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The Value Chain Lab creates economic value and competitive advantage for a company by helping it leverage a core capability that can't be readily imitated by competitors. Specifically, the capability to team effectively across various types of boundaries has been key to the success of many of today's winning companies (see Participant Testimonials). As consolidation, supply chain convergence, outsourcing and channel advances continue, cross-boundary efforts will become increasingly important for cutting costs and creating new revenue streams.
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PPG's Example
Companies have used various means to work across their boundaries including Open Agenda Dialogues, Joint Town Meetings and Task Forces. In one example, PPG Industries had begun an accelerated new product development initiative. As part of that effort, their Fiberglass Products Group set out to tailor fiberglass applications for specific customers. One customer, an automotive parts manufacturer, was developing a new fiberglass reinforced spring for an automaker. But no matter how PPG formulated the fiberglass, the parts manufacturer was not able to create a strong enough bond to its plastic materials, and a series of product failures ensued. The two sides worked together whereby the customer helped PPG recreate the customer's proprietary bonding process so they could test different types of fiberglass in different conditions for the bonding process. The result was a successful new application for fiberglass that was later expanded beyond the car model for which it was originally intended.
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Every organization has boundaries across which it must operate -- whether they be vertical boundaries separating layers within a company; horizontal ones based on function or product lines; geographic boundaries; or external boundaries such as those separating customers, suppliers and competitors. Because the Value Chain is the lifeline of any business, a key focus of our Lab offering is to develop and leverage cross-boundary skills within the customer supplier relationship. Skills that can generate new levels of economic and competitive gains for both sides.
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Results At GE Aircraft
Our labs are fashioned after the workout process that GE used extensively throughout their supply chain. In one example, GE's Aircraft Engine Division had a good relationship with Boeing - and both wanted to win. GE wanted to sell, and Boeing wanted to buy, good engines. Both had cost pressures. One thing they learned in a lab type workout was this: before GE shipped an engine, it had to pass a 1000 point quality checklist. And before Boeing installed that same engine on a plane, Boeing put it through their own 1000 point check list. Some of those check points overlapped. While some overlap is good, too much can be wasteful. Even if 25% of it could be done only once, both sides would save substantial time and money. They discovered they both could win if they managed the quality review process together.
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The unique aspects of our Labs include:
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An innovative Business Case for Competitive Advantage. The business case creates a shared understanding and urgency around the need for a new kind of customer-supplier relationship. |
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A proven method for examining and addressing cross-boundary issues, concerns and opportunities. This method becomes an on-going part of the new customer-supplier relationship. |
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An established change model designed to close the gap between the relationship's current and desired state, as well as measure the progress of the relationship. |
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An optional Human Resource Practice Analysis that facilitates the linkage between customer data and specific HR practices. This analysis becomes the framework for any resultant realignment or revision of HR Strategy and related practices/processes. |
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Labs At Coopers & Lybrand
Coopers & Lybrand, which has since merged with PriceWaterhouse, is one of the world's five largest professional services firms. The firm believed its advantage in the marketplace would have to be an ability to anticipate and meet client needs more effectively than their competitors. They further believed that their consultants could be another key differentiator, if they could create and leverage a deep client service competence and commitment among their teams. So C&L held a series of labs where their consulting teams met with members of their client organizations to openly discuss, probe and assess their relationships. Not only did the consultants come away more committed and equipped to service their clients, but the client came away understanding how to better leverage C&L's skills. More than that, they were able to flush out trouble spots that had been smoldering behind the scenes, discovered what differentiated them (C&L) in the clients' eyes, and surfaced several new service opportunities and future product ideas.
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The Labs engage and leverage a company's people resources across customer-supplier boundaries, building the capacity for rapid learning, collaboration, team confidence and competitive change - all of which are focal points of today's winning companies. And all of which have translated into economic and other benefits for such companies.
While the customer-supplier setting is an ideal application for our Labs, it is not the only application. Value Chain Labs are also used to achieve unique results in numerous other contexts. See Other Lab Applications.
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