Value chain and supply chain are two of the most widely used jargon in the business and commerce sectors. Many entrepreneurs confuse value chains with supply chains and vice versa. The difference between the two is apparently very subtle but there is a big difference.
In this post, we are going to look at value chains and supply chains. What both terms stand for and the differences and similarities between the two terms.
In a nutshell, Supply Chain refers to the integration of all operations involved in the process of manufacturing, sourcing, procurement, conversion, logistics, and warehouse management. Supply chain activities comprise the flow of information, products, and funds between all the stages of creating and selling a product. From procurement to management to logistics, every step is a part of the company’s supply chain.
It’s important for any organization to keep their supply chains moving as disruptions can have major repercussions. Here are the major functions of supply chains.
At its very base, the primary concern of supply chain management is to effectively manage the supply and demand equilibrium while delivering the products at the right time, place, and at the right cost. Proper supply chain management can help organizations reduce consumer costs and increase their overall profits.
In a nutshell, value chain refers to a series of business operations and creative measures that an organization takes to add value and utility to the goods and services offered by the firm. The concept of value chain comes from both a branding and business management perspective. The process involves experimentation, interpretation, and improvisation to cut back on the shortages and work with people involved at different stages of the chain.
Value chain tends to be traced in the opposite direction to the supply chain. Value chain essentially flows in reserve to supply chain starting from end customers and going all the way up to the manufacturing and procurement of raw materials. Here are some major functions of supply chains.
Spotting shortcomings and maximizing the new opportunities can help any organization have a competitive edge over players in the industry
In simple layman’s terms, the ultimate difference between a supply chain and a value chain is the most apparent fact that supply chains do not involve value addition. The supply chain is all about keeping the supply and demand cycle optimized whereas value chains are about optimizing the supply chain for quality and adding value to make the products more presentable and resourceful for the clients.
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