout in a chain management is always regarded increasing competition. The reason behind it is the competition of the services and products in eyes of the coustomers.in real sense to convince an independent company to join a supply chain needs a win-win situation for the companies which belong to the supply chain in the wrong run   whereas in the short run this may not be possible in all the entities. There are two wide means of improving competition in a chain management. Integration of organizations involved material coordination, financial flows as well as information.

 

Services

Telstra has operation all around the world. Some of their services run 24 hour a day the whole week especially the network systems. The company owns and maintain most of the public telephones in Auatralia.The Company owns 7,400 base station worldwide.

This illustrates the house of supply management. The roof lays for the extreme objective of the SCM-Competitiveness. Competitiveness van be improved in various was such as reducing the price of the products, increasing the flexibility in the same proportion as the changes in the demands of the customers or availing a product that is superior quality of goods and services. The two major parts incurring some degree of novelty shall in this text be broken down to a certain degree of building blocks. To start, forming a partnership demands that selection of suitable partner be made for an average partnership. Then, becoming a successful and effective organization in the networking requires that there is a lot of collaboration between the organizations.

Supply chain optimization is the use of a tool and other related processes to facilitate that the optimal returns are realized from the methods that is being used in the supply of the products. In Telstra it involves optimal allocation of the inventory between the supply chain and the costs of operation such as the transportation cost, manufacturing cost and the cost of distribution. In most cases the new techniques involve simulation using a computer aided program. The main concern in this process is to ensure that the nosiness is run and the model used in the supply of the goods is as effective as possible, also creating a reliable process where the supply is made as soon as possible without unnecessary delays.

Support Activities

Human resource management in Porters activities entails the support activities where the key element is the development of the manpower within an organization examples of the activities are training, recruitment of staff and coaching staff, Telstra limited protects people, their reputation livelihood by continuously amending their full-bodied security and response capabilities emergencies. The human resources are very key to the performance of an organization, it is well understood that human resource work on the final products delivered to customers. The value chain systems which involves a set of organization activities their success rest upon the performance of the individuals within the supply chain. Human resource functions array from development of Human resource schemes, recruitment to selection compensation and benefits to workforce and lastly management change and the relationship within the organization (labor relations) when all  activities are applied to value chain management  it results into lots of  benefits; identification of training objectives and needs precisely for value chain office and formulation of blueprint  to align the needs, identification and training staff to meet the positions  skills  and lastly human resource practices being  a vital value chain factor can be used to unify the supply chain  ,  because of business environment complexities consisting of product life oscillations , outsourcing and globalization the practices can be implemented to motivate value chain partners to establish valuable  relationships between firms. The outcome enhances competitive advantage.

The company operates beneath all peril emergence model which enables worldwide practical responses, in place they also hold effective controlled security and risk management strategies which acts as a form of preparedness in responding cases of hydrocarbon spillages. Lastly, the company furnishes leadership in the barring and detection to and responding to the corruption of fraud.

Michael Porter, in his analysis he explains a value chain contains a collection of all the elements illustrated in the paper to be the ones to establish a value for the customers.

The prosperity of any business requires full optimization of key-value chain areas by exhausting all the resourceful areas. The specific areas help a business to target the most beneficial areas. The most strategic factors Telstra limited can base on in optimizing value chain could be science and technology, marketing trading and shipping together with Human resource factors.

Technology

Telstra limited are adopting measures all-around value chain to modify investment in the development of network applications. This operational technology aims to affirm operational success and curb exploration, production and development costs. Advanced analytics procedures hare to be built of statistical tools which are updated with data from live streaming connecting people from all over the world. This program aids in making decisions in operations and engineering teams in a dimension of initiatives among them optimization, planning, surveillance and processes of control and maintenance. Technology also facilitates a reduction in operational cost for existing business by through innovation of solutions, for example, the invention of 3D printing program which has the capability to minimize operating costs by ensuring the spares on demand are printed. The 3D program in a speedy manner reproduces parts by inducing the prototyping, deployment, and testing of the new gas litigated technology. The science and technology has helped Telstra limited to inquire exploration and development of economical offshore among the technologies include development in network application technologies, e-health care services ,online sales, software and video delivery. To ensure consistency in innovations Telstra limited in 2011 the set aside a future lab to actively strengthen the environment of scientific and innovation technology by collaborating with institutions of research.

Procurement

Procurement is the process of acquiring raw materials, supplies and assets. The move to global market has helped the company to cut cost on acquiring raw material and supplies. They have also outsourced their network maintenance and installation to companies like ABB communications and Siemens (STCJV).

Another factor to be fully optimized is the marketing, trading and shipping of products and services. Marketing implicates strategies on the overall product portfolio and customers operative orientations. Marketing research acquires an increasing importance due to changes in seller markets to buyer markets (Wohe 2008). Markets have shifted from extra demand of insufficient supply to excess supply in the competition of saturated markets. Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization (Kotler et al. 2005).To increase the performance of the company marketing can be integrated along the five-piece of marketing which are the product, promotion, price and place (Kotler et al. 2008). Therefore marketing structure which is an interface to customers determine the product function together with pricing above all the place strategy with regard sales channels, for example, Telstra could implement the marketing strategies through web-based shops, wholesalers and direct sales. Lastly marketing structures the channeling function to distribute products to customers.

