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A supply chain is almost similar to a value chain except that one deals with a broader category of products than the other does. A supply chain simply deals with how goods and services move from the process of manufacturing products from raw materials to distribution of the end product, which is sold to the final consumer.
On the other hand, a value chain looks deeper into what happens in each process of realization of the product, starting from how the raw material is handled, all the way to the delivery of the final product to the final consumer.
Supply chain mostly concentrates on how efficient the services are in the whole manufacturing process, while the value chain, in addition to what the supply chain does, usually delves deeper and also concerns itself with the consumer’s needs, tastes and preferences (Koontz and Weihrich 63).
It has autonomous systems that ensure raw form of material gets to the intended consumer through the manufacturer, then the retailer and finally the consumer. It sometimes re-introduces a product from the consumer in the market where the product still has value.
This chain deals with all areas of distribution, these being procurement, distribution, management and delivery to stockers of a given line of products. It may be incorporated into the value chain to a limited level, but it cannot incorporate value chain since the two are entirely different in their true sense, but interrelated.
This chain is different from the supply chain in that it involves a whole different series of interrelated activities regarding a particular product intended for market. A product goes through certain stages in process for it to improve in value from raw material to a valuable product.
From this definition, we can say that each stage adds value to the item in production, but the chain does not involve the recruitment of personnel, or the distribution of the product. It encompasses the segments involved in a business till the final product. One can actually estimate the markup value by calculating incurred cost for production, revenue paid for item, plus product cost by volume of product.
Juxtaposition of the two chains
Though the two chains involve stages that are necessary to the manufacture and provision of finished products to the consumer, only one truly adds true value to the final product, the value chain. Taking the example of a milling company, the factory takes raw material from the farm and removes the husks from the corn. Subsequent changes are made as the corn moves along through each stage, as the extent with which it will satisfy the consumer increases. This adds value to the corn, and this constitutes the value chain.
The packed flour then leaves the mill through trucking companies that deliver the finished product to different destinations including consumer standard checks, and transport and re-packaging companies. This constitutes the supply chain. The two must not be taken to mean the same for they represent two completely different deeds regarding marketing as an element of business.
The latter adds little value to the product going into market, but Value chain adds almost all significance to the product, thus adds more value. Porter referred to the value chain as, processes that add value to consumer products (Feller et al 2). Value is literally taken to originate from the consumer who intends to utilize the final product, for without his intention to purchase there would not be a need to supply, and therefore, no value for the produced item (Andrew et al 3).
Feller, Andrew., Shunk Dan and Callarman, Tom. Value Chains Versus Supply Chains. BPTrends, 2006. Print.
Koontz, Harold and Weihrich Heinz. Essentials of Management. New Delhi: Tata McGraw Hill Education, 2006. Print.