Value Chain and IS/IT Discussion questions 1.What is the Value Chain (VC)? 2.Identify the activities of the VC. 3.How is the “service” activity different from “marketing and sales”? (Don’t “sales” people provide “service”?) 4.Differentiate between “procurement” activity and “inbound logistics”. 5.Why study about Value Chain in an IS/IT class? 6.Provide an example of IS/IT used to facilitate each VC activity. 7.Explain the term value chain linkage? 8.Provide an example of an internal value chain linkage. 9.Provide an example of an external value chain linkage. 10.Provide an example of IS/IT used to facilitate internal linkage. 11.Provide an example of IS/IT used to facilitate an external linkage.

Value Chain Primary Activities Inbound Logistics –Involve relationships with suppliers and include all activities required to receive, store, and disseminate inputs Operations –All activities required to transform inputs into outputs Outbound Logistics –All activities required to collect, store, and distribute output

Value Chain Primary Activities (Continued) Marketing and Sales –Inform buyers about products/services –Induce buyers to purchase products/services and facilitate their purchase (Stimulate demand for products/services) –Collect and pass on feedback from customer back to various units in firm and estimate expected sales volume Service –Activities required to keep the product/service working effectively for the buyer after it is sold and delivered

Value Chain Support or Secondary Activities Procurement –Acquisition (actual purchase) of inputs, or resources, for the firm Human Resource Management –Activities involved in recruiting, training, developing, compensating, laying off personnel

Value Chain Support or Secondary Activities (Continued) Technological Development –Technology purchased/adopted/developed to bear in the firm’s transformation of inputs into outputs Infrastructure (General Administration) –Activities include accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management

Value Chain and IS/IT Examples Inbound Logistics – Automated Warehousing System; JIT inventory systems Operations –Computer-Controlled Machining Systems Outbound Logistics –Automated Shipment Scheduling Systems –Tracking Systems

Value Chain and IS/IT Examples (Continued) Sales and Marketing –On-line Ordering Systems for customer –Sales forecasting Service –Equipment maintenance systems Procurement –Computerized Ordering Systems and EDI

Value Chain and IS/IT Examples (Continued) Technology Development –Computer-Aided Design Systems Human Resource Management –Multi-media database systems –On-line recruiting –Intranet for employee benefits (retirement benefits, medical benefits etc.) Infrastructure –Electronic scheduling; financial systems, accounting systems, decision support systems etc.

Value Chain Linkages Internal and External Internal Linkage: Efficiency and/or competitive advantage gains due to links between two or more VC activities of a firm –Example: (Operations and Outbound Logistics; Information exchanged – Completed order status) External Linkage: Efficiency, partnership and/or competitive advantage gains due to link between one VC activity of firm and external entity (e.g., customer, supplier etc.) –Example: Ford ‘s Supplier and Accounts Payable (Infrastructure); Information exchanged – Payment Information)