Topic 1
Oakden, R., Leonaite, K. (2011). A Framework for Supply Chains Logistics Operations in the Asia Pacific Region. Sydney NSW: McGraw Hill. Chapter 1, Topic: Value chain. (pp. 6).
Description of Topic
The value chain is defined as the “full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use”. Moreover, there are ranges of activities within each link of the chain. (Raphael Kaplinsky, 2000, p. 4). In addition firms usually perform value chain activities in certain ways that allows a firm the capabilities to outmatch rivals, which creates a potential source of competitive advantage. (Daniel McDermott, 2008). In the real world, of course, value chains are much more complex than this. For one thing, there tend to be many more links in the chain. The value chain can be broken down in to primary and support activities
The practical implications of the topic on logistics and supply chain management.
Porter 's Value Chain image below explains the value chain analysis to help add value to the company.
The value chains primary activities are implemented through logistics and supply chain management through:
• Inbound and outbound logistics
• Production
• Sales and marketing
The value chains support activities are implemented through logistics
Value chain is a set of activities a company performs in order to provide a valuable solution to their customer problem in their market space or industry. The value chain is made up of primary and support activities. Primary activities being research and development, production, marketing and sales and customer service. These are the primary steps that are required to get a product or service to market to solve the customer problems. Some of the secondary steps include company
A value chain analysis is a strategic analysis of an organization that uses value creating activities (Dess, McNamara, & Eisner, 2016, p. 76). The value chain analysis describes a company’s activities and relates them to an analysis of the competitive strength of the company
The value chain is one of the critical elements of a company’s strategy in today’s competitive world, because company’s profit depends on how the successful and efficient it runs its operations and how the end product appeals to the customers at a price that covers all the expenses of the company.
Keane (2008) stated to design, manufacture, promote, offer and facilitate its product or services, all organization engages in some activities. All of these activities of an organization are shown through the use of value chain process. The manner in which organization performs its varying activities along with the firm’s value chain mirrors the organization’s background, strategy along with the way in which the organization executes its strategy. Ponte (2008) stated that the analysis of value chain of an organization is used to develop the organization’s competitive strategies along with formulation the connected and interconnectedness between all the organizational activities that formulate value. Francis, Simons, and Bourlakis (2008) stated that value chain analysis is a helpful tool as an organization looks to attain competitive advantage. Furthermore, Rieple and Singh (2010) stated that a value chain is a useful tool in conceptualizing the varying activities
Value chain analysis looks at every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost. It is a systematic approach to examining the development of competitive advantage. The most basic breakdown of primary functions includes inbound logistics, operations, outbound logistics, sales and marketing and service. People should use the other models and frameworks within this software to further differentiate between, and add to, these domains. Product Innovation is one area that is not normally included in the de jure model but is often included in the de facto model. Value Chain Analysis describes the activities that take place in
Value chain is a concept or a framework from business management what which first described and popularized by Micheal Porter in 1985. It is a model that helps to analyse specific activities through which firms can create competitive advantage and value to customers (Value Based Management,2012). Micheal Porter
Companies are using value chain approach to better understand which key areas will give them the greatest edge over its competitors. They are focusing on each division, distribution centers, pricing, product innovation, selling techniques, and value-chain formations.
The value chain helps an organization in understanding where value is created at each of its activities and in linking those value-adding activities with the business strategy and customer needs. This set of activities which represents a unique and integrated value-creating sequence is hard for competitors to emulate and thereby sets up and maintains a long lasting competitive advantage for the organization. For example, The Warehouse Group Limited, the largest store retailer in New Zealand, has
Walmart is a successful chain retailer. While it successfully won its market share, the company also reflected its value chain. What is the value chain? According to Porter’s definition, the value chain includes all activities “to design, produce, market, deliver, and support the produce or service”, which means that it is focusing attention on the activities from raw materials to final goods or services. And the value chain is divided into two categories: primary activities and support activities. For the primary activities, they are inbound logistics, operation, outbound logistics, marketing and sales, service; the support activities involve procurement, human resource management, technology development, infrastructure.
The “value system” is also referred to as the “industry value chain”. The term value system underlines the fact that activities are not necessarily organised in a linear fashion, but viewing the activities that make up the final product as a chain is also useful and underlines the linkage between the concept of the “value chain” and the “value system”.
A value chain is a chain of activities that a firm operating in a specific industry performs in order to produce a product/ service and deliver it to the ultimate consumers with an incentive to earning revenue in return. A value chain includes the functions of al the subsystem within the firm that contribute to the production and product distribution of products by value addition.
Value chain analysis, which constitutes the basis of strategic cost management, includes the value creation chain for a corporation, composed of all activities that create value, from the supply of raw materials to the supply of the product to the final consumer. (Yüzbaşıoğlu 2006, 402) In other words, value chain analysis is defined as a strategic tool used to comprehend the competitive advantage of an enterprise, to determine which stage of the value chain may be improved or in which stage the costs may be reduced, and to better apprehend the relationship of the corporation with the suppliers, customers and other enterprises in the sector. . (Blocher et al. 2005, 40).
A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter (Porter, 2013)
The value chain can be used to diagnose and create competitive advantages on both cost and differentiation. I’ve written about this in Using the Value Chain to Create Competitive Advantage.
Value chain is an approach to know how an item or activities create value for consumers. The most of value provides to consumers, the most of competitive advantage an organization build. In this analysis, value chain model has separated into primary and support activities. Primary activities are included in the physical creation of the item and service. On the other hand, support activities give the inputs and infrastructure that enable the primary activities to happen. This value chain model can be refer to below figure 5.