Value chain is a model for structuring the activities developed by companies, aiming to guarantee the maximum quality of service and product to the final customer, in addition to creating a competitive advantage in the market.
The concept of the value chain was created by the American professor Michael Eugene Porter, which consists of creating a flowchart of the sets of activities essential for the adding value to the product or service of a particular company.
At Porter's value chain, each step of the product or service development process is essential for its full appreciation, from the way how the relationship with raw material suppliers is maintained, to how the final product is delivered to the consumers.
With the value chain, the company is able to identify which production steps are responsible for add value to the product and, therefore, develop a strategy that helps to leverage these sectors.
Thus, those processes that do not add any value can be revised, either as a target for restructuring or cutting (avoiding wastage of money and production time).
According to the scheme proposed by Porter, the value chain can be divided into two main groups of activities:
- Primary activities: internal logistics; operations; external logistics; marketing; sales; and service (after-sales).
- Support activities: acquisition; technology development; human resource management; and company infrastructure.
Learn more about the meaning of business value chain and the 5 forces of Porter.