by Ross O’Brien
In Part 1 of this series, we began looking at Porter’s Value Chain Analysis as a useful tool for business people seeking to maximize the value they deliver to customers while also seeking to gain a competitive advantage as they execute their strategy. We looked at Inbound Logistics as one of the primary activities in the value chain.
Beyond the traditional use of the analysis, we also unpacked how the tool could be used as a way to help a follower of Jesus steward the resources of God’s company. After all, while our names might be on the legal documentation as “owners,” we realize that the business belongs to God and we are co-laborers with him in restoring creation throughout the marketplace.
In the second part of the series, we continue to examine the primary activities of the value chain, this time focusing on operations and outbound logistics.
Dinesh Pratap Singh’s visualization for Porter’s Value Chain: CC BY-SA 3.0
Operations Through a Traditional Lens
In a manufacturing business, operations include the activities of making products, inventory management, work flow management, facilities, personnel and equipment management. In a software firm, operations involve developing software; in an accounting firm providing the accounting services for their clients, etc. In our little coffee shop example, the operations activities include making and selling coffee and associated products. Knowledge of the best processes and combinations of quality ingredients are vital. The right equipment and knowledge of how to use it is also essential.
A work culture that encourages innovation and learning improves operations and enhances a firm’s competitive advantage. A supportive and empowering environment fosters a sense of ownership among employees that help them find meaning in their work, resulting in longer tenure and lower turnover costs. Seeking to improve efficiency also enhances competitiveness, although the activity of innovation at times competes with seeking efficiency. Finding the right balance is an ongoing effort.
Operations Through a Spiritual Lens
As stated in Part 1, doing the above activities with a desire to reflect the excellence of God and bless others is sacred work. For example, improving efficiency reflects our stewardship responsibility mandated in God’s command to oversee creation as found in Genesis. Demanding quality in our work reflects the excellence of the God we serve. Fostering an enriching environment in which employees exercise and develop their God-given abilities demonstrates our love for them.
Once again, the way in which we conduct operations is as important as the motivation behind it. To maximize efficiency or cut costs we could take short cuts on maintaining equipment or demand that workers work long hours in poor work conditions. However, if our motivation is to restore creation, glorify God and make disciples, then these actions do not align with that motivation. Neglected equipment will break. Exhausted and used employees will either quit or work poorly. In the long run, the competitive advantages we seek will be elusive, as will the spiritual impact we seek.
Improving efficiency reflects our stewardship responsibility mandated in God’s command to oversee creation as found in Genesis.
Another spiritual factor to consider will be regarding the primary focal point of our ministry. In the same way that a company must identify a key target market and serve them primarily, a BAM firm must identify who its primary “spiritual market” is. This is not to say that a coffee shop with a primary target market of young professionals will not serve coffee to a high school boy on his way to school or a retired woman on her way to volunteer at a local charity. The shop will serve coffee to any customer who comes in even though its marketing efforts are directed at a segment of the overall market.
In the a similar way, though the coffee shop’s spiritual impact will be felt across many different segments, the shop would do well to identify its key spiritual market. For example, if the shop seeks primarily to have a spiritual impact on its employees, then the owner/manager would find ways to hire and train those in need of spiritual attention to work in the shop and intentionally minister to them. Some coffee shops hire women freed from human trafficking. Others hire people with disabilities or ex-offenders and seek to restore dignity and self-sufficiency in these employees. BAM businesses find and create many ways to holistically draw people into the love and grace of Jesus.
If customers are the primary spiritual market then the owner/manager will hire followers of Jesus as baristas and servers, then train them how to make an amazing cup of coffee and also how to make disciples. Of course, this decision about the primary spiritual market has implications across all the value chain activities. It is mentioned here because a strategy to reach the employees has implications regarding how operations are conducted.
Outbound Logistics Through a Traditional Lens
This activity involves getting the product or the service into the hands of the customer. Firms that manufacture their products must distribute through intermediaries such as retail stores or online stores. For some firms, the distribution chain is quite long. For example, the bowl of cereal you had for breakfast was manufactured in a factory and then stored in a warehouse. If the warehouse was not on site, the cereal had to be delivered, most likely by truck, to the warehouse. From there, trucks and possibly trains, ships or planes took the cereal to a distributor then to a wholesaler and then finally to the retail stores from which you bought it. It might have been warehoused at any point along the way while it waited for the next shipment. This process is time consuming and expensive. Finding ways to cut these costs are critical to companies. Some firms seek to cut out the middleman and sell directly to consumers via the Internet or by opening their own stores.
