What is the value chain analysis?

The value chain analysis helps the company to check its supplier chain and logistics to maintain a competitive advantage. The general value chain may include a number of different steps, such as incoming logistics, operations and outgoing logistics, as well as marketing and sales and services. Each step represents a part of the company's infrastructure that affects how the company performs tasks and activities. The primary purpose of the value chain analysis is to find areas to reduce operating costs and improve the total economic value of the company. This process can also affect internal operations because companies will have to move materials throughout the company to produce goods. This leads to the operational part of the value chain analysis, which includes activities for the transformation of raw materials into consumer products. Outgoing logistics is the distribution of finished products into a retail shift. This also leads to marketing and sales that can help companies to address consumers when selling a product. ServiceIt is necessary to obtain customer feedback and find ways to improve products.

Owners and managers often undergo a value chain analysis to determine whether their company will benefit from the economy of scope. This economic theory claims that the company can reduce costs by increasing the number of goods produced. For example, each step in the value chain adds operating costs to the company's operation. Although some costs are required - for example, raw materials and work to produce goods - others can simply add expenses without generating income. Increasing production can reduce these costs because the company can allocate money spent on the production of multiple goods, which is again equal to higher income.

Another purpose of the value chain analysis is to distinguish the company of the company to distinguish its operations from other companies. This can create a unique competitive advantage because other companyEven in the business environment, it may not be able to replicate this process. The value chain resolution methods include the use of internal or custom -designed computer software, integration with suppliers and suppliers, or by specific consumers.

technology in the business world significantly transforms the value chain process. Historically, most of the interactions between companies in this chain used interpersonal communication form to complete the tasks. Technology will remove the human element from many of these interactions. Companies can use technology to transmit information electronically and shorten the time that will take the goods or information through the value chain.