Difference Between Value Chain And Supply Chain Pdf


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difference between value chain and supply chain pdf

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In business, there are certain processes that need to be done if anyone is to see any profits. One such process is implementing an effective value chain. There is a difference between the two, though seemingly subtle, but a big difference.

Jan 18, Feature 0 comments. The idea is to give you food for thought and to encourage you to explore the value chain topic further, since it is important not only to the supply chain, but also to the overall success of just about any business operating today. Essentially, the value chain comprises all business activities which increase the value of a product or service in the eyes of the buyer.

What is the difference between Supply chain and value chain? Example if you know one.

The competitive environment for organizations of all shapes and sizes - and in all industry verticals - is more challenging than ever before. Technological advancements have enabled businesses to design and build more quickly, sell across multiple channels, react instantly to changing demands, and cut costs simply by outsourcing an activity. To achieve competitive advantage, an organization ultimately delivers more value at an equal or lower cost.

Value chain analysis is the method for determining the critical path to enhance customer value while reducing costs. A value chain refers to the activities that take place within a company in order to deliver a valuable product to market. The value chain system was first described in Tableau Economique , written in the 18th century by the French economist Francois Quesnay. Grant contemporary strategy analysis and Wassily Leontief the input-output model.

However, the value chain analysis pioneered and illustrated by Michael Porter in his groundbreaking book, Competitive Advantage , remains an indispensable methodology. The practice is now also a vital part of societal global initiatives. Value chain analysis focuses on analyzing the internal activities of a business in an effort to understand costs, locate the activities that add the most value, and differentiate from the competition.

To develop an analysis, Porter's model outlines primary business functions as the basic areas and activities of inbound logistics, operations, outbound logistics, marketing and sales, and service. The model also identifies the discrete tasks found in the important support activities of firm infrastructure, human resources management, technology, and procurement. The overall goal of value chain analysis it to identify areas and activities that will benefit from change in order to improve profitability and efficiency.

Cost advantage results from a reduction in costs associated with activities in a value chain. An organization can aim to control these cost drivers in order to improve efficiency, add value, and differentiate. Value chain analysis is more than a straightforward cost-to-profit model.

It expands on the principles of economies of scale and capacity. There are limits to lowering costs and increasing capacity that can inhibit business growth. Value chain analysis stresses that competitive differentiation can also focus on the perceived value to the customer that justifies a product's price tag.

Finding these perceived values could mean the difference between getting a consumer to spend three dollars on a cup of Starbuck's coffee rather than one dollar on a competitor's discount brand. The management and analysis of value chains are becoming both industry specific and increasingly global, taking into account fast-changing markets, adjustments necessitated by new technologies, delivery methods, trade and government involvement, and fast-paced and fickle consumer demands.

Add to that the global value chain's emphasis on sustainability, as well as its goal to expand the economic prospects of the world's poorest nations by fostering partnerships especially in the agri-business sector. The reason for this continued success is that Porter's framework is, first and foremost, a general model. It is not meant to be a standalone, rigid framework that creates barriers between functions or gives equal weight to every task that brings a product or service to market.

Various departments, including human resources, marketing, sales, and operations utilize value chain analysis. Similarly, a wide variety of industries such as enterprise, manufacturing, retail, service, and technology, in addition to governments and their agencies, successfully adapt the basic value chain concept, and understand that not all functions or activities need to receive the same level of scrutiny.

For example, the Department of Defense DOD has a design-chain operations reference DCOR that cites little need to spend time or resources analyzing marketing and sales activities in their overall value chain. Therefore, the first order of any value chain strategy is to identify the important tasks and functions necessary to deliver your product or service.

Once you identify value activities, you can then focus analysis on where you can add value and discover areas for optimization, differentiation, or cost efficiency. For now and into the near future, value chains are a useful management strategy for many different industries. Companies like FedEx see the future as a circular chain that values renewability. The World Bank, the United Nations Conference on Trade Development, and the International Crops Institute for the Semi-Arid Tropics all use global value chains to foster international cooperation to assist the world's poorest countries.

Companies that depend on global resources are developing initiatives to support global value chains by working with governments, United Nations partners, and economic aid organizations. A number of companies create partnerships to provide opportunities for overseas development assistance through the development of agri-food value chains, such as those in the macadamia industry in Kenya, the sweet sorghum by-products in India, and the seed nut harvests in Uganda.

