It’s the value chain stupid!

Private sector people with supply chain experience will chuckle when they read this. It will be so obvious to them. But it’s not obvious to the rest of us. This is just one example of how public private partnerships are so helpful. What’s obvious to someone from the private sector may not be obvious to someone from another sector and vice versa.

In the planning stage the guys from Coca-Cola would say “Yes, but what’s the value chain?”. And frankly we only had the vaguest idea what they were talking about. We certainly did not understand the significance of what they were asking. But we think we do now.

As someone from the NGO sector – and I would suggest that most people from the public sector think like this too – I’d focus on the supply chain, not the value chain. I would think: we have to get this product from here to there, how do we physically do it? Thinking in this way makes you blind to the fact that the physical means for getting something from one place to another is often already there. This is certainly the case with fast moving consumer goods like Coca-Cola, washing powder, talk-time and cooking oil. So you don’t have to build your own supply chain you just have to make the existing ones work for you.

So how do you that? This is where value chains come in. What we have done in ColaLife is build an end-to-end value chain right from the design of the Kit Yamoyo (attractive, functional, affordable), through the manufacture, assembly, storage and distribution, to the purchase by the mother. Every step adds value and generates a profit for the organisation or individual adding that value.

If you can successfully create a value chain you don’t need your own supply chain – along with all the 4 wheel drive vehicles, warehouses and so on. Magic.

Are there any private sector people still reading? Have we got this right?

The ColaLife value chain

Money is made at each point

The ORS packaging machine Kit Yamoyo assembly
1 ORS manufacture | 2 Kit Yamoyo assembly

Kit Yamoyo cartons at Medical Stores Limited MSL truck delivers to Choma Hospital
3 Storage and dispatch | 4 Delivery to the district wholesaler by Medical Stores Ltd

Alfred Siachoobe, Kit Yamoyo retailer in Kalomo buys Kit Yamoyos by the box full Alfred Siachoobe sells a Kit Yamoyo
5 Purchase of kits by the retailer | 6 Sale of the kit to a care-giver

Related blog posts

How Coca-Cola’s distribution system works
Supply Chain theory in 140 characters
Getting the syphon going

Comments

  1. Hello again,
    I have been reading more about Cola Life every time I receive your automatic emails. I am very proud of you if that is possible from someone who doesn’t even know you. Well Done!

    I have started The Silozi Seed Bank here in Toronto Canada.
    I have been saving and drying seeds from personal use vegetables. I save them in unused return utility envelopes that I have saved to keep costs down. It costs and average of $1.89 now to buy a veg. seed package and I can only get them in the spring planting season.
    I have taken these seeds to Kalabo, Zambia twice now and mailed some in Dec. 2012.

    Do you think you could fit a small package of sweet pepper seeds (with instructions on how to grow year round) into your Aid Pod. If not obvious for the following reasons:
    1. COMPARISON BETWEEN GREEN, RED AND YELLOW BELL PEPPERS

    Nutrient Green Red Yellow
    Vitamin A 12% DV 105% DV 3.6% DV
    Vitamin C 137% DV 292% DV 282% DV
    Beta Carotene 340 mcg 841 mcg 110 mcg

    * All quantities and % daily values (DV) are based on one cup (92g) of raw bell peppers.
    2. Vitamin A helps prevent blindness.
    3. This may be a further incentive for mothers to purchase the Aid Pod because when I took my seeds to Kalabo that was the gift they were most excited about.
    4. If you build a small grass roofed fence and grow your seedings under it and remove grass only when watering, you can grow year round. It stops the hot sun from baking the seedlings.
    5. There are approximately 250 seeds in each pepper.
    6. It will also be explained in the instructions that the longer you let the pepper grow it will turn from green to red.
    7. Also explain how to collect, store and propagate the seed.

    So What do you think?
    I have many friends now saving seeds of all kinds, envelopes and washed out clear milk bags that I hope to use to plant tree seedlings for Trees for Elephants a co-operative project to The Silozi seed bank.
    I am just in the early stages of this project and have applied for some grants as well. I will post it on my blog once I have a few more details worked out. medwoman.wordpress.com.

    Anyway! I think this could work well for you.
    All the best,
    Joanne

  2. Via email says:

    Simon

    I would say so – unless your business was providing supply chain solutions, in which case your value chain would be your supply chain ie how you add value to your customers in the context of what they see as valuable (in their value chain).

    There are lots of good examples of similar things. For example, while we think of Porsche as a car maker – actually, they don’t. They design and market cars but have specialist business partners who manufacture and assemble them. They do what they are excellent at (and can add most value by doing) and so do their business partners. They own this particular value chain because they own the value proposition to their customers (remember the business model canvas we introduced you to).

    [Talking of the Porsche example], you can think of it as an expression of your value chain. You have Strategic Partners who provide supply chain solutions that form part of the Channels that you use to connect to your customers.

    By the way, it’s often better to think about value networks, rather than chains. You will find that not all of how value gets generated fits into a linear (and sequential) model.

    The key question is, which parts of the value proposition and network should one take responsibility for and which parts should one engage another party in. Often this decision is based on one of two things: whether or not you have or could have the capability to take on that responsibility; and if so, does that generate the most cost-effective solution (taking account of service levels, quality, reliability, sustainability, etc.)

    Hope that helps.

    Keep up the fantastic work! Best wishes to Jane and all the rest of the team.

    C