Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Value chain analysis meaning and importance
Value chain analysis meaning and importance
Value chain analysis meaning and importance
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Value chain analysis meaning and importance
1. Determine and clarify the logistics costs Logistics costs are the costs that involved in logistics activities such as transportation, inventory management, warehousing, packaging and so on. Inbound transportation costs including train travel, trucks, air travel and sea transport, inventory carrying costs as part of total logistics costs, customer service costs and others. Companies need to manage their logistics with a balance between cost and performance, since the lowest-cost transportation path is not necessarily the fastest. Additional logistics costs include packaging, warehousing, security, materials handling, fuel, taxes and duties. Inbound Logistics (IL) Suppliers move the raw materials in the production processes or storage facilities. …show more content…
Outbound Logistics (OL) The process related to the movement and storage of products from the end of the production line to the consumers.Outbound logistics refers to the processes involved in moving products from thecreating firm to the firm’s customers. The field is focused on two concepts which are transportation and storage. The storage part of the field uses warehousing methods to keep the finished goodsand make sure the goods are accessible and safety. The transportation part is generally the more important and complex part of outbound logistics. 2. List and explain the costing tools in logistics costs The costing tool that can be used in inbound stage is Value Chain Analysis. Value Chain Analysis is a useful tool for create the greatest possible value to the customers. In manufacturing perspective, where the manufacturer "adds value" by taking a raw material of little use to the end user (for example, woods) and converting it into something that people are willing to pay money for such as paper. Firms or Companies can use inputs of time, knowledge, equipment, technology and systems to create services of real value to the
Since the sense of value chain analysis is to increase the value of a products or service. Value chain analysis is just breaking the whole operation processes into stages to identify which in stage we can do better or we can change it to become better. With the primary activities of inbound logistics, operations outbound logistics marketing & sales service and the support activities of procurement of purchasing, human resource management, technological development and infrastructure, we can easily get the margin which is referred to the
Huggins & Izushi (2011) affirms that "all firms in a given industry have a similar value chain, which includes activities such as obtaining raw materials, designing products, building manufacturing facilities, developing cooperative agreements, and providing customer service. " For this, it is necessary to carry out activities aimed at creating value for the customer, which will directly and positively affect the company's
Rao, K., and Young, R. R. (1994) Global supply chains: Factors influencing outsourcing of logistics functions. International journal of physical distribution and logistics management. Vol. 24. No. 6.
Value chain model highlights specific activities where the information systems could be applied. This model is set to identify leverage points in which IS could have a strategic impact to enhance company’s competitive position. The value chain perceives firm as a series of interconnected activities that add a margin of value.
Inbound logistics means to receiving, keeping storing and make a distribution the imputes to the product or services . Danfoss is a big multinational business company so, they have their own product produce in different factories from different parts of the world, but in china they have 13 sales offices form where they sell their product. It is important to main a good relationship with the suppliers in B2...
Value Chain Analysis"Accounting for Strategic Management Porter identified the 'value chain' as a means of analysing an organisation's strategically relevant activities in order to understand the behaviour of costs. Competitive advantage comes from carrying out those activities in a more cost-effective way than ones competitors.This essay describes the activities which are referred to as the value chain and discuss how cost analysis of the value chain can be achieved in order to facilitate cost-effectiveness.M. Porter (in Competitive advantage, 1985) breaks the value chain (VC) model into two distinctive types these being primary and support activities. (Bowman C., 1990, p63) The model suggests, that no matter how many operational units that are involved in the process of generating customer value; these primary activities can be conceptualised into five generic stages. The five primary stages are inbound logistics, operations, outbound logistics, marketing and sales, and service. These primary stages are supported by the firms infrastructure, human resource management, technology development, and purchasing and procurement. The stages within the VC should not be seen in isolation but looked at in a wider context and include the interactions between stages not just within the processes. The relationship between sales, operations and procurement for instance can determine how much stock is to be carried and therefore reflected in cost of inventory held.When analysing the VC of a given company/organisation the management accountant (MA) should firstly identify the activities of the firm to establish the framework of the chain.• o ". . . Porter suggests the detailed assignment of operating costs and assets to each value activity" (Grant R.M., 1995,p193) A company producing computers and a firm of accountants for instance would display very different components within the chain due to the differentiating activities (see below); this framework will allow us to establish the relevant importance of each unit of activity in regards to costs. As you can see the relevance of operations within the manufacturing company is higher than that of operations within accountancy. With over 60% of its costs being allocated to operations, it would seem that the manufacturing company should concentrate on this area to maximise savings, as this is the main cost driver. The accountancy firm however as two main cost drivers these being operations at 26% and marketing at 21% , suggesting almost equal saving potentials can will be offered. As MA’s we need to identify the cost drivers, in a similar manner as ABC costing.
Value chains are essential elements of successful businesses, and how to gain a competitive advantage by analyzing them is the most important aspect. In Porter’s value-chain model, he points out that there are two types of business activities: primary activities, which include inbound logistics, operations, outbound logistics, marketing, sales and service; and support activities, which include procurement, technology development, human resources management, and firm infrastructure. In order to gain an edge, companies should focus on these activities to improve or create products that will satisfy their customers.
As described by Kaplinsky and Morris (2001), a value chain can be defined as “the full range of activities which are required to bring a product or service from conception, through the different phases of production, delivery to the final consumer and final disposal after use”. The study in the value chain sector will improve the attempt to understand the distribution of power and value in the chain and to be able to address the agency of workers and small producers (Mitchell and Coles, 2011:11).
Outbound logistics: They are made up of centralized logistic centers to promote efficiency, global network, reduced emission of CO2 by 22% to ensure ecological sustainability and lastly to improve customer service.
It might take a lot of work to finish a full value chain analysis for a company. A company need to give a lot of effort so that they can identify and understand the key differences and strategy to establish this model for their business. This is not a short term tool. Pearson, G. (1999)
In this essay we will discuss the statement: “In a prosperous society, value is predominantly of an intangible nature”. Value is “the sum of the tangible and intangible benefits and costs to customers” (Kotler & Keller, 2012). The question is however if the tangible or intangible benefits and costs are influencing the value of a product the most. This essay will evince that value is mainly of tangible nature.
It must contribute to end consumer’s experienced benefit and the value of the product or service to its customers.
Operations. Making production and services more efficient and affordable for poor income families; hiring disadvantaged workers; providing product and services that solve the questions for local community
Focuses first and foremost on the social and/or ecological value creation and tries to optimize the financial value creation.
By adopting the value chain into a manufacturing company, it will gain efficiency, effectiveness, reduce the product cost and improve continuously. For example, Toyota has implemented Toyota Product System (TPS) integrated information system with the business process which allowed the company to be more efficiency, effectiveness and reduce inventory cost. (Toyota