Importance of Value Chain

• Knowing that price of the product in the

marketplace is among the most dominant aspect
that determines the competitiveness of the firm. It
is important and critical to study and analyze both
the backward and forward channels of the entire
value chain.
 C
U
ST
RAW MATERIAL

O
Business M
Backward channel Forward channel
Organization E
R
S
Supply Chain Distribution Chain
The Backward Channel
backward channel is composed of the
companies or organization providing raw
materials for the company to undertake its
value creation process. This channel refers to
the suppliers of the business concern.
Supplier
*Costs
*Quality
*Performance
Forward channel

refers to the distribution side of the

business or parties involved beyond
the production and storage line.
•distributors, dealers, importers,
transport/delivery firms and other
organization involved in the value
creation process.
the e-Commerce Era
•In the world of e-Commerce/e-Business,
companies can use the Internet technology
to improve the efficiency and effectiveness
of particular activities.
Customer-oriented Value Chain
• As presented in various supply and value chain
diagrams shown earlier, diagrammatic presentation
of value chain need not be a series and parallel or a
left-to-right diagram. The value chain concept takes
the form of a circular model.