1. Framework
The value chain describes the activities within and around an organisation that create a product or service. The value chain provides a framework for analysing an organisation by breaking it down into "strategically significant" activities that add value to the product or service in the eyes of the customer.
2. Activities
2.1. Primary Activities
Primary activities directly create or deliver a product or service.
(a) Inbound logistics are activities concerned with receiving, storing and distributing inputs to the product or service including materials handling, inventory control, transport, etc.
(b) Operations transform these inputs into the final product or service (e.g. machining, packaging, assembly, testing, etc).
(c) Outbound logistics collect, store and distribute the product to customers (e.g. warehousing, materials handling, distribution, etc).
(d) Marketing and sales provide the means whereby consumers/users are made aware of the product or service and are able to purchase it. This includes sales administration, advertising and selling.
(e) Service (after-sales-service) includes activities that enhance or maintain the value of a service (e.g. installation, repair, training and spares). Primary activities are linked to support activities.
2.2 Support Activities
Support activities help to improve the effectiveness or efficiency of primary activities.
(1) Procurement: Processes that occur in many parts of the organisation for acquiring resource inputs to the primary activities.
(2) Technology development: All value activities have a "technology", even if it is just know-how. Technologies may be concerned directly with a product (e.g. research and development, product design) or with processes (e.g. process development) or with a particular resource (e.g. raw materials improvements).
(3) Human resource management (HRM): HRM transcends all primary activities. It is responsible for recruiting, managing, training, developing and rewarding people within the organisation.
(4) Infrastructure: The formal systems of planning, finance, quality control, information management, and the structures and routines that are part of an organisation's culture.
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