Table of Contents

  1. Key Stages in the Industry Value Chain
  2. Inbound Logistics
  3. Operations
  4. Outbound Logistics
  5. Marketing and Sales
  6. Service
  7. Supporting Activities in the Value Chain
  8. Procurement
  9. Technology Development
  10. Human Resource Management
  11. Firm Infrastructure
  12. Benefits of Understanding the Value Chain
  13. Cost Reduction
  14. Quality Improvement
  15. Innovation
  16. Increased Profitability
  17. Challenges in Managing the Value Chain
  18. Conclusion

Know more about the industry value chain and how it proactively assists Canadian businesses in enhancing efficiency, cutting costs, and improving the quality of products, in this Faber LLP detailed blog. 

The industry value chain deals with how a product or service goes through from inception to the final consumer. It comprises all processes undertaken in the development, manufacturing, selling, and providing client goods or services. The countries in the supply chain increase the value of the final product, which aids the companies in working on the constraint and enhancing customer value. 

Knowledge of the IVT means that businesses in Canada learn to make better decisions about how they run their operations. When evaluating activities across the value chain, businesses gain insights into how they might minimize their costs, enhance their delivery of products and services, or enhance their competitive advantage. 

Key Stages in the Industry Value Chain

Experts typically identify five common levels in the industry value chain. Each stage actively develops the product or service to deliver to consumers. 

  • Inbound Logistics
In this process stage, companies either acquire partly or completely processed input from outside or from suppliers. The company stocks and processes various raw materials for the manufacturing process. During this stage, companies pay much attention to controlling stocks and procuring from accredited sources for efficient operation.
  • Operations

During this stage, firms process the good from its raw form to its final stage or form. This covers all stages of production, ranging from the creation of the product to construction, among others. Professional performance enables companies to manufacture goods with fewer defects and thus more cheaply. Possibilities of production line optimization leading to improvement in productivity and, therefore, to the reduction of losses. 

  • Outbound Logistics
After production, the firms require to transport goods giving customers the opportunity to access them. Outbound logistics mean the supply of finished goods, warehousing and distribution of materials to stockist or other business entities. On time and low cost delivery is always a key success factor to most customers.
  • Marketing and Sales
Organizations are more concerned with product publicity and customers acquisition. This ranges from creating advertizing campaigns, giving rebates, and making initial contact with likely clients. Marketing and sales are often an important part of a company’s overall strategy in the goal to attract more clients and, thus, gain more profits.
  • Service

Once customers acquire a product, companies offer services like preserving, fixing, or offering support on the same. Hence, good customer relations are vital to sustain and develop long term customer relations hence customer satisfactions. Organizations that provide support tend to gain more clients possibly because the customers receive services that enable them return for more.

Supporting Activities in the Value Chain

  • Procurement
Based on nature, there are two approaches to procurement. Direct procurement entails the sourcing of products used in production. Yet, in another aspect, firms closely associated with their suppliers are most likely to bargain for better supplies [Sousa, 2003].
  • Technology Development
It is based on the concepts of new solutions, better workflows, and improved production processes. Research and development results favor organizations in developing improved products and market competitiveness.
  • Human Resource Management
Constitutes the activities of acquiring and building staff. Thus, it is only when one has a competent and motivated employee that each value chain stage will be effectively executed.
  • Firm Infrastructure
The overall management and leadership of an organization involved in a business define its firm infrastructure. Management and leadership play their part in governing the value chain to ensure all activities are pertinent to the realization of corporate goals.

Benefits of Understanding the Value Chain

Some of the benefits that Canadian businesses can achieve if they are aware of their value chain include the following. Therefore, optimizing each phase will enable businesses to define where they could improve their performance. Here are some of the key benefits:
  • Cost Reduction
The former encompasses various tools that help companies sell, buy, produce, or petition goods and services at the lowest price possible by isolating wastage within an organization and its processes. This could include conditions like reducing scrapings, improving the workflow, or attaining better discounts from supplies.
  • Quality Improvement
The firms, which adhere to each of these steps in the value chains outlined above, can be confident of delivering improved goods. Quality for instance has to be meet in a consistent manner this bring confidence to the customers as well as help in improving the image of the company.
  • Innovation
The use of the value chain presents a firm with innovation chances. Here, it means that only those firms willing to venture their money into innovation can generate something new, improve service or make a more effective course of action to beat competitors.
  • Increased Profitability
All in all, it can be implied that when business firms undertake a value chain analysis, they adjust leverage points which assist the business in eradicating or at least reducing wasteful costs. This leads to the idea that pure profits strategy generates higher profits and generates higher stockholder returns than pure costs strategy.

Challenges in Managing the Value Chain

  • Despite the benefits inherent in the context of the industry value chain, the management of the chain is widely known to be quite a complex affair. It is for these reasons that Canadian businesses can experience a few challenges that affect the managing of the global value chain.
  • Evaluations indicate that disruption of supply chain is generic and is experienced most felt in businesses involving global vendors. Pandemic such as the COVID-19 have exposed the insecurity of supply chain systems. To modulate risks, contingency plans and enough suppliers are needed for any business.
  • Another challenge is on how the country adapts to technological changes. With increased advancements in technology, organizations have no option but to make investments in technologies. However, this comes with a lot of capital and resources that can be a problem to small business entities.
  • Another determinant of value chain management is the factor that has to do with regulatory compliance at any of these stages. The Canadian industries are governed by certain laws that pertain to labor, safety and environmental laws. These rules should be complied with in order to make sure that a business does not fall foul of the law.

Conclusion

Industry value chain management is a very useful tool for improving the business of Canadian companies. Knowing each stage allows a company to begin looking for ways to cut costs, increase product quality, and thus compete effectively. Nevertheless, managing the value chain is a continuous process that needs vigorous attention. Those businesses that take time to measure and benchmark their value chain will be in a better place in the long run.

Knowledge of the value chain is useful for companies because it provides a strategic view. This is particularly true because in any selling industry, there is always cutthroat competition. Those companies that embrace efficiency and innovation will survive. In the case of Canadian businesses, knowledge of the industry value chain translates into strong growth and profitability.

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