by Ross O’Brien
In this series of blog posts, we have been 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. If you have not yet read the previous articles, let me encourage you to read at least the introductory article linked here, as it will set the foundation for this and all the other articles in the series.
Beyond the traditional use of the analysis, we have also unpacked how the tool could be used as a way to help a follower of Jesus steward the resources of God’s company. In this sixth and final part of the series, we continue to examine the support activities of the value chain, this time focusing on Procurement and Technology.
Dinesh Pratap Singh’s visualization for Porter’s Value Chain: CC BY-SA 3.0
Procurement Through a Traditional Lens
Procurement plays a strategic role in a firm’s performance. More than simply purchasing the physical resources used in a company, procurement involves:
- the identification of the resources needed by the company,
- the strategic selection of suppliers with a focus on quality, cost and reliability,
- negotiating with suppliers, monitoring their performance and maintaining supplier relationships,
- timing the purchases to balance efficiency and cash flow,
- ensuring timely payment of suppliers, and
- documenting all purchasing activity.
In the case of our coffee shop example from previous articles in this series, the person responsible for procurement must establish a means by which she tracks both inventory as well as wear and tear on equipment so she knows when coffee and other resources need to be purchased. Food-related businesses have one of the worst track records for business failure, in large part due to the challenge of controlling inventory of perishable goods. Purchasing too many raw ingredients in advance results in spoilage. It can also negatively impact cash flow. Purchasing too few raw ingredients results in running out of ingredients, which can lead to losing customers. Sourcing the coffee and other l resources needed from reliable distributors is a key to the shop’s success.
Procurement Through a Spiritual Lens
As stated before, followers of Jesus who manage businesses are already stewards on behalf of God. They must attend carefully to the financial and operational health of God’s business. However, here are just a few ideas to consider when it comes to intentionally thinking about procurement through a spiritual lens.
Careful selection of suppliers involves investigating their resource capacity, their track record for on-time delivery, their financial health, and their reputation for quality and integrity. But from a faith perspective, it also involves looking at where and how they source their supplies, and how they treat their employees and other stakeholders. Their reputation for good or bad behavior will spill over in how they treat you. It can also affect how others perceive you.
Purchasing agents for a coffee distributor, wholesaler or retail shop must take the time to select suppliers that foster human flourishing at all stages in the distribution chain.
The coffee industry is a good example of this. Often, coffee farmers struggle for survival while well-known coffee companies do very well financially. This is due in part to the length of the distribution chain from farm to cup and the lack of transparency along the way. A local coffee shop could buy beans (whether green or roasted) from a distributor and likely has no way of knowing the profit margins along the way. Why would you buy coffee from a company that keeps poor farmers marginalized – whether knowingly or unknowingly? We do it all the time because of a lack of information. Purchasing agents for a coffee distributor, wholesaler or retail shop must take the time to select suppliers that foster human flourishing at all stages in the distribution chain. ‘Coffee as Mission’ is taking big strides in making this information accessible and providing shops and consumers a way to support the farmers who grow the second-most traded commodity in the world.
Building and maintaining healthy relationships with suppliers demonstrates the character of God. Typically, businesses operate with the assumption of self-interest. This is not a bad thing, as working in my own self-interest means I must treat my suppliers well to ensure they continue to supply my needs. But working from a faith perspective also means that I should seek to meet not only my own needs, but also the needs of others, including those of my suppliers. Raymond Harris, founder of Raymond Harris Architects, stated that his policy for paying suppliers was to pay before the payment was due to help them with their cash flow. Not all companies can do this, but it demonstrates an “others-mindedness” that sets his firm apart.
Technology Through a Traditional Lens
When we speak of technology as an activity in the value chain, we are not referring to the development of new technologies or new products or services based on new technologies. Rather, technology refers to the equipment, systems, and procedures that enable an organization to carry out its work. I work at a university as a professor. My work is dependent on technology that allows me to research, write, develop teaching tools and teach my students. This includes computers, servers, software, projectors, and Internet access, but it also depends on procedures that help students enroll in the university and register for classes. You can probably see the link that exists between customer support (a primary activity in the value chain) and technology. In fact, as was mentioned in the first article in this series, the value chain activities should not be seen as isolated activities, but rather as an overall, integrated system.
Utilizing appropriate technology is important not only in ensuring quality and consistency, but also in maintaining costs and efficient utilization of resources. Years ago, while living in Tanzania, East Africa, I noticed a large, rusting harvester out in a field. When I asked about it, I was told that a well-intentioned non-profit organization had given that harvester to a farmer. However, when it broke down, there was no one in the area who could fix the machine, and no spare parts with which to fix it. This experience taught me the importance of utilizing appropriate technology.
In the case of our coffee shop example, technology includes both the equipment used to make coffee and related products – as well as the processes baristas follow. Several years ago, Starbucks closed all their stores for an afternoon to re-train their baristas in how to make their products to ensure consistent quality and flavor of products across all stores. While the machinery had not changed, employees had grown lax in the way they made drinks, resulting in a diminishment of quality and consistency.
Followers of Jesus who use the value chain analysis to improve company performance reflect the excellence of God.
Business owners and managers must be intentional in the selection of equipment, the establishment of procedures, and the adoption of innovation. Change for the sake of change or simply being the first to adopt a new technology might not be a wise course of action. However, the graveyard of businesses is filled with companies that failed to adopt new technologies simply because the old ones had gotten them to the height of their industry.
Firms must also recognize that any major change in how work is accomplished can create stress for employees, resulting in a need for training and support.
Technology Through a Spiritual Lens
Work that reflects the character and purposes of God and work that is performed for the glory of God is sacred. Therefore, followers of Jesus who use the value chain analysis to improve company performance reflect the excellence of God. Specifically in the area of technology and work, it is helpful to question the effects of technology on people inside and outside our companies. Do our technologies help our employees not only to do their work efficiently and effectively but also to help them grow into their full potential?
What about the effect of our technology on creation? Mats Tunehag rightly reminds us that God has commissioned us as stewards of his creation. This world and universe are not ours to do with as we will, but rather to enjoy, use for the betterment of others, and celebrate God’s creativity and power. When the Lord returns, will he be pleased with how we have cared for his creation?
Our coffee shop example does not give the breadth of depth of the impact of technology on people and creation, nor does a textile factory in Bangladesh, or chip manufacturer in China. But even with these simple examples, we can see how appropriate technology and employee support can provide a positive environment that helps employees grow.
This article concludes the series The Value Chain Through a Spiritual Lens. The goal of each of these articles has been to help followers of Jesus think in practical ways about how to integrate faith with work. The series has barely scratched the surface on these ideas but hopefully has prompted you to think more deeply and find your own examples. We would love to hear from you about how you integrate faith with each of the value chain activities. Please send those examples to: firstname.lastname@example.org.
Read Part 1 >> Value Chain Analysis Through a Spiritual Lens: Introduction
Read Part 2 >> Operations and Outbound Logistics Through a Spiritual Lens
Read Part 3 >> Marketing and Customer Service Through a Spiritual Lens
Read Part 4 >> The Role of Business Leadership Through a Spiritual Lens
Read Part 5 >> Human Resource Management Through a Spiritual Lens
Read Part 6 >> Procurement and Technology 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.