Value Cha(i)nge

Do you really know what value chain means?

Generally speaking, value chain is a full set of primary and support activities – from product design to its distribution – through which a firm delivers valuable products or services to the market. The value chain considers all the activities from raw materials to the product delivery to the customer, so everything that is added to it before the product is sold. What is crucial is that the added value of a product from the value chain is higher than a simple sum of the added value of each activity.

Do you believe that digital innovation has the power to reshape activities inside the value chain?

The value chain of a manufacturing company can be divided into primary activities and support activities.
Traditionally, primary activities include inbound logistics, operation, outbound logistics, sales & marketing, servicing.
Here provided some example:

  • INBOUND LOGISTICS (receiving; raw materials control)
  • OPERATION (manufacturing; production control; packaging; quality control; maintenance)
  • OUTBOUND LOGISTICS (order handling; delivery)
  • SALES & MARKETING (customer management; promotion; sales analysis; market research)
  • SERVICING (maintenance; education and training; upgrades)

In order to perform such a process, support activities – such as administrative and finance infrastructures, human resource management, product and technology development, procurement – are assisting in every step.
In detail, some of them are:

  • ADMINISTRATIVE AND FINANCE INFRASTRUCTURE (legal, accounting, financial management)
  • HUMAN RESOURCE MANAGEMENT (personnel, training, staff planning)
  • PRODUCT AND TECHNOLOGY DEVELOPMENT (product and process design, R&D, production engineering)
  • PROCUREMENT (supplier management, subcontracting)

VALUECHAIN-01.pngEnabled by new ICT technology, activities could undergo some changes concerning mainly production innovation, infrastructure management and customer relationship management. They could experience increasing in accuracy, reductions in production time, improvements in productivity, or to be taken over by intelligent machines.

Considering technologies that facilitate information exchange, such as industrial wireless network and machine2machine systems, they could help in increasing accuracy and reducing transaction times in receiving raw materials, in manufacturing and in invoicing.

Regarding advanced manufacturing technologies, they could be used to reduce production time, especially in manufacturing, packaging and finishing goods.

Concerning data processing technologies, fox example big data and cloud computing, they could bring structured information and analyse patterns behind data which is valuable in sales analysis, market research and demand forecast.

  Product Innovation Infrastructure Management Customer Relationship Management
Economics Easy customization Production flexibility Product variety
Culture New working process Intelligent machines Customization

Extended Supply Chain

Competition Battle for information Battle of technology Battle of service

We observed several changes in the phase of product innovation. Thanks to the technologies that provide rich information related to customer needs, companies can easily develop tailored product. Due to the strong need of customization, it is now no more possible to produce the same product in high quantity, therefore flexibility of infrastructure becomes a fundamental requirement. In this new environment, competition is extended out of the company boundaries, increasing the consideration on customer services and customer relationship management inside an extended supply chain.

It is now clear that digital innovation and smart technologies are really able to change and transform the world of industry, having great impacts on company economy, enterprise culture and the core of competition.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s