The choice regarding where products are made has a big impact on the activities in outbound logistics. For example, if a company seeks to cut costs by manufacturing overseas, it must then deal with the time and expense of shipping the products to its markets, not to mention the additional risks associated with international business.
The choice regarding where products are made has a big impact on the activities in outbound logistics.
For our little coffee shop, since all the transactions are completed in the shop itself, the outbound logistics are pretty simple. The shop could put in a drive-through to speed up the purchase experience. It could allow customers to order online and then come in to pick up the order to avoid waiting in line. Starbucks does both of these in order to speed things up for the customer and keep customers happy.
However, these time-saving efforts might hurt the shop in other ways. Not only are these expensive ways to facilitate distribution of the product, but they encourage customers to get in and out of the store quickly. If customers who stay longer tend to buy more products, then keeping them in the store is more profitable. If they come to this coffee shop instead of one down the street because the environment is welcoming and a haven from the chaos of work or school, then getting customers out of the store quickly diminishes the value added at this stage in the value chain. The shop must understand its unique value proposition (UVP) and create value at the outbound logistics stage to maximize that UVP.
Outbound Logistics Through a Spiritual Lens
Finding ways to save the customer money by shortening the distribution chain or making the existing chain more efficient is a blessing to the customer. For example, research from 2005 shows Walmart saves the average American family $2,500 a year. This is true even for families who don’t shop at Walmart due to the competitive forces Walmart exerts on its rivals. While many debate the positive or negative impact Walmart has had on communities, a firm that can save the average family $2,500 a year blesses these families. Some need that money to put food on the table or cover medical costs. Some will use it to bless others through charitable contributions. Of course, some will misuse it. But even that does not diminish the fact that as a company focuses its attention on adding value through the distribution activities of its value chain, it is able to bless others. (In the case of Walmart, the savings occur not only due to outbound logistics but also through inbound logistics, operations and all of its value chain activities, in keeping with its “cost leadership” strategy.)
Considering the needs of our customers and delivering the products in a way that best meets these needs is a spiritual business exercise.
In what other ways can a BAM firm maximize its spiritual impact through its outbound logistics activities? There are many, and these depend on the nature of the firm. Timely distribution of products and services blesses customers. Honesty and integrity in distribution helps customers know when to expect the products or services. It is easy to tell a customer that the product is in the mail when in fact it is still sitting in the warehouse waiting to be picked up by UPS. This does not benefit the customer nor does it reflect the integrity of our God.
In the case of our coffee shop, considering the needs of our customers and delivering the products in a way that best meets these needs is a spiritual business exercise. If the baristas and servers are believers, then silently breathing a prayer for God’s blessing as the coffee is made and handed to the customer blesses them even if they don’t know the prayer was offered on their behalf. Training employees how to go the extra mile to deliver great products and service in a timely way blesses the customer. Taking note of the customers’ spoken and sometimes unspoken needs is a spiritual exercise.
Part 3 in this series will examine marketing and service, the final two primary activities of the Value Chain.
Read Part 1 >> Value Chain Analysis Through a Spiritual Lens: Introduction
Read Part 3 >> Marketing and Customer Service Through a Spiritual Lens
Ross O’Brien has been teaching at Dallas Baptist University since 2003. Prior to that time, he started and ran a small Internet firm in Birmingham, Alabama after working for AT&T’s Business Network Sales division as an Account Executive. Ross’ Ph.D. is from the University of Texas at Arlington in Business Administration and his MBA is from Dallas Baptist University. He began the undergraduate entrepreneurship program at DBU as well as the Center for Business as Mission, in which he serves as the Director. Through the Center, Ross teaches undergraduate and graduate classes in Business as Mission, has taken students on travel study courses to learn about business practices in Israel, Chile, Sierra Leone and Bangladesh, and helps host The Lion’s Den DFW event each spring.