ch-2 value chain

8/18/2019 Ch-2 Value Chain

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Chapter-2

The Value Chain


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Value Chains

The production of goods and services is the r

efforts of many organisations – a comple

contracts and co-operation known as the suor the value system.


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upply Chain

Component

supply

wholesalemanufactureub-assembly

supply

Fig: Manufacturing Value Chain

!e.g. wheels"

seats" etc.#

!e.g. import

agent#!e.g. engine"

gearbox" etc.#


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Manufacturing Inputs:

Components !e.g. wheels" seats" etc.#

Sub-assemblies !e.g. engine" gearbox" etc.#

Sales and Distribution:

Wholesale !e.g. import agent#

Retail !e.g. local main dealer#

The products sold in shops and purchased for use in

the result of a complex web of relationships betwee

component suppliers" wholesalers" retailers and the logi

that links them together.

upply Chain !cont$#


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The web of trade relationships is referred to as the s

the value chain.

%ach trade exchange in the supply chain is a transa

cost without adding intrinsic value.

%-commerce is the application of information and

technology to the value chain to enable the accom

business goal.

The business goal can be to reduce costs" improve se

into a new market.

upply Chain !cont$#


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&orter's Value Chain (ode

Fig: Porter’s Generic Value Chain

Inbound

Logistics

Operations Outbound

Logistics

Marketing

& Sales

Servi

Procurement

Human Resource Management

Technology evelopment

!irm In"rastructuresu ort activities

rimar activities


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&orter's model was essentially concerned with the initia

company.

The three (basic primary activities of a product proce

Inbound !ogistics:

• *andling goods that are bought into the compa

and making them available to operations as re+uir

"perations:

• The production processes" in many cases a serie

that can be represented on a detailed value chain

"utbound !ogistics:

• Taking the products of the company" storing them

distributing them to the consumer in a timely man

&orter's Value Chain (odel !co


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#o these basic primary activities $orter adds

primary activities:

Mar&eting and Sales:

• ,inding out the re+uirements of potential c

letting them know of the products and service

offered.

Service:

• ny re+uirement for installation or advice befor

the after-sales service once the transaction is c



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#o support these primary functions' there %ill be a compa

that performs a number of support activities:

$rocurement:

•

The function of finding suppliers of the materials re+uireoperations of the organisation.

• &rocurement is responsible for negotiating +uality supplie

price and with reliable delivery.

#echnology Development:

• The organisation needs to update its production processe

manage innovation to ensure that its products and its ove

and services remain competitive. uman Resource Management:

• The recruitment" training and personnel management o

work for the organisation.

)irm Infrastructure:

• The overall management of the company includi

accountancy.



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Fig: Value Chain Linkages

OutboundLogistics

InboundLogistics

Operations OutboundLogistics


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The efficiency of the linkages may be enhanced

information and communication technologies!CT's#.

nternal linkages can be coordinated using

technologies.

The internal systems need to interface with suppliers

The production planning and control process can info

logistics system of the +uantity of components/stock r

The marketing and sales system can be interfaced w

and outbound logistics to improve the +uality of servic



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IC#*s can also be used in other value chain activi

applications are:

*uman 0esource (anagement using electronic med

vacancies in the organi1ation.

&rocurement using online searches to identify appro

of supply.

(arketing using online advertising or portable sales t

ervicing providing online assistance and/ or fault dia


t i ti l V l Ch


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nter rganisational Value Ch

Fig: Porter’s Value System (Single Fir

!irm#alue

$hains

Supplier#alue

$hains

$hannel#alue

$hains

%u#

$h

t i ti l V l Ch i !


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The overall competitive advantage of an organi1at

dependent on the +uality and efficiency of the com

+uality of its products but also upon that of its supp

wholesalers and retails it may use.

The analysis of the overall supply chain is called the v

The term introduced by the &orter !4567# in the book

,dvantage: Creating and Sustaining Superior $er

Value chains differ considerably across trade sectors

different organi1ation within a trade sectors.

nter rganisational Value Chain !

t i ti l V l Ch i !


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Fig: Value System for Automoile Asse

InternalSupplies

#ehicle&ssembler

$omponent

Suppliersealer

'et(ork$onsu

t i ti l V l Ch i !


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Inbound !ogistics:

8arge number of suppliers

Vast number of components

$rocess:

9ust-in-time !9T# manufacture

"utbound !ogistics:

8imited number of (ain :ealers

utomotive ssembly Value yst

t i ti l V l Ch i !


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Fig: Value System of the Su!ermarke

Regional

)hse

uper-market

!oodProcessors

$onsu

nter rganisational Val e Chain !


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Inbound !ogistics:

8arge number of suppliers

Vast number of products

$rocess:

0etail

"utbound !ogistics:

Vast number of Consumers

,ood upermarkets Value ys



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Fig: Value System for "nsurance

Insurance$ompany

&gents

$onsume

Insurance%roker



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Inbound !ogistics:

;o significant suppliers !financial / re-insurance p

$rocess:

dministrative

"utbound !ogistics: ales through agents

ales through brokers

:irect sales


nsurance Value ystem

ch-2 value chain

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