These initiatives advocate a greatly expanded view of the value chain called collaborative value networks. For extensive strategies and actionable guidance to support or begin a process of value chain management, consult Michael Porter's book, Competitive Advantage. Many present industry-specific insight, models, and assistance. For example, approaches that focus on discovering cost advantages and disadvantages include:. Value chain analysis as a tool also concentrates on finding activity links or, as Porter called them, bridges between both the primary and secondary functions of a department, business unit, or enterprise.

Although the model is clear in defining general, discrete functions, there are numerous areas of interactions and cross-functionality that can identify cost opportunities, areas of greater efficiencies, and methods to distinguish a brand. Factors that can influence the value you provide include finding and utilizing the right people, motivating the team, remaining relevant, incorporating technology, and listening to customer feedback. When analyzing the value chain, it is important to include many stakeholders, and to study the entire market to find areas for competitive opportunities.

It is also vital to provide clarity and information, and to define goals. There are thousands of activities varying in importance in the primary and supporting areas of the chain, and opportunities are discovered through cooperative research and analysis, brainstorming, surveying, and observation. The advantages of value chain analysis can be seen by breaking product and service activities into smaller pieces in an effort to fully understand the associated costs and areas of differentiation.

With value chain analysis, you can easily identify those activities where you can quickly reduce cost, optimize effort, eliminate waste, and increase profitability. Analyzing activities also gives insights into elements that bring greater value to the end user. Some of the resulting activities may be as simple as negotiating with suppliers on raw material cost, focusing on end-user experiences that are enhanced by new communication or customer service experiences, and identifying activities that are better served by outsourcing — those that are not a core competency, result in process improvements, or are less expensive when performed by external suppliers.

It is common practice for organizations of all sizes and in all industry verticals to outsource to strategic partners. A company may choose to design a product or service, but use an outsourced provider to build or manufacture the product. In addition to negotiations, creating a better experience, and finding opportunities to outsource, analysis may also advocate the need for greater or more expensive resources that increase product value, develop loyalty, or create differentiation from your competition.

Value chain analysis is no simple feat. Some of the difficulties involve gathering data which can be labor and time-intensive , identifying the tasks or functions that can add perceived or real value, and developing and deploying the plan. Additionally, it is not always easy to find appropriate information in order to break your value chain down into primary and supporting activities. When implementing value chain analysis, questions of how to identify the relevant tasks, pinpoint areas for cost versus benefit, and locate the best strategies can be arduous for an in-house committee or a project manager.

Here are some tips to overcoming these challenges:. When organizations are experiencing high profits, inefficiencies typically soar. I work with businesses to make their value chains more efficient — freeing up employee time, reducing stressful firefighting, and increasing profitability.

Many companies manage both physical and virtual value chains. The differences in approaches are best illustrated by comparing the consumer experiences of utilizing the services of a brick and mortar bank and those of online banking. Customer service experiences, infrastructure and technology needs, and personnel and training are a few of the many factors to consider when analyzing and adapting these value chains. In reimagining the basic value chain, you should also study rapid technological advances.

The Consumer Goods Forum Board findings recognize that the consumer is now more involved in product development. And, as society onboards new and unknown technologies, value chains need to be continuously reengineered.

Societal questions about increased urbanization, the rapid rise of online shopping, and the changing expectations of the consumer are all considerations as valuable as the cost of raw materials, warehousing, and the delivery of any product or service. As companies adapt the basic value chain to the 21st century, many look at this methodology as a journey of transformation rather than a destination.

As such, value chain analysis will continue to be a relevant and useful tool to develop and maintain a sustainable, competitive advantage. Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done.

Try Smartsheet for free, today. In This Article. What Is Value Chain Analysis? Economies of scale Learning and spillovers Pattern of capacity utilization Linkages Interrelationships Integration Timing Organization policies Location Institutional factors Value chain analysis is more than a straightforward cost-to-profit model. Who Uses Value Chain Analysis? Examples of Value Chain Analysis by Industry For now and into the near future, value chains are a useful management strategy for many different industries.

Rather than focusing on premium pricing, Pizza Hut outpaced the competition by offering fast delivery of a less expensive product. Delivery Service: To increase market share and brand loyalty, FedEx's value chain emphasizes and invests in employee development through excellent human resources initiatives and infrastructure improvements. Retail: Walmart is constantly performing value chain analysis in order to keep costs low for their customers.

