A value chain describes how value is created through a chain of activities and combined in processes. The value chain is also referred to as process chain or performance chain.
Establishment of a value chain
To analyze a value chain, a company’s value-adding activities are divided into primary and supporting activities.
The primary activities are activities related to the creation and distribution of the company’s services.
These include:
- Inbound logistics
- Production
- Marketing and sales
- Outbound logistics
- Service
Supporting activitieshelp primary activities to remain functional and facilitate business performance. They are the prerequisite for successful fulfillment of the primary activities.
Supporting activities include:
- Enterprise Infrastructure
- Human Ressource Management
- Technology development
- Procurement
The goal of these activities is to identify a company’s competitive advantages. The analysis of the individual processes should help to create a marketable end product.
Value Chain Diagram
The value chain diagram serves as an introduction to business process modeling. In a value chain diagram, the core and support processes of an organization are represented in model form.
Possible structure-forming relationships between the individual value chains are as follows:
- The functional structure, i.e. the representation of different hierarchy levels, in which, through the decomposition of sub-functions, the process-oriented superordination/subordination is represented (e.g. “company process” is superordinate to the three processes “product creation”, “production optimization” and “sales processing”).
- The flow structure, i.e. the representation of the sequence in which the value creation processes take place (e.g. “product creation” → “production optimization” → “sales processing”).
For more information, see Integration of brick-and-mortar retailing into the e-commerce value chain.
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