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Undersrtanding Value chains


Lets Understand the benefit of Value Chain


¢  Identifing  value processes

¢  Finding areas for cost improvement


Primary activities of    any product processes can be summarized as follows:

¢  Inbound Logistics: Handling goods that are bought into the company, storing them and making them available to operations as required.

¢  Operations: The production process, in many cases a series of sub-activities that can be represented on a detailed value chain analysis

¢  Outbound logistics: Taking the products of the company, storing them if necessary and distributing them to the customers in a timely manner.

¢  Marketing and Sales: Finding out the requirements of the potential customers and letting them know the product and services that can he offered.

¢  Services: Any requirement for installation or advice before delivery and then after-sales service once the transaction is completed.


To support these primary functions there will be a company infrastructure that performs number of support activities.

¢  Procurement: The function of finding suppliers of the materials required as inputs to the operations of the organization. Procurement is responsible for negotiating quality supplies at an acceptable price and with reliable delivery.

¢  Technology Development: The organization needs to update the production process, train staff and to manage innovation to ensure that its products and its over all range of goods and services remain competitive.

¢  Human Resource management: The recruitment, training and personnel management of the people who work for the organization.

¢  Firm Infrastructure: The over all management of the company including planning and accountancy

Inter-Organizational Value Chain
The value chain of  a company is part of over all value chain. The over all competitive advantage of an organization is not just dependent on the quality and efficiency of the company and quality of products but also upon the that of its suppliers and wholesalers and retailers it may use. The analysis of overall supply chain is called the value system.
Different value chains can be  as follows:
1.      Supplier Value chain
2.      Firm Value chain
3.      Channel Value chain
4.      Buyer Value chain
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