Value Chains


Over time, researchers and academics have developed numerous definitions to describe supply chain and supply chain management. A question that often arises and one that has no definite answer involves the difference between a value chain and a supply chain.
The following few pages will attempt to point out these key differences through an analysis that will firstly define the term “Value”. This will then be followed by identifying the differences between the supply chain and value chain. The project will end off by explaining the increasing need for the introduction of “Value Chains” in companies.

What Is Value?
The first objective before going into detail about value is to define the term value. Value is considered as to what buyers would pay for what a firm offers be it a service or product. (Porter, M, 1985) Another definition is considered to be the least possible cost in which a product/service achieves its primary function while also meeting the quality standards laid out by customers. (Hugo, W.M.J et al, 2006: 58). On the other hand the value chain of a business is thought to be nine activities that take place within the business that adds value to a product. The main aim of any value chain is to add maximum value to the product before customer purchase. One can safely say that an effective value chain generates profits for a business by keeping customers satisfied with the firm’s product/service. value means different things to different people, for a restaurant waitress, a half empty plate of food wouldn’t mean much to her (no value) but to a person who hasn't had food in a while and is starving it would provide nourishment (has value). Value has two faces:   when it occurs and the experience. Value occurs once a product meets the needs of the customer. The experience part of value is when it flows from the manufacturer to the customer. (Porter, M,1985)
There are two factors that must be taken into account when devising a strategy...