Value chain analysis is a tool that business owners use to break down each process their business uses. This analysis can be used to improve the business’s individual processes, enhancing the company’s efficiency and establishing a competitive advantage.
Value chain analysis is used by businesses of all sizes, ranging from sole proprietors to enterprise-level companies. Every business uses various processes to accomplish its work, and they all can use value chain analysis to study and improve these processes.
What is value chain analysis?
A value chain is the full range of activities – including design, production, marketing and distribution – that businesses conduct to bring a product or service from conception to delivery. For companies that produce goods, the value chain starts with the raw materials to make the products and consists of everything added before the product is sold to consumers. Value chain analysis finds any deficiencies in these processes and improves them, saving money, improving quality and expediting time to market.
Value chain analysis can create change within a business, improve the products and services it offers, and expand connections with other companies and their customers or clients. The United States Postal Service (USPS) explains the purpose of value chain analysis is “to create value that exceeds the cost of providing the product or service and generates a profit margin.”
Value chain vs. supply chain
A supply chain and value chain are similar, but the value chain takes a few more things into consideration.
“The supply chain generally looks at the parts or materials that go into a product, where a product is manufactured, and the transportation logistics of getting it from the factory to the store,” said Jon Gold, vice president of supply chain and customs policy at the National Retail Federation.
The value chain “takes into