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Supply Chain is the interconnection of all the functions that starts from the manufacturing of raw material into the finished product and ends when the product reaches the final customer. Value Chain, on the other hand, is a set of activities that focuses on creating or adding value to the product. These two networks help to provide quality products to the customer at a reasonable price. Most of the time supply chain is juxtaposed with the value chain. In this article, we have compiled all the substantial differences between supply chain and value chain. Have a look. Content: Supply Chain Vs Value Chain
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Definition of Supply ChainSupply Chain is a connection of all the parties, resources, businesses and activities involved in the marketing or distribution through which a product reaches the end user. It creates a link between the channel partners like suppliers, manufacturers, wholesalers, distributors, retailers, and the customer. To put simply, it encompasses the flow and storage of the raw material; semi-finished goods and the finished goods from point of origin to its final destination i.e. consumption. The process which plans and controls the supply chain operations is known as Supply Chain Management. It is a cross-functional system that manages the movement of raw material, within the organization and the movement of finished goods out of the firm along with full customer satisfaction side by side. The following activities are included in the supply chain:
Definition of Value ChainValue Chain refers to the range of activities that adds value at every single step in designing, producing, and delivering a quality product to the customer. Value Chain Analysis is used to evaluate the activities within and around the organization and relating to its ability to provide value for money, goods, and services. The concept of Value Chain Analysis was first evolved by Michael Porter in 1985 in his renowned book “Competitive Advantage”. In his opinion, two major steps involved in the value chain analysis are:
Porter split business activities into two main categories, for the purpose of Value Chain Analysis:
The following are the major differences between supply chain and value chain:
ConclusionSupply Chain is described as a tool of business transformation, which minimizes costs and maximizes customer satisfaction by providing the right product at the right time at the right place and the right price. Conversely, Value Chain is a way of getting a competitive advantage, through which a company can beat its competitors along with fulfilling customer requirements. What begins with collecting raw materials and ends with receiving the goods by the consumer?A supply chain is the network of individuals, companies, resources, activities, and technologies used to make and sell a product or service. A supply chain starts with the delivery of raw materials from a supplier to a manufacturer and ends with the delivery of the finished product or service to the end consumer.
What serves as a raw material to be processed by the consumer?Examples of raw materials include steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals. Raw materials can be direct raw materials, which are directly used in the manufacturing process, such as wood for a chair.
What is the process of making a raw material into a finished product?Manufacturing is the process of turning raw materials or parts into finished goods through the use of tools, human labor, machinery, and chemical processing. Most products were handmade using human labor and basic tools before the Industrial Revolution.
What is raw materials in supply chain management?One major component in any supply chain is raw materials, the unprocessed materials, components, or partially finished assemblies that are required to build or produce a product.
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