Value Chain Analysis

SOURAB KESAR

Value Chain Analysis

Introduction:

Every business activity is composed of number of separate tasks which ultimately lead to value creation in terms of company’s products/ services

These activities put together in a successive sequence of value addition we get a chain of activities called value chain

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin

Chain of activities starting from new material purchase to delivery of finished products

Every activity in a chain adds some value to the product, may it be cost cutting or value addition

A competitive advantage can be achieved by analyzing and restructuring the value chain to provide lower cost or better differentiation

Value

Value

Cost advantage

DifferentiationAdvantage

Simila

r pro

duct

At lower c

ost

Higher price

For unique product

Porter’s Generic Value Chain

Inbound Logistics

Operations

Outbound Logistics

Marketing& Sales

Services

SUPPORTED BY →

Firm’s Infrastructure

HR Management

Technology Development

Procurement

Inbound Logistics:-

Inbound Logistics:-

Value Chain Analysis

Inbound Logistics:-

The receiving & warehousing of raw materials & their distribution to manufacturing as they required.

Case of Tata Motors: Long term contract with service provider’s – transporters and

agents. Transparency and monitoring through deployment of IT – all

transactions through SAP. Efficient storage facilities – easy storage and retrieval.

Operations:-

Value Chain Analysis

Operations:- The process of transforming inputs into finished

products/services

Apprentice Trainee Course – ensuring stable source of skilled manpower.

Automated manufacturing processes.

Distributed manufacturing – Assembly units at South Africa, Thailand, Bangladesh, Brazil etc.

Capacity Utilization – Mercedes Benz cars make use of Tata Motors paint shop facilities. .

Outbound Logistics

Value Chain Analysis

Outbound Logistics:-

The warehousing & distribution of finished goods

Stockyards, all across the country.

Long term contracts with transporter’s – higher volume of business to transporters ensures competitive price.

Regional Sales Office and Vehicle Dispatch Section linked through SAP.

Efficient security system for prevention of any kind of pilferage.

Marketing & Sales:-

Marketing & Sales:-

Value Chain Analysis

Marketing & Sales:-

The identification of customer needs and the generation of sales

Clear identification of product requirements, leading to development of innovative products – Tata 207 DI, Tata Ace

Independent teams for addressing the requirements of institutional customers – Defense, State Transport Units

Helping to augment the scarce resources – Fiat selling vehicles through Tata dealerships, in return Tata has access to Fiat’s technology and unutilized capacity.

Large network of dealers

Services:-

Value Chain Analysis

Services:-

The support of customers after the products & services are sold to them

Easy availability of spare parts.

Efficient collection of data from field and communication to the respective plants.

Large network of workshops – Dealer workshops and TASS.

Training facilities – for dealer

Value Chain Analysis

Supported By

Infrastructure:-

Organizational structure, control systems, company culture etc.

Human Resource Management:-

Employee Recruiting, hiring, T&D, Compensation

Technology Development:-

Technologies to support value creating activities

Procurement:-

Purchasing inputs like materials, supplies, equipment

Value Chain & Value System of TATA motors

Inbound

Logistics

Operations

Marketing Service

Outboud Logistics

Suppliers , Contractors

SAP , VCM

SAP , CRM - DMS

Strategic Alliances

Transporters, Convoy Drivers Association

Dealer Network, Marketing Research

Firms, Vehicle Financing

Regional Warehouses, Dealer Workshops, Distributors, TASS

QUESTIONS...?

Value Chain Analysis