Operation case - divide in value chain

operations cases
New answer on Jun 04, 2020
5 Answers
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Anonymous A asked on Feb 20, 2020

Hi, I have a question about operation cases. In operation cases, it is important to know the "divide in value chain", in order to further analyze the problem.

For instance:

1. Population decrease: look into death/birth and move in / move out

2.: Production line: look into the production process

My question is: is it okay to ask for the "function" or "divide in value chain"? Because in some cases there are multiple ways to list down the function (for instance: reducing car accident rate: I need to know the function of how car accident numbers is calculated). How could I frame the question in a better way?

Thanks for the advice!

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Daniel
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replied on Feb 20, 2020
McKinsey / ex-Interviewer at McKinsey / I will coach you to rock those interviews

Definitely not in the way you just described it, because I had to read your question 3 times to understand what you just meant.

If you are asked your opinion on how to reduce the car accidents rate – then yes, it's a valid question to ask how this rate is calculated (is it car accidents per thousand of people, car accidents per thousand of drunk drivers, or car accidents per under-aged drivers – those 3 rates are very different and look at different problems).

The same is with any "rate". Population decrease rate of course has a numerator (death or move-out) and denominator (birth or move-in) – so, yes, definitely you need to understand what those are.

The best way to ask this question is to say: "Could you please specify how this rate is calculated?"

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Emily
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replied on Jun 04, 2020
BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University

Hi there,

Got to say the question is very confusing and a few concepts are mixed up.

"Divide in value chain" refers to the gap in value chain. To identify the divide in value chain, you need to first map out the value chain, what are all the different steps/stages in the end-to-end process. E.g. Procurement -> Supply Chain Planning -> Manufacturing -> Distribution -> In-store sales -> After sales service. An example of "divide" here could be the procurement function and the supply planning function is not working in sync, e.g. supply planning requires 100 tons of materials, but procurement only purchases 80 tons.

On the car accident example quoted here, tbh it is not clear to me how it is a value chain problem?

Best,

Emily

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Ian
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replied on Feb 23, 2020
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1 and 2 are very different concepts. I think you're confused because they're both represented by "rates" but one is counting "in minus out" and the other is "how long" from the point of putting something in to it coming out - very different.

In regards to your denominator question (which is what I think you're asking for), like any case question, you should frame it already with a hypothesis in mind. So, what do you think is the denominator of car accidents? Say "I'm thinking the denominator is x" or "I'm going to go with the view that the denominator is x", and then confirm that that logic is correct.

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Vlad
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replied on Feb 20, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I think you put in one place the value chain approach and the math approach:

  • Value chain - is going through the key steps of the value creation / process
  • Math - you list the mathematical parts: Birth rate, death rate, migration

You can use math to structure the process even based on common sense. Value chain - you can either ask the interviewer what is the process or you can build based on common sense as well

Best

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Clara
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replied on Feb 20, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

This applies particularly to the value chain cases. Hints to identify those: cases involving supply chain and logistics, cases with operational bottlenecks, etc.

For those, totally agree with you that it´s key to identfy and even draw in a piece of people asap in the case the whole value chain, not only including product flow but also influencing agents (e.g., for the go-to-market of an specific drug, don´t only include the flow factory > distributors > pharmacy > patients but also dotted lines with insurance companies and doctors.

For this, make questions such as "do you have information about the different agents in the value chain?", etc.

Hope it helps!

Cheers,

Clara

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Daniel gave the best answer

Daniel

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McKinsey / ex-Interviewer at McKinsey / I will coach you to rock those interviews
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