Value Chain Analysis: Overview of Two Approaches

Value Chain Analysis: Overview of Two Approaches for Supervisor

In business, no one wants to be at the helm of what is merely termed a supply chain. Rather, a company wants to boast of its having a value chain, a chain that achieves a maximization of the inbound logistics, operations, outbound logistics, marketing and sales and service. Obviously, the ideal is to obtain the maximum value for the company from each process through continual improvement of the product, with a still-vigilant constant eye upon maintaining quality control of all steps of the chain. But different benefits are obtained through a shift in focus from product to process.

By focusing on continuing improvement of company products, the theory is that reductions in costs often come simultaneously. A firm that continuously improving on the value that customers perceive that they get from company products means that the company will also sell more of its products and thus have a leaner supply chain because of low storage, due to greater company responsiveness to increased customer demand for its products.

In contrast, a focus on quality control focuses on processes in the chain, such as improving and reducing the margin of error of cross-functional goals as quality of the goods currently being produced, the cost of the goods, scheduling of employees, manpower development and deployment over the course of the day, as well as new product development. It is assumed that these activities ultimately lead to increased customer satisfaction, as well as to better products.