Adding value to products must start from a solid production foundation, which arises from creating value for various organizational activities that are interconnected and linked like a chain. The organization must also consider its resources. This is the principle of the value chain, which helps enhance operational efficiency and adds value to products to meet customer needs effectively. So, what exactly is this, and why is it important to organizations? Today, CPL will share these insights.

What is the Value Chain?

The value chain is an explanation of how various activities within an organization are related and connected to adding value to raw materials and products in the supply chain. In simple terms, all activities contribute to adding value to the products or services of an organization. Activities start with the purchase or receipt of raw materials and move through the transformation process into finished products. Every step uses resources, such as money, personnel, raw materials, and equipment, and involves management. The organization’s value chain connects to the value chains of suppliers and customers in an ongoing cycle.

Activities Within an Organization According to the Value Chain Concept

This concept can be divided into two types of activities: Primary Activities and Support Activities, both of which contribute to adding value to the company's products or services.

Primary Activities:

These include activities that add value throughout the process. They consist of five main activities:

Inbound Logistics: Activities to prepare for production, including importing, storing, and production planning.

Operations: Manufacturing activities that transform raw materials into finished products, including assembly, packaging, quality control, and regular machine maintenance.

Outbound Logistics: Storing and distributing products to customers and distributors.

Marketing and Sales: Analyzing customer needs to help the company sell products or generate revenue.

After-Sale Services: Post-sale services to ensure customer satisfaction and create opportunities for future sales, such as warranties, inspections, repairs, and customer feedback surveys.

Support Activities:

These activities support the primary activities to ensure smooth operations. They consist of four key activities:

Firm Infrastructure: Core activities like financial management, strategic planning, and organizational structure.

Human Resources Management: Activities for recruitment, selection, development, and management of personnel, including employment policies and compensation.

Technology Development: Managing and developing technology systems to support primary activities, such as inventory and warehouse management systems.

Procurement: Purchasing raw materials and machinery for production. Primary activities work well when supported by these four activities, which must also support each other.

The Importance of the Value Chain The value chain is a management concept that enhances products through various activities. Every primary activity must rely on supporting activities to operate efficiently. For example, transportation, one of the activities within an organization, works well when supported by logistics, packaging, and proper documentation. CPLINTER offers services to assist in export-import, logistics, product packing, and documentation. We provide consultations to ensure smooth shipping operations. Contact CPLINTER: Phone: 02-519-4426, 063-519-4426, 091-519-4426 Line: @cplinter Website: www.cplinter.com

If you're looking to export goods internationally, send us your product details for a pre-shipment review by our team. You can also contact us via LINE ID: @cplinter! Follow the CPL What is series to learn more insights about export-import processes and other related topics on our YouTube channel.