Introduction to the Value Chain Reference Model & the BPTF
Click on the above to see the BPTF material.
The VCG Framework is Instituted to Support the Evolution of the Business Environment
The VCG is dedicated to bringing awareness to Business Process and IT Executives on the challenges, benefits, costs and return on investment of the Business Process Transformation Framework.
Click here to understand the rationale for BPTF.
The Value Reference Model is the cornerstone of the VCG's Business Process Transformation Framework.
· Provides standardized language and relational connectivity for processes, activities and their dependencies throughout the entire Value Chain
· Enables visual representation of the total Value Chain, or its domains
· Provides the Roadmap linking Strategy to Operations to Tactics
· Allows visualization of the performance(s) of the total Value Chain, or parts there of
· Provides standard metrics (Key Performance Indicator’s) throughout the Value Chain
· Enables corporations to present the Value Chain elements in financial terms
· Provides VRM in an XML output for Software Tool Members
· Enables standardization of work elements
· Provides understandable and usable models that business people can understand and implement.
With the Value Reference Model (VRM) you can begin to define the business process context for services. The VRM supports the key issues and the gearing together of processes within and between the individual units of chains (networks) for the benefit of the following:
Execution (information - financial - physical flows)
with the objective to increase the performance (yield) of the total chain and support the ongoing evolution.
The structure of the VRM model supports and enables corporations to integrate their three critical domains; Global Product Development, Global Supply Network Integration and Global Customer Success, using one reference model to support the vision of an integrated value chain.
Corporations applying the model are able to reach their goals of both horizontal and vertical collaboration. VRM uses a “process based, common language” of syntax and semantics while at the same time creating a foundation for the successful Service Oriented Architecture Game Plan.
VRM Methodology Coverage
The Top Level of the model encompasses all the high level processes in Value Chains and are represented through the Process Categories Plan – Govern – Execute. The Level is defined to be the Strategic Level of the Model, meaning that this is where high level decisions are made regarding how to gain a competitive advantage for the Value Chain in scope.
An example of such a competitive advantage could be Increased Market Share through a Cost Optimized, Adaptive Value Chain and extensive Collaboration with Customers and/ or network partners. By some this level of the model is categorized as the C-Suite.
The Activities and Actions
The VRM ValueCards
Network Level ValueCard
The VRM model supports the issues of value chain horizontal improvements, strategic goals and tactical decision making through two essential tools being the Value Card with Value Chain Network Goals, and the Value Card for the setting of Priorities for the Enterprise.
Most organizations would prefer to operate in a scenario with all their value chain partners using the same goals and priorities as their own. However, this is hardly the case in practice.
For the purpose of intra-company developments across value chains with multiple strategy and business plans the VCG has instituted the Value Card with Network Goals. A set of Attributes are proposed in the Value Card to act as guidelines for the developments.
The Enterprise Level Value Card's purpose is as being a guide for deciding on priorities within the boundaries of the enterprise’s area of direct influence and decision making.
The Value Card on the Enterprise level is created to support implementation of Strategic and Business Plans as well as being a guide and support tool for Tactical Plans and Priorities. The seven Priority Dimension do “compete” and a priority between them should be established and communicated at an early stage of any developments.
“You can not run a business without metrics” - is true and the Value Chain Group is certainly aware of that fact. Each of the Seven Priority Dimensions has a set of supporting performance indicators (metrics) enabling high level performance for monitoring each of the dimensions.
The VRM Processes
Strategic Level - Macro Processes
The Plan and Govern Process categories encapsulates:
The VRM Tactical Level Processes
The Tactical Level can be described being instituted for “Horizontal Value Chain Process Re-Engineering”. The Value Reference Model processes decompose from Strategic to the Tactical Level with Plan and Govern keeping their respective naming in the first part of the process notations on this level as they influence each of the Execution Processes e.g. Plan Research and Govern Support (not shown in the figure).
Execute decomposes to Market-Research-Develop-Acquire-Build-Sell-Fulfill-Support. Specific for the Market process is that it actually has an impact on all the other execution processes demonstrated by being shown on top in both ends of the execution processes in the figure bellow.
