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

Summary

The 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.