The term “value chain” has been a buzzword in the supply chain industry for the last couple of years. Many people consider it just an updated and fancy variant of the term supply chain. Value chain and supply chain are extensively entwined concepts. Therefore, no one-liner can define the difference between supply chain and value chain.
However, we will try to make it easy to understand how supply chains and value chains are different and also linked.
Definition of Supply Chain and Value Chain
The supply chain is the process that involves materials, resources, and funds for ultimately delivering a product or service to end-users.
The value chain essentially runs through the entire flow of the supply chain. It defines the overall value that is being created, offered, delivered, and used through various stages of the supply chain.
From the above definition, it is clear that:
The supply chain is a subset of the value chain
In other words, the value chain represents the “value” that a business creates, offers to consumers, and also consumes itself through its supply chain.
You can also say that a value-added supply chain is called a value chain.
Supply Chain and Value Chain: An Example
Manufacturing and production in the supply chain entail creating a product and then marketing and selling to meet the consumers’ demand. When you define the same manufacturing and production process in the context of a value chain, it means the manufacturing of a product with better quality control, additional features, and room for customization.
SimplyPurchasing is robust procurement management software that works on many fronts to improve organizational performance. It improves the procurement process and helps you turn your supply chain into a value chain.