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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