Difference Between Supply Chain and Value Chain

Edited by Diffzy | Updated on: September 15, 2022

       

Difference Between Supply Chain and Value Chain Difference Between Supply Chain and Value Chain

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Introduction

Multiple divisions must collaborate for a firm to be successful. The company's brand value helps to improve the company's image. A supply chain is a link between a business and its vendors. It aids the company's production, distribution, and customer service. A value chain analysis is business analysis.

They look at the activities and look for ways to add value to the items via competition. The supply chain and value chain are two procedures that are crucial to a company's ability to deliver high-quality items to consumers at a cheap cost and on schedule. The term "supply chain" refers to the tying together of all the operations involved in the sourcing, procurement, conversion, and logistics processes. Value chain, on the other hand, refers to a set of commercial processes in which utility is added to the firm's goods and services to increase consumer value.

Supply Chain vs Value Chain

The term "supply chain" refers to the tying together of all the operations involved in the sourcing, procurement, conversion, and logistics processes. Value chain, on the other hand, refers to a set of commercial processes in which utility is added to the firm's goods and services to increase consumer value. The supply chain is the connectivity of all operations that begins with the manufacture of raw materials and concludes with the delivery of the finished product to the ultimate client.

A value chain, on the other hand, is a series of operations aimed at increasing the value of a product. Both have a distinct focus; the supply chain is concerned with the movement of products from manufacture to delivery. The supply chain involves several actions, beginning with the manufacture of raw materials and their conversion into the final product and finishing with the delivery of the product to the consumer. Value chain, on the other hand, refers to the alteration of various business operations that add value to the company's goods and services.

It entails a variety of operations that produce or add value to the product. The primary distinction between the supply chain and the value chain is that the supply chain refers to the stages involved in getting a product to a client. The stakeholders involved in the supply chain are those who ensure consumer pleasure. The value chain is a method of enhancing the value of materials sold to customers. The value chain offers the organization a competitive advantage in the market.

  • A company's value chain is the process through which it adds value to its raw materials to manufacture goods. These goods are then sold to the customers.
  • The supply chain includes all the steps that are involved in making the product reach the client.
  • The supply chain leads to total consumer satisfaction, while the value chain offers organizations a competitive advantage in the industry.
  • A value chain diagram must be created precisely and rapidly since it serves as a template for planning and manufacturing.

Difference Between Supply Chain and Value Chain in Tabular Form

Table: Supply Chain vs Value Chain
Parameters of Comparison
Supply Chain
Value Chain
Definition
It's a synthesis of all operations involved in getting a product to a client.
A value chain is a collection of operations that provide value to a product.
Origin
Operation Management

Business Management
Objective
Customer satisfaction.
Developing a competitive edge
Sequence
Product Request- Supply Chain- Customer
Customer Request- Value Chain- Product
Concept
Movement of product.
Adding value to the product.

What is Supply Chain?

The supply chain is the link that connects all of the persons, resources, enterprises, and activities involved in the marketing or distribution of a product to the ultimate consumer. It connects channel partners such as manufacturers, wholesalers, distributors, and retailers with customers. The supply chain is a network that connects a firm and its suppliers to manufacture and distribute a product or service. The supply chain starts with the start and ends with the results. A company's supply chain encompasses every stage of the process, including designing a product or service, producing it, delivering it to a point of sale, and selling it.

A supply network manufactures a product and then sells it to the end-user using existing knowledge, resources, and capital. Order processing, procurement, planning, logistics, manufacturing, assembly, marketing, distribution, delivery, and customer service are all important aspects of the process. In exchange for the sale of finished goods, it creates money for the corporation. From the standpoint of operational management, the supply chain is a notion. Information, activities, resources, people, and actions taken to bring the product or service from its original form to the client make up the supply chain. It's a cross-functional system that coordinates the flow of raw materials inside the company and the transfer of completed items out of the company, all while ensuring complete customer satisfaction.

The supply chain includes the following activities:

  • Services to the customer
  • Sharing of Information
  • Integration
  • Development of product
  • Performance analysis
  • Procurement
  • Production
  • Distribution

Usage of Supply Chain

Supply chain management that is effective encourages improved planning and forecasting throughout the company's activities. It means that the company buys raw materials regularly and stores them according to expected needs. In the same way, the market's supply and demand are still in sync. This is accomplished through the use of data analysis models.

Strategies for supply chain integration, logistics, and product innovation. As a result, the company may respond more quickly to changing markets, emergency needs, and shorter product life cycles.

Importance of Supply Chain

To bring the product or service to the consumer, a sequence of procedures must be followed. It entails obtaining raw materials and converting them into a final product. The supply chain includes transportation, warehousing, distribution, and retailing. To make certain that all of the pieces are in harmony. To avoid material shortages that might cause production to stop, manufacturers rely on supply networks to reliably deliver supplies to assembly facilities. Retailers rely on supply systems to deliver pricey goods promptly. Supply chain managers are valued by businesses because they assist regulate and minimizing supply chain expenses. items to prevent keeping expensive stocks in stores for longer than required.

