What is the Difference Between Supply Chain and Value Chain?

The difference between the Value Chain and the Supply Chain is usually very important two concepts that are mixed or weighted on one side and hindered on the other side.

While the supply chain is a process involved     all parties to fulfill the demands of the customers, we can say that Value Chain is placing a series of interrelated activities involved in the realization of this process to a position, which will create competitive advantage.

Michael Everett Porter, Professor of Business and Economics at Harvard University's Business Department, is the pioneer of the Value Chain idea. The 5 steps in the Value Chain he had mentioned are listed as below:

• Inbound Logistics,

• Operations,

• Outbound Logistics,

• Marketing and Sales,

• Services

These steps in the Value Chain are also referred to as the primary step create a positive value in the cost of materials or services they provide to their customers. It is quite possible that a business employing even only one of these 5 steps at maximum level in their activities would have a competitive advantage in their own sector.

Inbound logistics, includes procurement, storing and inventory management.  
Operations are value creation activities for the transformation of inputs into outputs.
Outbound logistics includes activities for delivering end-products to the customers. 
Marketing and sales activities are the processes related to finding buyers to purchase products.
Services, include activities like post-sale maintenance, customer support  in order to increase value of the product.

Important secondary activities that support the Value Chain are Procurement (Purchasing), Human Resources Management, Technology Investment and Infrastructure.

Supply Chain includes information, products, materials, the different steps of selling and creating a product, that is, the entire flow. Each step in this flow;  creation of the product/service, production, transportation of it to some place for sale and then selling,   refers to the supply chain of the firm. The supply chain covers all functions, including the realization of  customer requests and the receipt of customer requests.

These functions include;

• Product development,

• Marketing,

• Operations,

• Distribution,

• Finance

• Customer service

Author: Ahmet Savaş Göktürk