Description
Value chain analysis (VCA) is a process where a government organisation identifies its primary and support activities that add value to its final service
it has to deliver and then analyse these activities to reduce costs or improve efficiency. Value chain represents the internal activities a government
organisation engages in when transforming inputs (e.g. procurement of medicine) into outputs (e.g. providing medicine to patients in hospitals).
Together with other analysis, such as spend analysis, demand analysis, price and cost analysis, one would get a well-rounded view of the organisation’s internal information.
Objective:
To identify the organisation’s primary and support activities that add value to its final service delivery mandate and then analyze these activities to identify
opportunities to reduce costs or increase levels of efficiency.
Output:
WHAT IS VALUE CHAIN ANALYSIS?
Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers.
In business, we're paid to take raw inputs, and to "add value" to them by turning them into something of worth to other people.
This is easy to see in manufacturing, where the manufacturer "adds value" by taking a raw material of little use to the end user (e.g. wood pulp)
and converting it into something that people are prepared to pay money for (e.g. paper). But this idea is just as important in service industries such as government,
where people use inputs of time, knowledge, equipment, products and systems to create services of real value to the person being served – the tax payer.
And remember that your customers aren't necessarily outside your organization: they can be your bosses, your co- workers, or the people who depend on you for what you do.
So how do you find out where you, your team or your organisation can create value?
This is where the "Value Chain Analysis" tool is useful. Value Chain Analysis helps you identify the ways in which you create value for your customers,
and then helps you think through how you can maximize this value: whether through superb products, great services, or jobs well done.