Just a couple of points here. First, not everyone agrees with Porter's view of the world. As has been pointed out below, moving products from one location to another clearly adds value. If it didn't, Amazon would make you go to their one warehouse in Seattle to pick up your goods. Have fun with that. But more importantly, you have failed to properly present the key difference between the two models (at least as Porter envisions them). Value stream models apply at the firm or business unit level. Supply chain models, which deal with virtually identical issues, include the relationships and interactions between firms. So a value chain for a furniture manufacturer would start with the timber supplier from whom they purchase their wood, their hardware supplier from whom they purchase their other bits, include their internal manufacturing processes, and then to their distributor. In the supply chain construct, our furniture manufacturer is concerned with the source of the wood all the back to the forest where it was grown. This set of linkages might include the forest management organisation, the timber processor, one or two levels of distribution, the shipping companies (probably trains, boats, trucks) that move the logs or processed timber, the import/export operators who will be involved in what is typically an international supply chain, and let's not forget any possible government-level interactions with occasionally uncooperative countries. At the other end, we need to link distributor to the wholesaler through to the retailer, and in some cases the actual final customer. Along the way we will be managing inventories, costs, schedules, payments, and relationships. it's complicated! There is one other point I'll make. The entire purpose of your video is to sell your services. You have just couched it as an educational experience. It's really bad form to so blatantly misrepresent these two concepts to satisfy your marketing goals. Marketing is fine, just don't insult education in the process.
This is a good video UNTIL you stated that a supply chain adds no value...really? You state that a supply chain is only concerned with moving and storing the physical product. Even given your extremely narrow definition of a supply chain, value is still created. Does not moving a product to its place of sale also add value? If one of the four P's of marketing is not "Place" then I will eat my hat. Place is also a value adding activity. You are just plain wrong on this one. A better way of understanding this is in terms of push and pull systems. There is a common, but incorrect view that: • Supply chains = Push system and therefore bad, and • Value chains = Pull system and therefore inherently good. Many, like this video, loudly speak of a ‘value chain’ when referring to a company’s supply chain, and bad mouth supply chain management as an old fashioned term or say its just about transport and storage (I thought this was logistics? could be wrong). Further these people will incorrectly proclaim that a much better way is to use a value chain or a pull system. This is an incorrect understanding of what a push and pull system looks like and ignores the fact that ALL supply chains and so called value chains are actually a mix of push and pull systems - hybrid systems. A proper understanding will recognise that a supply chain is a value chain and a value chain is a supply chain, the base system or mechanism is identical. In fact the views are synergistic. I would argue that the difference between a value chain and a supply chain is a simple matter of perspective. When you are discussing a value chain you are attempting to observe the underlying supply chain through the value creation and value destruction lenses. In other words, trying to find those parts of your supply chain that are the key to value adding and contribute the most to value as perceived by the final consumer. To be a little technical, a value chain perspective is simply a heuristic (or a mental model or mental tool) that allows you to analyze a supply chain for a value objective. The key advantage of doing so is that it places what the consumer values at the heart of supply chain design and operations, and this I believe, is what value chain proponents are trying to achieve. Please stop propagating this rubbish. Regards
I see a supply chain as linked value chain across several organizations, therefore i follow this defination of supply chain, "A set of firms or a linkage of separate agents, each with their own individual value chains that pass materials forward and bring products or services to the market, is called a supply chain". so giving a sweeping statement like "supply chain doesnt add any value" (as given in this video) is not correct. I think, effiecient and effective supply chain clearly add value to time, place and price utility.
My own definition and differences between these two is Supply Chain- is the set of activities of sourcing the materials, storing, and distributing to the market efficiently to satisfied consumers. Value Chain- is a set of activities which are receiving the material, producing, marketing, delivering it to increase the efficiency in the production. In summary Supply chain is focusing in adding value to their consumer Value chain is focusing in their internal business to add value in their products and services.
Absolutely stupid! This commentator/author does not know the first thing about supply chains, let alone value "creation"! However, it does provide a starting point for an interesting discussion on why we see chaos in today's supply chains - it is because similar views are espoused by some, at the highest levels in corporate environments!
