TIES THAT BIND

INDUSTRYWEEK Value Chain Study reveals manufacturers' struggle to add value from product development to delivery, BY DAVID DRICKHAMER

IN THE IDEAL STATE, A MANUFACTURING COMPANY IS LIKE a seamless, value-creating pipeline endlessly meeting customers' expectations by transforming ideas, raw materials,

Of course reality is all about limited resources, wasteful and disconnected processes, unfulfilled promises, impossible customers and recalcitrant suppliers. Still, the vision of the perfect customer-fulfillment process provides a useful framework for understanding where a company actually adds value. To understand how manufacturers are adding value today and how they might better align functional activity, we joined forces with IBM Corp., working closely with IBM Business Consulting Services, late last year to conduct the INDUSTRYWEEK Value-Chain Survey.

The spirit of our inquiry followed the original value-chain concept introduced by Michael Porter back in the mid-1980s (Competitive Advantage, 1985, The Free Press). Looking internally, Porter said the goal of a company's various activities-which include marketing and after-sale service in addition to operational functions-is to add sufficient value to a product or service to, at minimum, cover the cost of providing those products and services.