The value chain pertinent to a given firm is that collection of activities performed within or outside of the firm itself which combine to design, produce, market, deliver and support a product. Traditional manufacturing value chain segments include raw material or component suppliers, manufacturers, distributors and retailers.

Value chain optimization requires a careful analysis and balancing of the specific advantages provided by each of the participants against the transaction costs incurred at the divisions of the chain.

Increasingly, value chains are being reshaped by economic efficiency and the ability to process information bi-directionally, rather than purely by physical product flows. These changes present new sets of challenges for managers.

Bain's Experience in Value Chain Optimization

Bain's approach to value chain optimization is grounded in a systems perspective: understanding customer needs, leveraging suppliers' skills and managing to optimize the overall process, not just its discrete pieces.

We work with clients to map a comprehensive view of the existing value chain, then identify the most highly levered steps for financial improvements. Often, these areas are also the most vulnerable to attack by new entrants seeking previously unrealized opportunities to deploy information technology and to capture the value addition at lower cost.

Bain focuses on aggressively recognizing and attacking these opportunities for market incumbents and new entrants alike.

To find out more about Bain's work in this capability area, please contact capabilities@bain.com.