Supply Chain and Value Chain

Topics: Supply chain, Supply chain management, Supply chain management terms Pages: 2 (725 words) Published: September 7, 2013
Supply Chain and Value Chain
Supply chain is a network of distribution and facilities options that performs the function of procurement of materials, conversion of these materials into intermediate and finished goods and the supply of these finished goods to the ultimate consumers, for e.g. for a single product, supply chain consists of flow of raw material from vendors, transformation into finished goods i.e. interflow of materials, transportation to distribution centers and supply activities for serving the ultimate customers. The flow of materials is not always along a tree-like network, various modes of transportation and the bills of materials may be considered. Supply chain management is the management of all materials and information in the logistics process from the acquisition of raw materials to the distribution to the end users. It helps in coordinating the processes involved in producing, shipping and distributing products. It traverses the whole value chain to manage the procurement of entire range of inputs that are required to produce a product or service so that the process can be performed in an integrated and optimum manner (Kazami, A., 2002). There are four major decisions in this concept namely, location, production, inventory and transportation. Supply chain activities can be grouped into strategic, operational and tactical activities. A value chain is a set of interlinked value-creating activities performed by an organization. These activities may begin with the procurement of basic raw materials, go through its processing in various stages and continue right up to the end products finally marketed to the ultimate consumer. Activities of value chain are not separated from each other in-fact the cost and the performance of one activity is affected by the other (Kazami, A., 2002). Value chain analysis is a method for accessing the strengths and weaknesses of an organization on the basis of an understanding of the series of activities it...
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