The dynamic value chain (DVC) captures key concepts from value chains, activity based costing, service level agreements and customer satisfaction tracking present unique and powerful views of value creation dynamics. Applied Enterprise Dynamics (AED) views the value chain as bi-directional – that is the value added during each step in the value creation process is only as good as the value delivered and perceived by the recipients of the added value at the conclusion of each step. Thus, there are “internal customers” throughout the process whose satisfaction levels are not only an important feedback, but are principal drivers of performance.
AED undertakes a 5-step process for structuring an enterprise’s DVC:
1. Identify the value-adding components in each of the enterprise’s key processes
2. Determine the created value per unit for each component, using activity based and standard costing techniques
3. Determine the delivered value per unit, which is the net revenue realized per unit (the difference between created value and delivered value is profit contribution per unit)
4. Determine the perceived value by external and internal customers for each component of the process, which often entails building in proprietary satisfaction measurement techniques
5. Analyze the resulting structure to understand relative contributions, variances from standards and disconnects between value created and value perceived.
DynamicsiQ™ extracts continuous value creation data and presents it to the Performance Scorecard (PSC)
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