From regularly evaluating suppliers and integrating in-store and online shopping experiences to remaining innovative in order to differentiate, Walmart is driven by their commitment to helping people save money. For example, approaches that focus on discovering cost advantages and disadvantages include: Identifying primary and supporting activities Rating the importance of each activity in providing value to the product or service Identifying the cost drivers that cause a change in the activity cost Identifying linkages and dependencies Identifying cost reduction and value improvement opportunities Approaches with a focus on finding differentiation include: Identifying activities that create value for your customers Identifying differentiation activities that improve customer value Identifying the best opportunity for differentiation Value chain analysis as a tool also concentrates on finding activity links or, as Porter called them, bridges between both the primary and secondary functions of a department, business unit, or enterprise.

Advantages of Value Chain Analysis The advantages of value chain analysis can be seen by breaking product and service activities into smaller pieces in an effort to fully understand the associated costs and areas of differentiation. Disadvantages of Value Chain Analysis Value chain analysis is no simple feat. Value Chain Analysis Tips When implementing value chain analysis, questions of how to identify the relevant tasks, pinpoint areas for cost versus benefit, and locate the best strategies can be arduous for an in-house committee or a project manager.

Here are some tips to overcoming these challenges: Involve your team in identifying and analyzing activities. Your results will be more thorough than if you attempt to identify them on your own. Obtain customer feedback on your results from a trustworthy, well-known customer. Decide whether you are trying to reduce costs or differentiate. Create A Collaborative Value Chain Analysis with Smartsheet Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change.

Value Chain Management

Register now or log in to join your professional community. In Supply chain consist of steps in which material transfer from one place to final place while in value chain instead of transferring we add some certain values to them. Supply Chain is all about receiving the product from suppliers and despatching it to final destination. All the parameters required in this process comes under supply chain. In this process the product is despatched as it receives from the supplier. So we add a value to the product. As an expample in India the goods train are taking product from one end to other.


key difference between a value chain and a supply chain – they flow in opposite directions. Many views of Value Chains can be created. Examples of Value.


Value Chains vs. Supply Chains

The competitive environment for organizations of all shapes and sizes - and in all industry verticals - is more challenging than ever before. Technological advancements have enabled businesses to design and build more quickly, sell across multiple channels, react instantly to changing demands, and cut costs simply by outsourcing an activity. To achieve competitive advantage, an organization ultimately delivers more value at an equal or lower cost. Value chain analysis is the method for determining the critical path to enhance customer value while reducing costs.

Supply Chain. Nicole Garman Oct 17, When we start talking about the integrated systems and processes that form modern supply chains, no aspect or actor can be discounted.

Comparing Value Chain and Supply Chain

Supply Chain refers to the integration of all activities involved in the process of sourcing, procurement, conversion and logistics. On the other hand, value chain implies the series of business operations in which utility is added to the goods and services offered by the firm so as to enhance customer value. Supply Chain is the interconnection of all the functions that starts from the manufacturing of raw material into the finished product and ends when the product reaches the final customer.

The Supply Chain and the Value Chain: The Same but Different?

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Posted by Dave Kravitt. Quite often, the terms value chain management and supply chain management are used interchangeably. While they overlap and are ultimately complementary, they are in fact two separate yet critical terms that impact your organizational success.

Раздался сигнал, после которого надо было оставить сообщение. - Привет, это Дэвид.  - Он замолчал, не зная, что сказать. Беккер терпеть не мог говорить с автоответчиком: только задумаешься, а тот уже отключился.  - Прости, не мог позвонить раньше, - успел сказать .

Женщина отвернулась. Танкадо, задыхаясь и не в силах произнести ни звука, в последней отчаянной надежде посмотрел на тучного господина. Пожилой человек вдруг поднялся и куда-то побежал, видимо, вызвать скорую.

Беккер встал и потянулся. Открыв полку над головой, он вспомнил, что багажа у него. Времени на сборы ему не дали, да какая разница: ему же обещали, что путешествие будет недолгим - туда и обратно. Двигатели снизили обороты, и самолет с залитого солнцем летного поля въехал в пустой ангар напротив главного терминала.

Тупик. Стоя возле креста, он слушал, как приближаются шаги Халохота, смотрел на распятие и проклинал судьбу. Слева послышался звон разбитого стекла.

5 Comments

Zulma M.
23.05.2021 at 04:52 - Reply

Key Takeaways. The value chain is a process in which a company adds value to its raw materials to produce products eventually sold to consumers. The supply chain represents all the steps required to get the product to the customer.

Anicet R.
26.05.2021 at 02:33 - Reply

The primary difference between supply chain and value chain is that the integration of all the activities, persons and business through which a.

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