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c
•
o that each business unit undertakes.
Value chain is a way of organizing the activities
cstrategy
technologies
and
e
applications
e The value chain
c
o
m
m
eelectronic
rcommerce
• The production of goods and services is the result
of the efforts of many organisations – a complex
c strategy
technologies
and
web of contracts and co-operation known as the
supply chain or the value system.
e
applications
e Porter’s value chain model
support activities
c Firm Infrastructure
Human Resource Management
o Technology Development
Procurement
Margin
m primary activities
eelectronic
• Primary Activities(those that are directly
concerned with creating and delivering a product):
rcommerce
–
–
Inbound Logistics
Operations (Production)
c strategy
technologies
and
–
–
Outbound Logistics
Marketing and Sales
e
applications
– Service
e Porter’s value chain model
support activities
c Firm Infrastructure
Human Resource Management
o Technology Development
Procurement
Margin
m primary activities
eelectronic
• Support Activities (which whilst they are not
directly involved in production, may increase
rcommerce
effectiveness or efficiency):
– Procurement
c strategy
technologies
and
–
–
Technology Development
Human Resources Management
e
applications – Firm Infrastructure
e Importance of value chain
c • Useful way to think about business
o strategy in general
m • Provides an excellent way to organise the
examination of business processes
m • Starting point to improve the efficiency
e electronic
and productivity of a company
r commerce
• Help indentifying the component
activities
c strategy
technologies
and
• Help identifying the various linkages
eapplications
e
applications
e Key weaknesses of traditional
c value chain
o • Most applicable to manufacturing of
m physical products as compared to services
• One way chain involved with pushing
m products
eelectronic
• Does not emphasis on customer needs
• E-commerce has implication for whether
rcommerce
activities are achieved internally or
c strategy
technologies
and
externally which is not covered in value
chain
e
applications
e Revised value chain
c N M
o M
R
P
D
M
P
P
M
P
P
S
F
m
m – MR: Market Research (Identifying the product and
eelectronic
customers)
– NPD: New product development (Designing)
– MP: Market product (Test marketing)
rcommerce
– PM: Procure material (procurement activities)
– PP: Procure products
c strategy
technologies
and
– MSF: Manage selling and fulfillment (Promotion, pricing,
sales monitoring, distribution channel)
e
applications
e e-Commerce in the value chain
c
• Electronic Value Chain:
o – Reduced time frame
m – Changed cost structures
c• Competitive advantage
strategy
technologies
and
e
applications
e Linked value chains
c
o Outbound
Logistics
Inbound Operations Outbound
Logistics Logistics
Inbound
Logistics
m
m • Inbound Logistics —from Suppliers
eelectronic
rcommerce
• Outbound Logistics —from Customers
c strategy
technologies
and
e
applications
e Porter’s value system
(Inter-organisational value chain)
c
o Supplier
Value
Chains
Firm
Value
Chains
Channel
Value
Chains
Buyers
Value
Chains
m
m • Overall organisational competitive advantage:
– efficiency of the company
eelectronic
– quality of its products
rcommerce
• plus
– efficiency and quality of suppliers
c strategy
technologies
and
– efficiency of wholesalers (Channel)
– efficiency of retailers
e
applications
e Automotive assembly value system
c Internal
Supplies
o
m Component
Suppliers
Vehicle
Assembler
Dealer
Network
Consumer
m • Inbound Logistics:
eelectronic
– Large number of suppliers
– Vast number of components
rcommerce
• Process:
c strategy
technologies
and
– Just-in-time (JIT) manufacture
• Outbound Logistics:
e
applications – Limited number of Main Dealers
e Food supermarkets value system
c Regional
Whse
o
m Food
Processors
Super-
market
Consumer
m • Inbound Logistics:
eelectronic
– Large number of suppliers
– Vast number of products
rcommerce
• Process:
c strategy
technologies
and
– Retail
• Outbound Logistics:
e
applications – Vast number of Consumers
e Insurance value system
c Agents
o
m Insurance
m Company
Consumer
eelectronic
rcommerce
Insurance
c strategy
technologies
and
Broker
e
applications
e Insurance value system
c
• Inbound Logistics:
o – No significant suppliers
m (financial / re-insurance partners)
m• Process:
– Administrative
e
electronic
• Outbound Logistics:
r – Sales through agents
commerce
c –– Sales
strategy
technologies through brokers
Direct sales
and
e
applications