This understanding value chain analysis template has 6 pages and is a MS Word file type listed under our production & operations documents.
Sample of our understanding value chain analysis template:
UNDERSTANDING VALUE CHAIN ANALYSIS No matter the nature of your industry and the business you're in, a value chain analysis can help you make sense of the internal workings of your company. The primary reason for conducting a value chain analysis is to understand your business better and learn where you can cut costs, improve your product, increase the value for your customers, or become more efficient in your workflow processes. Let's dive in and learn all about designing a value chain analysis model that fits your business needs. What is Value Chain Analysis? Value chain analysis or VCA is the process of identifying and analysing a company's internal primary and support activities that add value to your end product. These are all the activities that a company puts into converting the input into output. With a good value chain analysis, a business can learn which processes work and which need improvement. This allows them to optimize the inefficient processes, cut costs, and gain a competitive advantage. Activities in Value Chain Analysis In 1985, Michael Porter, a professor at Harvard Business School, first introduced a simple value chain analysis model that companies still use today. His value chain model had nine activities altogether, divided into primary activities and support activities. By analysing these nine internal activities in a company, Porter believed you can gain a competitive advantage and optimize your workflow processes. Primary Activities Of the nine activities of Porter's value chain model, the first five are the so-called primary activities that go directly into manufacturing the output or the end product. Inbound Logistics The first step is to check how you source your inputs or raw materials needed to manufacture or create the output (end product). So, inbound logistics are typically things like suppliers' location and delivery options, inventory and warehousing processes and costs, shipping solutions, and similar. Operations The second activity in Porter's value chain analysis model is operations. Here, you have to look at the process of manufacturing or transforming your inputs into outputs. Examples of operations activities are the manufacturing processes, assembly lines, equipment, automation, product quality control, etc. Outbound Logistics Next, we have the outbound logistics that typically deal with the distribution of the ready product or output. At this point, we have to look at the internal or external delivery processes, shipping options, distribution process, storage, and similar activities. You can adjust and modify these activities based on the nature of your business. Marketing and Sales The marketing and sales activity looks at how the company presents the product to the target audience and the effectiveness of different marketing efforts compared to their costs. So, in this category, we usually check things like reach, channel success, brand loyalty, advertising costs, campaign success, etc. Ultimately, we're interested in analysing and reducing the company's CPA (cost-per-acquisition). Services The last primary activity in Porter's value chain analysis model is the services. Here, we usually analyse the company's activity after the product is sold. For example, these are things like customer support, product warranty, product onboarding or training, handling customer complaints, repairs and product spare parts, and similar processes. Support Activities Porter calls the last four activities support activities. These are the activities that help the primary activities, guiding them, optimizing them, and making them more efficient. Procurement As a support activity in Porter's model, procurement deals with external vendors and suppliers. The goal here is to analyse the supplier quality vs. cost ratio and see if you can optimize the procurement process by finding suppliers with improved input quality at a lower price. Firm Infrastructure The next thing to analyse is the firm infrastructure. That's practically the company's departments and main activities that allow it to function on a daily basis
