A value chain refers to the necessary and consecutive processes a business goes through to deliver a product or service to the market, from its initial creation to its finished form to the customer. For example, a car manufacturing company’s value chain might include:
- Inbound logistics: Receiving steel, tires, aluminum, and electronics from suppliers.
- Operations: Assembling the car parts like engines and interiors into the final product.
- Outbound logistics: Distributing the completed product to customers.
- Marketing and Sales: Running advertising campaigns and auto shows.
- Service: Offering warranties, services like maintenance, and providing customer support.
Businesses can propel to greater success as a value chain allows them to identify areas for improvement, optimize processes, and reduce waste which leads to better efficiency. It also helps to save money as procurement, logistics, and operations can be analyzed to better control costs. And with the service and after-sales support component, customers are satisfied and have a better experience.
A value chain relies on accurate, consistent information which is where PIM and ERP come in. Both systems can help businesses streamline their value chain through the centralization and enrichment of product information.
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