Business Architecture and Value Stream

With a Business Architecture built with integrated value streams, you can build a value chain as defined above. For example, looking inside a typical mid-size, “build-to-order” manufacturer, you will find the following sixteen value streams:

• Prospect to Customer
• Order to Cash
• Manufacturing to Distribution
• Request to Service
• Insight to Strategy
• Vision to eBusiness Enterprise
• Concept to Development
• Initiative to Results
• Relationship to Partnership
• Forecast to Plan
• Requisition to Payables
• Resource Availability to Consumption
• Acquisition to Obsolescence
• Financial Close to Reporting
• Recruitment to Retirement
• Awareness to Prevention

Each value stream contains several integrated components. For example, in the Order to Cash value stream, you have four integrated components: Fulfill Order, Change Order, Review Order and Return Order. Some of these value stream components are the building blocks for a value chain. A value chain is not a collection of independent activities but a system of interdependent activities. Michael Porter first wrote about value chains back in 1985. His timeless ideas are enjoying a revival, perhaps having been forsaken by the focus on the explosive growth of the Internet during the past several years. A value chain is fundamental to the strategy, not an option merely for consideration.

The value chain and value stream are different just as illustrated in the earlier definitions. A value chain is more complex than a value stream and generally composed of value stream components. The most important differentiator is their purpose! As just defined, the value stream has a clear purpose; to delight the customer. The value chain has a clear purpose; to gain a competitive advantage. And both are important strategic elements. It is far more difficult to effectively and efficiently achieve the demands of a business unit’s strategic initiatives without a well defined value chain and value streams.

http://www.bainstitute.org/resources/articles/business-architecture-value-streams-and-value-chains