Value Chain

A value chain can be conceived at two levels: first, at the level of the firm, the value chain is a series of primary and support activities that acquire and process inputs I order to create value. Second, at an industry level, the value chain describes the linkages between the different firms operating in the same supply chain. Its significance for procurement and supply chain management is not limited to the fact that it proposes that participants in the same supply chain are united in a common value stream. The value chain also identifies inbound and outbound logistics as primary activities in creating value for the enterprise. Value chain analysis implies a review of the organisation’s key activities to identify opportunities to increase margins through a focus on a range of cost drivers. See also Costing, Activity Based.