Value Chain and IS/IT Discussion questions based on reading assignment What is the Value Chain (VC)?

)? Identify the primary activities of the VC Identify the secondary activities of the VC How is the service activity different from marketing and sales? (Dont sales people provide service?) Differentiate between procurement activity and inbound logistics Why study about Value Chain in an IS/IT class? Value Chain Linkages (Internal and External) Components of a Value Chain

Value Chain Primary Activities Inbound Logistics Involve relationships with suppliers and include all activities required to receive, store, and disseminate inputs Operations All activities required to transform inputs into outputs Outbound Logistics All activities required to collect, store, and distribute output Marketing and Sales Inform buyers about products/services Induce buyers to purchase products/services and facilitate their purchase (Stimulate demand for products/services) Collect and pass on feedback from customer back to various units in firm and estimate expected sales volume Service

Activities required to keep the product/service working effectively for the buyer after it is sold and delivered

Value Chain Support or Secondary Activities Procurement Acquisition (actual purchase) of inputs, or resources, for the firm Human Resource Management Activities involved in recruiting, training, developing, compensating, laying off personnel Technological Development Technology purchased/adopted/developed to bear in the firms transformation of inputs into outputs Infrastructure (General Administration) Activities include accounting, legal, finance, planning , public affairs, government relations, quality assurance and general management Value Chain and IS/IT Examples Inbound Logistics Automated Warehousing System; JIT inventory systems Operations Computer-Controlled Machining Systems Outbound Logistics Automated Shipment Scheduling Systems Tracking Systems Sales and Marketing On-line Ordering Systems for customer Sales forecasting Service Equipment maintenance systems Procurement Computerized Ordering Systems and EDI Technology Development Computer-Aided Design Systems Human Resource Management Multi-media database systems On-line recruiting Intranet for employee benefits (retirement benefits, medical benefits etc.) Infrastructure Electronic scheduling; financial systems, accounting systems, decision support systems etc. Internal Linkage: Efficiency and/or competitive advantage gains due to links between two or more VC activities of a firm Example: (Operations and Outbound Logistics; Information exchanged Completed order status)

External Linkage: Efficiency, partnership and/or competitive advantage gains due to link between one VC activity of firm and external entity (e.g., customer, supplier etc.) Example: Ford s Supplier and Accounts Payable (Infrastructure); Information exchanged Payment Information)

Components of a Value Chain

Components of a Value Chain