Chief Financial Officer And Value Chain Management

First, value chain and value chain management.

The concept of "value chain" was put forward by Michael Porter, Professor of Business School of Harvard University (MichaelPorter) in 1985.

He believes that according to the relative independence of economy and technology, every production and operation activity of an enterprise should be an economic activity that creates value, and all the different but interrelated production of enterprises.

It forms a dynamic process of creating value. This dynamic process is called value chain.

The core of the concept of value chain is to create value. The criterion is to see whether an activity is creating value for enterprises. Michael Porter believes that the value creation activities of enterprises can be divided into two aspects: the first aspect is to increase or lower the cost, and then whether the activity reduces the cost of follow-up activities and whether the value of follow-up activities is increased. On the other hand, although this activity does not directly bring value increase or cost reduction, it is beneficial to improving the quality of follow-up activities.

If an activity has nothing to do with reducing cost, increasing value and improving quality, it can not be called enterprise value chain activity. This activity should be removed from business activities or compressed as far as possible.

From Michael Porter's "value chain" theory, we can see that value chain management is based on the analysis of the value chain of enterprises, how to integrate the design, procurement, production, storage, marketing, finance, human resources and other aspects from the perspective of value creation. From the perspective of value creation, we allocate enterprise resources and plan, coordinate, supervise and control.

The significance of value chain management is to find value-added businesses of enterprises, optimize core business processes, explore and manage enterprises in the value chain, make use of enterprise resources from increasing enterprise value and reducing costs, improving and improving the service quality of enterprises. In particular, the advantages of enterprises should be applied to the core value chain of enterprises, so as to enhance the core competitiveness of enterprises and expand the value of enterprises.

What is the purpose of the existence of an enterprise? This may be the answer of most people. Actually, this description is not accurate. There are many reasons for the existence of the enterprise. But the reason for the existence of the enterprise may be many, but it is fundamental to create value for users. Others will accept your services. Only when users accept your services can you deal with them. Transactions are the only way for the realization of value in the commodity society. So is the production process among enterprises. Only by letting the next process accept your products or services can your value be realized. Making money is only a by-product in the process of value realization, and creating value for customers is fundamental.

The enterprise's strategy and management work are all centered around the fundamental of the enterprise. Without this foundation, the enterprise will lose its existing goals, and enterprise management will inevitably become chaotic. At this point, enterprise management may become invalid management or even destructive management.

The idea is based on the relative independence of economy and technology, dividing enterprise operation into a number of independent activities and assuming that these activities can bring value-added to enterprises. The value activities and composition of different enterprises are different. Value chain management is to find value-added points and value-added modes in every aspect of enterprise design, procurement, production, storage and marketing, and find out the core value-added links belonging to enterprises, and link business activities with value.

The value chain theory holds that every value activity is determined by different driving factors. Each business activity has different contributions to the creation value of an enterprise. The enterprise should analyze its own conditions from the internal value chain and the industrial value, and use the resources to control, find a suitable value chain suitable for the enterprise itself, and win the competitive advantage for the enterprise from all aspects of the innovation of the value chain, which is the central link of the enterprise management.

Enterprise management also covers all aspects of enterprise supply, production, marketing, human, financial and material, which is also the maximization of enterprise value, but its management mode is usually carried out by functional departments. The same business may be jointly managed by different departments, which is not conducive to the realization of enterprise's value-added goals by the superior resources of enterprises. Value chain management links directly from supply, production, marketing, people, talents and goods to management from the perspective of value-added. The emphasis is on value added, weakening the functions of departments, more direct and clearer, and enabling enterprises to apply superior resources to enterprises' value-added business, which is more conducive to the realization of the goal of maximizing enterprise value.

Three, chief financial officer should pay attention to value chain management.

Chief financial officer, as the leader of financial management in enterprises, is mainly planning, configuring and controlling various resources from the aspect of value. In view of its division in enterprise work and its financial professional characteristics, the chief financial officer has special status in the management of enterprise value chain. He has more contacts and understanding of enterprise information channels than other managers, especially the value information of enterprises, and their professional characteristics also determine that they are more sensitive to value problems than others. Therefore, the chief financial officer is one of the important organizers and implementers of enterprise value chain management.

The responsibilities of the chief financial officer include many aspects, including financial accounting management, fund raising and allocation, cost control, and dealing with various financial relationships. All of these things are carried out around the increase of enterprise value. Because of the different nature of enterprises, there are differences in the ability to create cost values for all business activities. The value chain involves the entire enterprise and even the whole industry. It is necessary to find the core value chain of the enterprise, and do not calculate the cost and the input-output data.

The requirements of enterprise operation and development push the development of the core of the enterprise to the core value chain of the enterprise, so we have to understand which link of the enterprise has the greatest value added. We must apply the superior resources to the core link that is most conducive to the maximization of the enterprise value, including resources such as manpower, financial resources, material resources and information. Therefore, the work of the chief financial officer also goes deeper and deeper with the deepening of the management of the value chain by the enterprise, and the focus of the CFO also shifts from the traditional financial accounting and financial relationship management to the value chain management with the value chain as the core.