Infrastructure

Science and technology this activity relate to establishing of the services and products some externally and internally. For example, IT, development of modern products grounded on current technology, technological innovations according to Porter all this value is created through optimization and innovation. Now Telstra limited, claims problems in business are lowered by innovation solutions which then reduces their cost of supply thereby resulting in growth and optimization of their broader strategy. Telstra activities have therefore been strategized into four categories; upstream technology, subsurface technology, downstream technology and lastly disruptive and innovative technology. These strategies help the company to reduce lifting cost while protecting eminent reliability, they have 3D machines for printing programs which get rid of operating costs by providing spares when on demand and also their cognitive computation capacity save time, reduce cost and drive efficiency (Cox 2009).

 

Strategic approaches to optimize value chain

Telstra has managed to improve it relationship with other global supplier to boost its business growth and performance. The core competence of Telstra are  using new innovations and technology , improving suppliers relationship by improving supplier relationship management(SRM) and expanding to global market to attract more customers.

Telstra has managed to acquire supplier relationship management team to expand sales and growth revenues. The main aim of this is to develop new products and services. Maximizing the relationship with the suppliers will enable the company to meet customer’s expectation. The company has cooperated with both local and international suppliers to meet the customer’s expectation.

Telstra has gone to the international market to expand it business and to attract more customer. This has enabled the company to acquire more customer and to boost the revenue. The global market has put the company at a competitive advantage over the other companies due to the new markets. It has also enabled the company to improve its services due to the high demand and competition.

The company has adapted new technology to deliver high quality services to the customers. The new technology has improved communication and the also the customer experience .This has resulted into the company acquiring new market and increase in sales.

New business growth

Primary activities are considered to have a prompt effect on the production, sales, maintenance and supporting of services or products supplied. Telstra limited value chain consists of exploring the materials, developing the product, producing a refined product and lastly supplying the product to the target market. According to Porter, the primary activities entails a list of elements as follows;

The second activity is the production process, this is founded on production floor operating from the production line, and it changes over inputs of services and products into semifinal or almost completed products. It is considered that operational systems are the channeling principle to the conceptualization of value. The expansion of the company to other global market has enabled the company to increase sales and get a bigger portion of the market share. This has increased revenue of the company. The expansion has also enabled the company to create employment increasing the number of employees to 13000.This has boosted the economy of the new region.

Studying the market and forecasting to improve the customer experience

Telstra limited is the largest entertainment company in Australia and the company accommodates customers around the globe enabling production process through closely working cropped and other articulated venture participants, governments, suppliers and communities to achieve the chance across the lifecycle development. Having such services within the organization they get an upper hand it is required of them to have a well efficient value chain Therefore for the process to be carried on, it requires approval thereafter for the materials to move into product execution. Telstra limited has expanded its network application services to Asia-Pacific region which has contributed to increased opportunities. As the largest distributer of network application services, it's considered one of the best world facility. The project supplies entertainment and network services to international markets and Australia generally from vast enterprise as well as the global market. Underneath the Telstra functioning, the project bears a maintained record to reliable production and delivery for a period of 30 years and more.

Risks in value chain management of the firm

In a research conducted by Deloitte two thirds of the respondents identified risk in supply chain management this is equivalent to 63 percent. The global research revealed that the supply chain management has become costly over the past three years. In the Telstra, while identifying risks in supply chain it is important to consider the two types of risks and include them in a risk management plan. These are; internal risks which are in reach of your control and external controls which are not in reach of your control.

Chain optimization.

It is briefly the use of tools and processes in ensuring optimal operation in making and distribution in a supply chain .According to Telstra records it entails placement of stock in the chain reducing cost of operations.it entails use of computer software while applying techniques of mathematics model. Most importantly the supply has been manager’s aim is to maximize profit in both the manufacturing and distribution supply chains. Thus they must include measures such as maximizing gross margin return on stock or inventory invested, minimizing operating expenses, or maximizing GP. Of the finished products supplied through the supply chain.it also addresses the problem that may occur in delivering of product at a lower cost but at high profit. Among the most effective way of saving money in distribution is by optimizing transportation and storage cost by means of packaging size.it is evident that optimization of supply chain is applicable in all industries distributing and manufacturing including industrial products, retail, and etcetera (D'heur 2015).

During the optimization the techniques used are said to be credible academically.in relation to that several companies has been adopted from academic research projects or consultants.

The techniques are commercially effective since significant and measurable benefits are evident. This comes from lower logistics and reduced inventory costing levels. Various routines in supply chain management allows gain of competitive advantage by companies through increasing effectiveness as well as measurable savings.

Big data analytics for data driven forecasting

In summary, the ability to manipulate larger data bases in speed has contributed to a new breed of optimization solutions. The algorithms applied equivalent to those that make decisions concerning financial investment; the analogy becomes simple since the inventory is termed as an investment of the forthcoming return on sales. Most vendors offer chain optimization as a solution and also run for their clients as application service providers. Telstra Company, is the leading company in telecommunication.