Details on VRM Tactical Level - Plan Processes
Details on VRM Tactical Level - Govern Processes
Details on VRM Tactical Level - Execution Processes
VRM Tactical Configurations
VRM offers Tactical Configurations as a sub-set of processes to the domain specific execution processes. They are instituted to support Strategic Decisions and to describe the business conditions of Tactical Level Processes being applied.
Product Development Configurations
The Value Reference Model currently offers Design to Market, Co-Design and Design to Spec as Configurations for the Product Development Domain. It is expected that more will be added as practical application of the model and this particular Domain in a Value Chain context is executed.
Supply Networks Configurations
The VRM offers Stocked, To-Order, and Engineered to Order Configurations for the Supply Network Domain. They are instituted to support the developments of Push (activities are forecasted), Pull (activities are based on a firm order) and Engineered to Order (Pull activity requiring Engineering) in Supply Networks.
Customer Relations Configurations
The VRM currently offers New Product to Existing Market, New Product to New Market, Existing Product to Existing Market and Existing Product to New market Configurations for the Customer Relations Domain.
VRM Operational Level
In a horizontal value chain perspective, the Operational Level is usually applied after the Tactical Level processes have been structured to support Strategic goals and objectives for the purpose of fine-tuning processes. The level is more intra-enterprise focused and, as such, more applicable for “vertical” improvements than for “horizontal” from a value chain perspective.
The 26 Tactical Level Processes decompose to 191 Processes; an example of such is shown in the figure bellow using the Tactical Level “Acquire” process.
Process Details in the VRM Model
The processes of the VRM model include a standard format of information. The format includes Process Definitions supporting the benefit of having a Common Language and Semantics, Priority Dimensions with supporting performance indicators, Practices and Input/Outputs.
“You can not manage without metrics” – or performance indicators as some say. The individuals involved in developing the VRM metrics all have a broad experience of developing and applying metrics and are willingly sharing their experiences to ensure the delivery of the highest possible quality. With our extensive focus on quality and details we are introducing a new metric standard for BPM models to the market.
VRM Metric Example
Delivery Performance, Request Date
Priority Dimension - Reliability
Delivery Performance, Request Date = o/d
Unit of Measure - Percentage (%)
Calculation of dimensional (segment) performance:
VRM Inputs / Outputs
To enable high level horizontal input and output mapping the VRM introduces Inputs and Output templates and guidelines for Tactical Level Processes beyond demonstrating Material flows. In addition to Material flows the VRM also includes Financial, Recourse and Information flows.
The figure below shows the matrix VCG uses as a guideline for Input/Output developments.
VRM Input /Output Detail
The figure bellow demonstrates the level of detail that has been put into organizing and linking the Operational Level Processes within the model.
Integrated Process & Technology Framework ©
The Value Chain Group is well aware of the challenges bridging BPM (Business Process Management), IT Applications and BPMS (Business Process Management Services).
The VRM BPM model enables organizations to effectively develop and get knowledge of the processes in their Value Chains. With a comprehensive process architecture in place organizations are ready to determine use of technology to support the processes.
The VCG together with partners has develop the Integrated Process & Technology Framework © to support the process of successfully aligning business and IT strategies, architecture, design, execution, monitoring and management of the processes. With this initiative the VCG creates a “bridge” and partnership between process owners and IT addressing organizational and cultural issues by balancing people, process and technology.
Besides the Value Reference Model the Federated Enterprise Reference Architecture (FERA) model is an essential component in the Framework. FERA may or may not be applied depending on what scenario is being developed. For Service Oriented Architecture (SOA) specific templates have been developed to support the “game-plan” without applying FERA.
Bellow is a figure showing the relationship between VRM and FERA being the essential components of the framework.
The VRM model is available in an electronic read-only format
VRM has been database-managed since its inception enabling VCG members to navigate in the model with ease. Bellow is a screen shot shown and by clicking on the link bellow you can enjoy a demonstration of the tool. View Model Browser Demo.
VRM Benefits Statement
The Value Reference Model enables organizations to develop unique competitive Value Chains with highly integrated business processes that cut across corporate and functional boundaries supporting the strategy of the corporation through;