Value Chain Management - Meaning, Definition, Differences with Supply Chain & Porter's VC | AIMS UK

AIMS Education, UK

11 Jun 201603:51

Summary

TLDRThe video script delves into the concept of a value chain, describing it as a collaborative network of entities enhancing a product or service's value. It integrates supply chain activities such as customer needs determination, production, distribution, marketing, and after-sales service. The script also explains value streams, the sequence of activities for delivering goods or services, and value stream mapping, a method for analyzing and improving supply chain efficiency. Additionally, it covers Porter's value chain, highlighting primary and support activities that businesses engage in to transform inputs into outputs, emphasizing the importance of each activity in the overall process.

Takeaways

🔗 A value chain is a network of collaborating entities that work together to meet market demands for specific products or services.
📈 The purpose of a value chain is to enhance the value of a product or service through integrated supply chain activities.
🔄 Value chains cover the entire lifecycle of a product or service, from understanding customer needs to after-sales service.
🚀 A value stream is a sequence of activities necessary to design, produce, and deliver a product or service to the market.
🏢 Value streams can be managed by a single business or a network of businesses, involving suppliers, manufacturers, and distributors.
🖼️ Value stream mapping is a two-step process involving the creation of a current supply chain map and an improved, more effective version.
🔍 Porter's value chain analysis looks at how systems transform inputs into outputs, focusing on primary and support activities.
⚙️ Primary activities in Porter's model include inbound logistics, operations, outbound logistics, marketing and sales, and service.
🛠️ Support activities in Porter's value chain support primary activities and include procurement, human resource management, technological development, and infrastructure.
🔑 Procurement involves acquiring necessary resources, while human resource management focuses on recruiting, training, and motivating employees.
💡 Technological development activities are crucial for managing and processing information within a company.

Q & A

What is a value chain?
-A value chain is a string of collaborating players who work together to satisfy market demands for specific products or services, with the intent to increase the value of a product or service.
What is the purpose of a value chain?
-The purpose of a value chain is to integrate various supply chain activities throughout the product or service lifecycle to increase its value.
What are the activities included in a value chain?
-Activities in a value chain include determination of customer needs, production, distribution, marketing, and after-sales service.
What is a value stream?
-A value stream is a sequence of activities required to design, produce, and deliver a good or service to the market, which may be controlled by a single business or a network of several businesses.
How does a value stream differ for products and services?
-For a product value stream, it encompasses raw material suppliers, manufacturers, and distribution networks. For a service value stream, it consists of suppliers, technology, service producers, and distribution channels.
What is value stream mapping and what does it involve?
-Value stream mapping is a two-step process where you first draw the current supply chain flow (value stream map) and then create an improved and more effective flow for your product or service.
What is Porter's value chain and what does it focus on?
-Porter's value chain focuses on systems and how inputs are changed into outputs. It describes a chain of activities that are common to all businesses.
How are the activities in Porter's value chain categorized?
-In Porter's value chain, activities are categorized into primary activities and support activities.
What are primary activities in Porter's value chain?
-Primary activities in Porter's value chain are related to the physical creation, sale, maintenance, and support of a product or service and include inbound logistics, operations, outbound logistics, marketing and sales, and service.
What are support activities in Porter's value chain?
-Support activities in Porter's value chain support the primary activities and include procurement, human resource management, technological development, and infrastructure.
How does procurement support the primary activities in a value chain?
-Procurement supports operations by obtaining necessary resources and also supports marketing and sales by negotiating with vendors for best prices.
What role does human resource management play in a value chain?
-Human resource management in a value chain is responsible for recruiting, training, motivating, and rewarding workers to ensure efficient operations.
How does technological development contribute to a value chain?
-Technological development activities in a value chain relate to managing and processing information, which can improve efficiency and innovation within the business.
What is the infrastructure in the context of a value chain?
-Infrastructure in a value chain refers to a company's support systems and functions that allow it to maintain daily operations, such as accounting, legal, and administrative management.

Outlines

00:00

🔗 Understanding Value Chain Concepts

This paragraph introduces the concept of a value chain as a collaborative network of entities that enhance the value of products or services to meet market demands. It discusses the integration of various supply chain activities throughout the lifecycle of a product or service, including customer needs determination, production, distribution, marketing, and after-sales service. The paragraph also differentiates between a value stream, which is the sequence of activities required to deliver a product or service, and value stream mapping, a process to analyze and improve the efficiency of the supply chain. Additionally, it explains Porter's value chain, which categorizes business activities into primary (directly related to product or service creation) and support (activities that facilitate primary activities).