Analysis using porters five forces

 Porter’s five forces is a model that describes the understanding of competition forces for work within an industry and also illustrate the economic value division between industry actors. The five competitive forces include the threat by substitute services and products, the bargaining ability of suppliers, threat of new entrants, the bargaining ability of buyers and lastly competitors between existing competitors. The five forces of porter have benefited much value chain management systems;

Core competence and outsourcing other services

The core competence has enabled the company to among the leading in telecommunication all over the world. The involvement of the company with the supplier management team has resulted into low bargaining power which has given the company a competitive advantage. The competitive advantage has enabled the company to provide better services to the client in region.

The expansion of the company to the global market has increased productivity and the customer base has resulted into low threat of substitute products and services. The company has utilized the use of new technology to improve the services which has narrowed down entry of new companies into the market. The new technology which is also expensive has enabled the company to provide better services for the customers and also has reduce the entry of new companies in the market.

The use of supplier management team has also accumulated its own problems in that the team may delay in delivery of goods or services. The shortage will results into competitive disadvantages. This will also affect the delivery of services to the customers which may result in high bargaining power of the clients due to the availability of a close substitute.

 

Business growth.

Telstra has expanded into other global territories which has it advantages and disadvantages. The new territories had other established network owners such as Vodafone, Virgin mobile and Optus. This will trigger high competitive rivalry due to the crumble of customers in the region. High competition results into high threat of substitutes. Some of the customers will remain loyal to their previous providers hence the bargaining power of customer will be high. Telstra improving their technology will help reduce the rivalry among the competitor since they will be on another level than the competitors which will reduce the bargaining power of the users.

Studying the market and forecasting to improve the customer experience

The company has team which studies the market and comes up with new innovations and technology to increase sales and to attract more customers. Using new technology will enable the company to have a more competitive advantage over the rival companies and will reduce the bargaining power of the consumers as they offer better services than the other companies. The entry of new markets means the company has little information about the new consumer hence it will take time for the company to get enough customer share as other rival companies in the market hence the other companies will have a higher competitive advantage over Telstra. The competition will enable the client to have a high bargaining power due to the availability of multiple close substitutes.

Conclusion

Telstra value chain activities are the guiding principles to the formulation of strategic and operational decisions within an organization. It is the one of the largest telecommunication companies, besides that it is listed in Australian security exchange and its headquarters are in Melbourne. Telstra has operating activities in a number of international regions including Indonesia, Asia-pacific, Europe and America. The company is involved in sale and distribution of network application, software, online sales, video delivery and business solutions such as data and IP networks, cloud, industry solutions and integrated services. This has contributed very much to its success because their constant supply which has created loyalty among its customers. Most considerably, the company has created confidence to their customers by becoming the most reliable company in Australia as far as petroleum is concerned. Over years it has thrived in the market and it has remained steady up to date. Generally, supply in both manufacturing and distribution industries since customer’s attention is always attracted by constant availability of the products. Telstra limited achieves the workflow in the organization by linking system actions with each other and demonstrating the on cost and benefits, therefore it clearly indicates the source of value and amounts loss is ascertained within the organization (Sabri 2010).

 

References

Chyi Lee, C. and Yang, J., 2007. Knowledge value chain. Journal of management development, 19(9), pp.783-794.

Blanchard, D. (2007). Supply chain management: best practices. Hoboken, N.J., Wiley.

Beamon, B.M., 2009. Measuring supply chain performance. International journal of operations & production management, 19(3), pp.275-292.

Kannegiesser, M. (2008). Value chain management in the chemical industry global value chain planning in commodities. Contributions to management science. Heidelberg, Physica-Verlag.

Cox, Andrew. "Power, value and supply chain management." Supply chain management: An international journal 4.4 (2009): 167-175.

Sabri, E. H., & Shaikh, S. N. (2010). Lean and agile value chain management: a guide to the next level of improvement. Ft. Lauderdale, FL, J. Ross Pub.

D'heur, M. (2015). Sustainable value chain management: delivering sustainability through the core business.

Poirier, C. C. (2009). Advanced supply chain management: how to build a sustained competitive advantage. San Francisco, CA, Berrett-Kochler Publishers.

Sabri, E. H., & Shaikh, S. N. (2010). Lean and agile value chain management: a guide to the next level of improvement. Ft. Lauderdale, FL, J. Ross Pub.

Cox A. Power, value and supply chain management. Supply chain management: An international journal. 2007Oct 1;4(4):167-75.

Cox, A., 2009. Power, value and supply chain management. Supply chain management: An international journal, 4(4), pp.167-175.

Cox, Andrew. "Power, value and supply chain management." Supply chain management: An international journal 4, no. 4 (2008): 167-175.

Gereffi, G., 2014. Global value chains in a post-Washington Consensus world. Review of International Political Economy, 21(1), pp.9-37.

Gereffi, G. (2014). Global value chains in a post-Washington Consensus world. Review of International Political Economy, 21(1), 9-37.

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