The sequence of activities a company performs in order to design, produce, market, deliver, and support its product or service. The concept of the value chain was first suggested by Michael Porter in 1985, to demonstrate how value for the customer accumulates along the chain of organizational activities that make up the final customer product or service.
Porter describes two different types of business activity: primary and secondary.
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In this example, expected gross profit margins differ significantly within and between value chain modes.
a. ice cream manufacturer
b. foodservice distributor
c. additive producer
a. sugar importer
Additional insights could reveal issues such as:
a. trade regulations that create volatility in the price of imported sugar
b. grocer margins fluctuate between major national chains
c. local regulations
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The network of manufacturers, wholesalers, distributors, and retailers, who turn raw materials into finished goods and deliver them to consumers. Supply chains are increasingly being seen as integrated entities, and closer relationships between the organizations throughout the chain can bring competitive advantage, reduce costs, and help to maintain a loyal customer base.
“Supply chain.” Business: The Ultimate Resource. 2002. Print.
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The management of the movement of goods and flow of information between an organization and its suppliers and customers, to achieve strategic advantage. Supply chain management covers the processes of materials management, logistics, physical distribution management, purchasing, and information management.
“Supply chain management.” Business: The Ultimate Resource. 2002. Print.