What is Value Chain?

A value chain is a collection of input acts carried out by a company to create value for its customers. The worth of an object increases as it advances through these phases. Michael Porter introduced the concept of Value Chain Analysis in his acclaimed book "Competitive Advantage" in 1985. Two key phrases in the value chain analysis, in his perspective, are:

Individual actions are identified.

Analyzing the added value of each activity and comparing it to the competitive power of the

company. The value chain improves corporate efficiency by ensuring that the finest products are delivered at the lowest possible cost. The value chain offers the company a competitive advantage. The organization is continually examining the aspects that influence a buyer's decision and feelings to maintain a competitive advantage in the industry. A well-designed value chain can result in more focused efforts, lower costs, and less waste. Adding value, on the other hand, does not always indicate better features and functionalities, but may also include several additional variables such as after-sales services.

Primary is made up of five vital or core components that offer value to the company:

  • Inbound logistics- It is responsible for receiving, storing, and disseminating inputs.
  • Operation- Conversion of raw materials into final goods.
  • Marketing and Sales- Engage in actions that raise product awareness among the broader audience.
  • Outbound Logistics- The process of getting the finished product to the suppliers and then to the buyers.
  • Services- Customer assistance and warranty service are examples of activities that sustain and increase the value of a product.

Support Activities

Procurement, technological development, human resource management, and infrastructure are examples of secondary activities that support the main activity.

At big firms, supply chain management is a critical operation that involves many interconnections. As a result, supply chain management needs a high level of experience and talent to maintain. The cost of materials and effective product delivery are the two main objectives of supply chain management. Proper supply chain management may lower consumer costs while increasing company profitability.

Usage of Value Chain

The value chain of a corporation aids in the effective operation of the company. When a company understands which activities create value and which use resources without providing much value, it may reduce non-value-adding activities and focus on more important ones.

By concentrating on the most important processes, the value chain aids in enhancing a company's production. When all of the necessary procedures are in place and everything is running well, the company can respond swiftly to weaknesses, opportunities, and threats.

Importance of Value Chain

The value chain framework aids companies in identifying and evaluating sources of cost efficiency, both positive and negative. A value chain analysis may be beneficial; nevertheless, when focusing on granular process specifics in a value chain, it's crucial to remember to keep an organization's overall goal in mind. Create a cost edge over your competition. Recognize your primary talents and opportunities for growth. Determine where ineffectiveness exists so that corrective action can be taken. Recognize the connections and interdependencies between various company operations and sectors. A value chain analysis is when a business applies the value chain idea to its activities. Value Chain Analysis is a method of assessing the operations within and outside of a business about its capacity to deliver goods and services for a reasonable price. 

Main Difference Between Supply Chain and Value Chain in Points

  1. The supply chain is defined as the integration of all activities, people, and businesses involved in moving a product from one location to another. The term "value chain" refers to a series of operations that add value to a product at each stage until it reaches the end customer.
  2. The supply chain focuses on operational management, whereas the value chain focuses on business management.
  3. The movement of materials from one location to another is included in supply chain operations. Value Chain, on the other hand, is primarily concerned with giving value for money in the form of a product or service.
  4. The transportation of commodities or services is what the supply chain is all about. The value chain is all about adding value to a product's cost.
  5. The value chain encompasses the process from customer request to product development, whereas the supply chain encompasses the process from product request to delivery.
  6. The supply chain's main goal is to achieve 100% customer happiness, which is not the case with the Value Chain.
  7. Research, development, testing, packaging, sales and marketing, and after-sales services are all part of the value chain. Order processing, procurement, logistics, production, assembly, marketing, distribution, delivery, and customer service are all part of the supply chain.

Conclusion

Supply chain management is defined as a business transformation tool that reduces costs while increasing customer satisfaction by delivering the right product at the right time, at the right location, and the right price. Value Chain, on the other hand, is a method of gaining a competitive advantage through which a firm may outperform its competitors while also meeting consumer needs. Both the supply chain and the value chain are crucial to a company's success.

To optimize customer satisfaction, the supply chain's core philosophy is to offer the right product at the right time and in the right location. The goal of the value chain is to gain a competitive edge through innovating and satisfying consumers. A business's value chain and supply chain are both useful instruments for strategic management and planning. These two products provide distinct kinds of help for the firm. To ensure customer satisfaction, the supply chain works on decreasing costs while delivering on a client's request. The value chain, on the other hand, concentrates on product development and innovation to increase sales and, as a result, provide the company with a competitive advantage in the industry.

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"Difference Between Supply Chain and Value Chain." Diffzy.com, 2022. Fri. 09 Dec. 2022. <https://www.diffzy.com/article/difference-between-supply-chain-and-value-chain-618>.



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