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The major difference between a supply chain and a value chain is the simple fact that within a supply chain, there is no value added. In a supply chain, all that is being done is conveyance. One product or material is taken from one company or from one end and transported to the other. Of course there are procedures involved such as proper storage and careful transportation but that is about it. In value chains, as much as there is transportation and some storage involved, the main purpose of a value chain is to add value to the product so as to make it presentable to the client. This is often achieved via packaging, marketing and sales.
That being said, a supply chain is as important to the business world as a value chain.
Supply Chain is the organised management flow of goods or services. It includes the movement and storage of goods or services, work in process inventory and finish goods from point of origin to point of consumption.
While value chain is a strategy of companies working together to satisfy market demand for a particular product/ services through added values to convert input into output to gain competitive advantage.
Focusing on the value creating activities could give the company many advantages. For Instance: the ability to charge higher prices, lower cost of manufacturer, better brand image,faster response to threates or opportunities which comes on bussiness way.
I am by the answer raised that supply chain does not involve or add value i honestly desagree for the linkage in the supply planning process series of satifaction must be met by the parties thus values comes in form of negotiation true price suitability and the ability and will power to get very good alternatives which improves your bottom line and add value to the chain. You could decide to source for better alternative from a more better links withing the supply system or improve by oiling the wheels of the vehicle of the supply links through better customer service, product improvement and better logistics planning all this add values.
Thus value chain is a diffrent model together on it own it comes through proper strategic reorientation and planning in meeting up with a higher bottomline profit magin.
wale hassan
supply chain analyst
www.ordrecgroup.com
I tend to agree with Jahabar Sadiq Ifthikar that supply chain doesn't necessarily involve value addition. Hence, the two concepts are different andmust not be mixed up.
Is "Value chain" a correct term?
Do it exist?
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