The objective of value chain activities is to be able to create value in which weighs more than the cost of developing and offering the goods and services, as a result making a revenue margin.
The purpose of these activities is to be able to create value in which weighs more than the cost of developing and offering the goods and services, as a result making a revenue margin.
The value chain separates the organization into 9 activities, belonging to two categories: 5 primary activities and four support activities.
The value chain analysis normally takes place in 6 phases: discovering the area to examine, drawing the value chain, collection and validation of information and facts, reorganization of the chain and action planning.
- Inbound logistics consist of the receiving, warehousing, and also stock or inventory management and control of input resources.
- Operations are the value-creating activities in which transform the inputs in the direction of final product or service.
- Outbound logistics are the activities found it necessary to access the finished product or service to the customer, such as warehousing, order fulfilment, and so on.
- Marketing & Sales are the activities most typically associated with getting prospective buyers to purchase the product or service, together with sales channel selection, promoting and advertising, pricing, and so forth.
- Service activities are those that maintain as well as improve the product’s value consisting of customer support, maintenance services and so on.
All or any of these primary activities are actually very important in building a competitive advantage.
To provide an example, logistics activities have proven to be crucial for a supplier associated with distribution services, and service activities may be the major emphasis for a company promoting on-site maintenance tasks deals for workplace tools or related equipment.
These five different categories have proven to be generic and described here in a comprehensive manner. Each individual generic activity incorporates unique activities that vary by business sector or industry.
The primary value chain activities explained previously are facilitated by four generic categories of support activities.
- Procurement – the function of purchasing the raw components as well as other inputs used in the value-creating activities.
- Technology Development – involves research and development, process mechanisation, as well as other technological advances used to support the value-chain activities.
- Human Resource Management – the activities involving hiring people, continuing development and training, as well as compensation of workforce.
- Firm Infrastructure – consists of activities including financial resources, legal, quality management and others.
Support activities in many cases are believed to be “overhead”, yet some organizations effectively have tried them to create a competitive advantage, as an example; to be able to build a cost advantage via innovative management of information systems.