Mindmap

Keywords

💡Value Chain

A value chain refers to a network of businesses and entities that collaborate to produce and deliver a product or service to the end consumer. It is a concept that emphasizes the interconnectedness of various stages in the production process, from raw materials to the final product. In the video, the value chain is described as a string of collaborating players working together to satisfy market demands, integrating supply chain activities throughout the product or service lifecycle.

💡Value Stream

A value stream is a sequence of activities required to design, produce, and deliver a product or service to the market. It may be controlled by a single business or a network of several businesses. The video script mentions that for a product value stream, it includes raw material suppliers, manufacturers, and distribution networks, while for a service value stream, it consists of suppliers, technology, service producers, and distribution channels.

💡Value Stream Mapping

Value stream mapping is a process used to analyze and improve the flow of materials and information through the value stream. It involves creating a visual representation of the current state of a process and then designing a future state that is more efficient. The video script describes it as a two-step process: first, drawing the current supply chain flow, and second, creating an improved and more effective flow for the product or service.

💡Porter's Value Chain

Porter's value chain is a framework developed by Michael Porter to analyze the competitive advantage that a company can achieve through its operational activities. It breaks down a company's operations into primary and support activities. In the video, Porter's value chain is explained as focusing on how inputs are transformed into outputs, and it is divided into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) and support activities (procurement, human resource management, technological development, and infrastructure).

💡Primary Activities

Primary activities are the activities directly involved in the physical creation of a product or service and its sale, maintenance, and support. They are a part of Porter's value chain and include inbound logistics, operations, outbound logistics, marketing and sales, and service. The video script illustrates that these activities are crucial for the physical creation and delivery of the product or service to the customer.

💡Support Activities

Support activities are those that support the primary activities in the value chain. They include procurement, human resource management, technological development, and infrastructure. As mentioned in the video, these activities play a role in each primary activity, providing necessary support for the smooth operation of the business.

💡Inbound Logistics

Inbound logistics are the processes related to receiving, storing, and distributing inputs. They are part of the primary activities in Porter's value chain. The video script describes inbound logistics as the activities that prepare the raw materials and components needed for the production process.

💡Operations

Operations are the activities that transform inputs into outputs, creating the product or service. They are central to the value chain and involve the actual production process. The video script emphasizes that operational systems create value by converting raw materials into finished goods or services.

💡Outbound Logistics

Outbound logistics are the activities that deliver the product or service to the customer. They are part of the primary activities and involve the storage, transportation, and distribution of the final product. The video script mentions that outbound logistics ensure the product reaches the customer.

💡Marketing and Sales

Marketing and sales are the processes used to persuade clients to purchase a product or service. They are also part of the primary activities and involve promoting the product and facilitating its sale. The video script describes marketing and sales as essential for attracting customers and driving revenue.

💡Service

Service activities are related to after-sales support and maintaining the product or service. They are included in the primary activities and are crucial for customer satisfaction and loyalty. The video script highlights service as an important aspect of the value chain that can differentiate a company from its competitors.

Highlights

A value chain is a string of collaborating players who work together to satisfy market demands for specific products or services.

The intent of a value chain is to increase the value of a product or service.

Value chains integrate supply chain activities throughout the product or service lifecycle.

Value chains include activities such as determination of customer needs, production, distribution, marketing, and after-sales service.

A value stream is a sequence of activities required to design, produce, and deliver a good or service to the market.

Value streams may be controlled by a single business or a network of several businesses.

For a product value stream, it encompasses raw material suppliers, manufacturers, and distribution networks.

For a service value stream, it consists of suppliers, technology, service producers, and distribution channels.

Value stream mapping is a two-step process of drawing the current supply chain and then an improved flow for the product or service.

Porter's value chain focuses on systems and how inputs are changed into outputs.

Porter described a chain of activities that are common to all businesses.

Porter's value chain is divided into primary activities and support activities.

Primary activities are related to the physical creation, sale, maintenance, and support of a product or service.

Support activities play a role in each primary activity, such as procurement, human resource management, technological development, and infrastructure.

Inbound logistics are processes related to receiving, storing, and distributing inputs.

Operations are activities that change inputs into outputs, creating value.

Outbound logistics are activities that deliver the product or service to the customer.

Marketing and sales are processes used to persuade clients to purchase from you.

Service activities are related to after-sales service.

Procurement involves getting resources needed to operate, including finding vendors and negotiating prices.

Human resource management is about recruiting, training, motivating, and rewarding workers.

Technological development activities relate to managing and processing information.

Infrastructure includes support systems and functions that allow a company to maintain daily operations.