Introduction
Value creation by an organization is the end product of a complex process comprising series of action often referred to as value stream mapping or process flow. Imperatively, the customer, either internally or externally, is attracted by the value that flows to them and not in measurable degree of an organization’s struggle for its products or in the products that flow towards customer value (Faulkner & Badurdeen, 2014). Therefore, managers in a global supply chain must concentrate on a particular product’s value stream and customers can improve it so that both the customer and the organization can benefit. In this essay, the article creates a value stream mapping for Best Buy, an American multinational consumer electronics retailer, with operations in North America (Best Buy, 2016).
Best Buy’s value streams
Best Buy is global consumer electronics retailer founded in 1966 and owns over one thousand big box and over one hundred express stores around the world. Its brands include CinemaNOw, Geek Squad, Magnolia Audio Video, Pacific Sales, and MindShift. With increased competition from other retail outlets, especially online retailers like Amazon, the organization must create a value stream process aimed at creating a long-term value that flows to its customers so that it can remain competitive and sustainable in the big box stores market (Best Buy, 2016). Value stream mapping enables an organization to identify a problem in its supply chain in its efforts to create the value for its customers.
The identification of a product family is the first step in value streams mapping. A product family comprises of related items that go through the basic supply chain steps in an organization (Womack, 2007). Therefore, such identification helps an organization to maximize its value streams benefits. The organization’s family products include consumer electronics, audio and video, gaming among other entertainment products in the big box industry. The second stage is the identification of the current challenge with the product family value stream from the customer’s and organization’s points of view. For instance, a customer may request for reduced prices and planning to shift to another retailer if they cannot obtain a new lower price. Again, an organization can offer product value suitable to the customer but at a margin unfavorable to the business. Additionally, a chronic quality problem may affect the value streams for an organization (Womack, 2007). However, the problem at Best Buy is its declining sales because of increased competition in the retail industry. Again, the organization is facing a significant market paradigm shift towards online purchases, mobility, and music and video downloading and streaming.
Organizations can pursue different value streams that include operational excellence (OE), customer intimacy (CI) or product leadership (PL). Imperatively, they must master one value stream so as to succeed in the marketplace (Womack, 2007). Firms that pursue operational excellence succeed in minimizing overhead costs and maximizing convenience by designing and using processes and systems that drive efficiency in the production and delivery of goods or services (Faulkner & Badurdeen, 2014). Secondly, organizations that pursue consumer intimacy strive to create customer segmentation in their supply chain with the aim of addressing individual customer needs through the delivery of the right product at the right place, time and price. Thirdly, product leadership value stream aims at designing and delivering a continuous stream of innovative products and services. Enterprises pursuing PL must be open-minded, embrace external concepts and encourage new ideas (Womack, 2007). They must also bring the products to the market quickly through flexible and rapid engineering, use agile supply methods, develop products concurrently, and pursue rapid marketing and distribution (Kim, 2012). Finally, they must continuously raise the bar by creating new products and solutions.
Currently, Best Buy value proposition is in a state of flux as it focuses on efforts to streamline its activities. The focus of the streamlining efforts is creating connectivity with its customers, online retailing and customer service. All these activities are aimed at creating value for the organization and customer (Kim, 2012). Therefore, through value stream mapping, the organization can predict and assess its future direction by mitigating the current problem in its value chain.
Best Buy’s “showrooming” approach on its online store is one of the challenges that it must overcome. Customers browse the information, try the products and then go to make purchases online at a lower charge from other retailers like Amazon (Kim, 2012). Therefore, it increases costs for the retailer and the customer but fails to create value. However, the organization is leveraging on Geek Squad expertise and knowledge, an attribute that is difficult to find from its competitors. These technicians can visit customers’ homes and install and service purchased products. They also offer lessons without sales pressure and BB extends zero financing for a one to two-year period for selected consumers. These activities lower consumer prices and reduce BB’s cost of customer acquisition by retaining them and guaranteeing repeat purchases. Therefore, the company is focusing on product leadership followed by customer intimacy. Effectively, its value stream does not create long-term value for its customers and the organization.
Value streams mapping for Best Buy Inc.
A value streams mapping must ensure that each process is valuable, capable, available, adequate, and flexible for the organization and customers (Womack, 2007). An effective value streams mapping should guarantee a continuous flow of family products, continuous streaming of information, with no product control information, and no disruption of upstream steps in the scheduling of supplies to meet consumer demands.
Value streams mapping for Best Buy
References
Best Buy, (2016). About Us. Accessed on 4th August 2016 from
https://corporate.bestbuy.com/about-best-buy/
Faulkner, W., & Badurdeen, F. (2014). Sustainable Value Stream Mapping (Sus-VSM):
methodology to visualize and assess manufacturing sustainability performance. Journal of Cleaner Production, Vol.85, pp.8-18.
Kim, B. (2012). BEST BUY EXEC: Here’s the Truth About the “Showrooming
Phenomenon.” Business Insider.
Womack, J. (2007). Value Stream Mapping. Accessed on 4th August 2016 from
http://www.sme.org/Tertiary.aspx?id=30192&terms=value
