THE VALUE CHAIN DEFINED
Some thought about the linkages between activities: These linkages are crucial for corporate success. The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only than operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as pre-determined by marketing.
In the outcome, the linkages are almost un-seamed cooperation and data stream between the value chain activities.
John Shank and V. Govindarajan (1993) depict the value chain in wider terms than sets Porter. They express that “the value chain for whatsoever business firm is the value-creating actions the whole way from primary staple sources from component part providers by to the eventual end-use product deported into the ultimate consumer’s reaches.” This description considers the business firm as function of an general chain of value-creating actions. Reported to Shank and Govindarajan, the manufacture value chain begins with the value-creating operations of providers, who supply the primary staples and component part*. It carries on with the value-creating operations of assorted categories of vendees or end-use consumers, and culminates in the disposition and reusing of materials.