1

September 23,
2017
2 VALUE CHAIN
 Porter’s definition includes all activities to design, produce, market, deliver,
and support the product/service.
 A value chain is a set of activities that a firm operating in a specific
industry performs in order to deliver a valuable product or service for
the market.
 W a y of organizing the activities of a business so that each activity
adds value (value added activity) or productivity to the total operation
of the business.

September 23,
2017
3 TYPES OF VALUE CHAIN

 V a l u e Chain is Categorized Based On The Type

Of Organizations.

 M a n u f a c t u r i n g based.
 S e r v i c e based.
 B o t h Manufacturing And Service Based.

September 23,
2017
4
VALUE CHAIN ANALYSIS

 V a l u e Chain Analysis is a useful tool for working out

how you can create the greatest possible value for your
customers. In business, we're paid to take raw inputs, and
to "add value" to them by turning them into something of
worth to other people.

September 23,
2017
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September 23,
2017
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 Introduced by Michael E. Porter in his influential book “Competitive Advantage” in

1985.
 Can be used by companies to examine all of their activities in the process of converting
inputs to outputs.
 How value chain activities are carried out, determines costs and affects profits.
 The value that's created and captured by a company is the profit margin (Value Created
and Captured – Cost of Creating that Value = Margin). September 23,
2017
 7
Inbound Logistics.
Primary
1
2 Operations
Activities
Involve the purchase of
materials, the 3 Outbound Logistics
processing of materials
into products, and
delivery of products to
4 Marketing and Sales
customers.

5 Services
September 23,
2017
 Firm’s Infrastructure : These are a company's support systems,
and the functions that allow it to maintain daily operations.
Accounting, legal, administrative, and general management are
8 examples of necessary infrastructure that businesses can use to
their advantage.

Support Human Resource Management : This is how will a company

Activiti
recruits, hires, trains, motivates, rewards, and retains its workers.
People are a significant source of value, so businesses can create
aclear advantage with good HR practices
es
Technology Development : These activities relate to managing
Support primary and processing information, as well as protecting a company's
activities and can play a knowledge base. Minimizing information technology costs, staying
current with technological advances, and maintaining technical
role in each primary excellence are sources of value creation.
activity.
It may also support each
Procurement : This is what the company does to get the resources
other within support it needs to operate. This includes finding vendors and negotiating
activities. best prices.
September 23,
2017
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 The value chain is a very flexible strategy tool for looking at your business.

 Used to analyze and create competitive advantages on both cost and difference.

 Understand the organisation issues involved with the potential of making customer
value commitments and potentials

 Adapted for any type of business (manufacturing, retail or service, big or small).

 The deeper understanding of your strengths and weaknesses to be included in

your SOWT analysis ( you vs competitors)

 Well known and has been a support plan for teaching in business schools
(last 20to 25
yrs.) September 23,
2017
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 I t has to be adapted to a particular business situation and that can

be a disadvantage since, to get the best from the value chain.

 M a n y people are familiar with the value chain but few are experts
in its use.

 T h e scale and scope of a value chain analysis can be threatening.(full

value chain is difficult)(your vs competitors)
September 23,
2017
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TATA MOTORS
(A Manufacturing Based
Company)

September 23,
2017
 Value Chain Value System of T A T A
12
Motors Dealer Network, Marketing
Transporters, Convoy
Drivers Association Research Firms, Vehicle
Financing

SAP ,
VCM

Inboun Operations Outboun

Marketing Servic
d d
e
Logistic Logistics
s
SAP , CRM -
DMS

Suppliers , Regional Warehouses,

Contractors Dealer Workshops,
Distributors, TASS

Strategic September 23,

Alliances 2017
13
Inbound
Logistics
 Long term contract with service provider’s – transporters and agents.
 Personnel at regional offices for over seeing the smooth transit of goods.
 Transparency and monitoring through deployment of IT – all
transactions through SAP.
 DTL (daily transport logistics) supplies for critical high value items.
 Efficient storage facilities – easy storage and retrieval.

September 23,
2017
14 OPERATIONS
 C a p i t a l Equipment Manufacturing division – tooling development
capabilities of global standard.
 Apprentice Trainee Course – ensuring stable source of skelid
manpower.
 T P M ( t o t a l productive management) team – continuous drive to
m
i prove efficiencies.
 Automated manufacturing processes.
 Distributed manufacturing – Assembly units at South Africa, Thailand,
Bangladesh, Brazil etc.
 Maintenance – technical capability.
 C a p a c i t y Utilization – Mercedes Benz cars make use of Tata
Mootsr paint shop facilities.
September 23, 2017
15
OUTBOUND LOGISTICS
 Stockyards, all across the country.

 Long term contracts with transporter’s – higher volume of business to transporters

ensures competitive price.

 Regional Sales Office and Vehicle Dispatch Section linked through SAP.

 Efficient security system for prevention of any kind of pilferage.

September 23,
2017
 16 M arketing
Sales
 Structured approach to understanding the requirements of individual customers
– QFD’s conducted at regular intervals.
 Clear identification of product requirements, leading to
development of innovative products – Tata 207 DI, Tata Ace.
 Pan India presence and global footprint.
 Various teams for addressing the requirements of institutional customers –
Defense, State Transport Units
 Quick assessment of the changing market dynamics and consumer
preferences –
 Tata
Large407 LCV of dealers – use of technology (CRM-DMS).
network September 23,
2017
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Service(TASS
 E a)s y availability of spare parts.
 E f f i c i e n t collection of data from field
and communication to the respective
plants.
 P a n India presence, as well as global
presence.
 L a r g e network of workshops – Dealer workshops
and TASS. September 23,
2017
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SUPPORT
AC T IV I T I E S

September 23,
2017
19 Procurement
 E procurement initiative.
 G l o b a l Sourcing Team – China like tires, power steering units
etc., Steel procured from Belarus.
 Long term relationships with a stable and loyal pool of suppliers.
 Technology driven procurement – SAP.
 G r o u p resources – Tata Steel and Tata International .
 Localized supplier base at mfg. locations – low inventory levels.

September 23,
2017
20 Technology
Development
 A p p r o x i m a t e l y 2% of the annual profits of the company invested
in (R&D).
 Knowledge portal – helps employees keep up-to-date with the aletst
technologies.
 Extensive prototype building and testing facilities. Strategic
partnerships – MDI (France), Fiat etc.
 Formal benchmarking process.
 “Technology Day” organized across all plant locations.

September 23,
2017
21 Human
Resource
 V a s t pool of technically competent engineers
and managers.
 Focus on development of technical capabilities –
Technical Training Center’s, Alliance with technical
Institutes.
 Focus on development of managerial skills – MTCs’ ,
TMTC
 C a r e e r improvement schemes – FTSS September 23,
2017

.
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Firm
Infrastructure
 M u l t i – Location facilities.
 Strong leadership – under the support of Tata Sons.
 Best in class prototype building facilities.
 Technology – SAP.
 Large product portfolio.
September 23,
2017
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September 23,
2017
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September 23,
2017