The Role of the Engineer in the Value Chain

In recent years, the requirements of commercial and industrial operations in the production of services and goods have been subject to vast changes. In the present era of globalization and increasing international competition, a trend away from vertically integrated organizations has become more and more evident. In fact, most companies nowadays tend to solely concentrate on their own core competencies, outsourcing different steps of the production.However, including a great many of other organizational units to the production systems, has lead to rising complexity in terms of the operations management (Plenert, 2012). In this context, engineers with their accomplished problem solving skills come to the fore, implementing sciences and information technology to the development of production processes.

This notion comes along with an increased focus on the management of value chains.Against this background, the following report firstly gives an overview of the different elements of a value chain, applying this concept to the automobile industry. After a description of the engineer’s related management actions, the importance of his role in the value chain is analysed. The Value Chain As an approach for analysing competitive advantage, the value chain concept describes the operations of a firm in a particular industry as a linkage of activities that are performed to add value to a product (Porter, 1985).

Based on this model, a distinction between a supply chain and a demand chain can be drawn. While the demand chain comprises the sequence of market-orientated activities that drive and sustain the end-customers’ needs for a certain product, the supply chain primarily focuses on the opposite part of the value chain: It represents a system of interrelated organizations that are involved in the production processes of a good, beginning with the procurement and processing of raw materials and ending with the delivery of the product to the customer (McCallum, 2012).Taking the supply chain of the automobile industry as an example, the production process starts with designing a new model according to research findings regarding customers’ demand. After raw materials have been supplied and processed, the newly formed vehicle parts are assembled to the complete automobile.

From the manufacturing plant, the vehicle reaches the customer through different tiers of wholesalers or retailers, respectively. In contrast, processes like the actual sale and marketing of the automobile as well as customer services constitute activities of the demand chain.The given example illustrates the large number information, financial and material flows that become evident at all stages of the value chain (Stadtler & Kilger, 2008), including the transportation of raw materials and intermediate products from suppliers to manufactures as well as the shipping of the automobile to the wholesalers. Likewise, each of these transactions is connected with payments for e. g.

the procured material, salaries or insurances. All in all, it becomes apparent that operations in the value chain of a company have become exceedingly complex, calling for a sophisticated value chain management.The role of the engineer in the Value Chain Management (VCM) Managing the value chain comprises a large number of different operations, which are all aimed at increasing efficiency and customer satisfaction as well as easing the interaction among all members of the production process (Plenert, 2012). However, the present report focuses on the main management actions that are targeted at sustaining the value chain: Innovation, optimization of the supply chain and response to external changes – actions, in which engineers have taken on a central role.Their task is to create and to maintain or rather increase value under the overall goal of enhancing customer’s satisfaction.

One approach to sustain the value chain comprises the improvement of a company’s product catalogue through new inventions, which are important in order to achieve a competitive advantage. In this context, the engineer’s competences are not only in demand during the actual process of designing a product, but also concerning the development of technologies, which help to identify customers’ needs (Sabri & Shaikh, 2010).Hence, engineers are involved in research processes as well as they play a crucial role in the management of those projects, guaranteeing a successful accomplishment of innovations. Stadtler and Kilger (2008) point out that the competitiveness of a product is not only included in the responsibility of a single company, but for the whole supply chain. Accordingly, the engineer has to ensure efficiency and effectiveness of the supply chain by both enhancing the cooperation of the different functional units and improving the “coordination of material, information and financial flows” (Stadtler & Kilger, 2008).However, depending on these two objectives, he can take on different focuses in his role as a manager.

On the one hand, an engineer can increase value, for instance, by streamlining the cost of procurement and production or optimizing operations concerning customer orders. On the other hand, he can rather concentrate on more holistic decisions, which are particularly evident in the context of improving the collaboration of the organizational units involved in the supply chain.As a strategic manager, he has to give directions and to align objectives among all partners in order to increase the effectiveness of the value creation (Stadtler & Kilger, 2008). Due to frequently altering market situations, organizations constantly need to be able to adjust their competitive advantage to different external changes, for example the appearance of new competitors or a change in demand as described above regarding the significance of innovations.In this context, the engineer is not only required to find suitable reactions to the altered conditions, but must also take the new situation as a starting point for further improvements, while analysing and accordingly reducing the risk (McCallum 2012).

The benefits of the engineer for the VCM All in all, it becomes apparent that engineers take on various roles in the management of the value chain. Coming from a technical background, they combine mathematics and scientific knowledge with accomplished analytical and reflective thinking.Unlike many other scientists, the engineer mainly focuses on applying research finding to human needs (Roadstrum, 1998). Accordingly, his distinctive skills enable him to develop solutions for all kinds of practical problems - a competence that makes him especially attractive for the management of industrial and commercial processes in modern economy. For example, he is well grounded in developing mathematic models that help to describe, analyze and solve business problems as well as give support in terms of the assessment of different action alternatives.Thus, the role of the engineer has become significant for the optimization of operations at all stages of the value chain.

Conclusion From expert adviser to strategic manager, the engineer brings benefits to the value chain in various different roles. However, in the modern economy, he faces changing requirements due to increasing complexity of business processes. Therefore, the current focus is increasingly placed on working in an interdisciplinary manner at the interface between technology and business in order to ensure effectiveness and efficiency along the entire process of value creation.