value chain

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  • 1. 144PART2Strategic FormulationFew management layers toStandardized accountingFirmreduce overhead costs.practices to minimize infrastructurepersonnel required. Minimize costs associated withEffective orientation and Human resource employee turnover through training programs to maximizemanagementeffective policies. employee productivity. Effective use of automatedExpertise in process engineering~Technology~.technology to reduce scrappageto reduce manufacturing costs."? developmentrates. Effective policy guidelines to ensure Shared purchasing operations with Procurementlow-cost raw materials (withother business units.acceptable quality levels).EffectiveEffectiveEffective Purchase ofThoroughlayout ofuse of utilization media in large service repairreceivingqualityof delivery blocks.guidelines todock controlfleets.minimizeoperations.inspectors Sales forcerepeat maintenance to minimizeutilization is calis.$ rework onmaximized byci35 the finalterritoryUse of single product. management.type of repair vehicle to minimize costs.InboundOperationsOutboundMarketingService logisticslogistics and sales I Value-ChainActivities: Examples of Overall Cost Leadership Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter. Copyright 1985, 1998 by Michael E. Porter.Below, we will discuss some examples of how firms enhance cost leadershipin their industries.While other managed care providers had a string of weak years, WellPoint, bThousand Oaks, California, has had a number of banner years and recently enjoyedgrowth of 22 percent to approximately $340 million." CEO Leonard Schaeffer CDcompany's focus on innovation for both expanding revenues and cutting costs. R,for example, WellPoint asked the Food and Drug Administration (FDA) to make :lergy drug Claritin available over the counter. Surprisingly, this may be the first .an insurer has approached the FDA with this type of request. Schaeffer claimed.were kind of stunned," but the FDA agreed to consider it. It was a smart move fPoint. If approved as an over-the-counter drug, Claritin would reduce patient visitdoctor and eliminate the need for prescriptions-tworeimbursable expenses forWellPoint would otherwise be responsible.Stephen Sanger, CEO of General Mills, recently came up with an idea that heln,firm cut costs.? To improve productivity, he sent technicians to watch pit crewNASCAR race. That experience inspired the techies to figure out how to reduceit takes to switch a plant line from five hours to 20 minutes. An important lesson: teresting benchmarking examples can take place far outside of one's industry. 0novation involves identifying the best practices in other inoustries 8.lJO 6Jd9p:'Ph'g ~

2. 144PART2Strategic FormulationFew management layers toStandardized accountingFirmreduce overhead costs.practices to minimize infrastructurepersonnel required. Minimize costs associated withEffective orientation and Human resource employee turnover through training programs to maximizemanagementeffective policies. employee productivity. Effective use of automatedExpertise in process engineering~Technology~.technology to reduce scrappageto reduce manufacturing costs."? developmentrates. Effective policy guidelines to ensure Shared purchasing operations with Procurementlow-cost raw materials (withother business units.acceptable quality levels).EffectiveEffectiveEffective Purchase ofThoroughlayout ofuse of utilization media in large service repairreceivingqualityof delivery blocks.guidelines todock controlfleets.minimizeoperations.inspectors Sales forcerepeat maintenance to minimizeutilization is calis.$ rework onmaximized byci35 the finalterritoryUse of single product. management.type of repair vehicle to minimize costs.InboundOperationsOutboundMarketingService logisticslogistics and sales I Value-ChainActivities: Examples of Overall Cost Leadership Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter. Copyright 1985, 1998 by Michael E. Porter.Below, we will discuss some examples of how firms enhance cost leadershipin their industries.While other managed care providers had a string of weak years, WellPoint, bThousand Oaks, California, has had a number of banner years and recently enjoyedgrowth of 22 percent to approximately $340 million." CEO Leonard Schaeffer CDcompany's focus on innovation for both expanding revenues and cutting costs. R,for example, WellPoint asked the Food and Drug Administration (FDA) to make :lergy drug Claritin available over the counter. Surprisingly, this may be the first .an insurer has approached the FDA with this type of request. Schaeffer claimed.were kind of stunned," but the FDA agreed to consider it. It was a smart move fPoint. If approved as an over-the-counter drug, Claritin would reduce patient visitdoctor and eliminate the need for prescriptions-tworeimbursable expenses forWellPoint would otherwise be responsible.Stephen Sanger, CEO of General Mills, recently came up with an idea that heln,firm cut costs.? To improve productivity, he sent technicians to watch pit crewNASCAR race. That experience inspired the techies to figure out how to reduceit takes to switch a plant line from five hours to 20 minutes. An important lesson: teresting benchmarking examples can take place far outside of one's industry. 0novation involves identifying the best practices in other inoustries 8.lJO 6Jd9p:'Ph'g ~