Those weak links include improperly mitigating risk when expanding to emerging markets, lacking an accurate understanding of the impact of natural capital and failing to create the proper ethical culture. The new research reports, entitled Rethinking the Value Chain, are aimed at business leaders, particularly Chartered Global Management Accountants, or CGMAs, the designation created by a joint venture between the AICPA and CIMA. The reports provide guidance and best practices to help CGMA business leaders understand the steps they can take to strengthen their value chain.
By focusing on the value chain, which encompasses the environment outside the traditional boundaries of a business, and by considering the potential impacts from globalization, digitization and demographic shifts, companies can gain actionable insights into the interdependencies that create value.
The reports highlight the ways in which business leaders must evaluate opportunities—including those in emerging markets – by looking at both the commercial upside and the risks inherent in less tested business arrangements.
The reports include steps business leaders can take to change how they manage their extended value chains, such as scrutinizing performance and risk and making sure governance structures within the organizations include the appropriate skills to scrutinize performance and strategy and be alert to risks. Business leaders should also widen the focus from traditional supply chain analysis to include customer demand to the same extent, the reports recommend. Not only the distributor and the retailer need to be included in the analysis, but also those who comment on a product, service or business.
Business leaders should also learn to embrace dependency and be able to relinquish a degree of independence in favor of shared goals when forming business alliances, according to the researchers. They suggest executives should review data flows and implement efficient, reliable information exchange throughout the extended value chain. Cloud-based systems can provide a common platform across geographic boundaries.
Business leaders should be able to collect, analyze and communicate future-looking information about business activity and the external environment, the reports recommend. They should also recognize the external context and understand the regulatory, social system and infrastructure requirements necessary to support operations across the value chain.
The reports also recommend business leaders such as CGMAs align key performance indicators and articulate what criteria will be used to define “value” and develop collaborative business partnerships to gain competitive advantage across the entire value chain, while ensuring alignment between the supply chain, the business and corporate strategy.
“CGMAs have the ability to evaluate the opportunities presented by business relationships, while tracking performance and monitoring risks to help ensure the value chain is managed effectively,” added Thomas.
The series of reports, along with tools and videos, are available to CGMAs at cgma.org.
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