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Inter Organizational Value Chains

Inter Organizational Value Chains

The value chain within a company is a microcosm (miniature) of the overall value chain. The analysis of overall supply chain is called the value system. Figure 1.14 shows the porter's value system for single firm.



Value Chain in Different Areas 
Value chains differ considerably across trade sectors and between different organisations within a trade sector. Value system in automobile assembly, food, supermarket, and insurance sector are summarised as follows: 

1) Automobile Assembly: 
Automobile assembly uses a vast number of components. The making of a car is a component assembly job. Some of the components, such as engines and body panels, may be produced by the company (possibly in other plants), whereas most of the parts: lights, break, wheel, tyres, etc. are brought in from supplies. 
Components are delivered to the production line on a just-in-time basis; larger components might be "sequenced delivery" with their arrival synchronized to match the order of the vehicles on the assembly line.
 
The sales channel is the dealer network; each vehicle assembler sells through a chain of dealers tied by contract to that marquee. Vehicle supply to the network is a mixture of the car maker instructing the dealers what to stock and the dealers ordering to meet demand. The dealer network also has a system of swapping vehicle so that the specific requirement of a customer can be met.

 


  • 2) Food Supermarket: Food retailer is dividing into two parts: 
    • i) Large supermarket chains (direct deal with manufacturer) 
    • ii) Small retailers (deal with wholesaler rather than manufacturer). 

Supermarket supply chain is start from food manufacturer. Product is either delivered to a regional distribution depot or direct to the shop. Items that are relatively small or are sold in modest quantities can be delivered by the manufacturer to the regional depot where the load can be split up and sent on to the shops where they are needed. Items required in large quantities or that need to be very fresh can be delivered direct from the supplier to the supermarket, obviating the need to "double handle" the goods at the regional warehouse. Supermarket sells directly to the consumer; there is no requirement for any intermediary or channel.



  • 3) Insurance Sector: Insurance is a service industry and it is not directly reliant to its suppliers, its value system is therefore focused on sales. Insurance policies to the public can be: 
    • i) Sold by an agent (company employee). 
    • ii) Sold by an intermediary (like insurance broker). 
    • iii) Direct sales using telesales or the internet.


Value Chain In Organisation
An organization needs to analyze its own value chain and it should apply similar techniques to its overall value system. The organization needs to establish which of its inter-organizational relationships working well, providing profit and which fail to achieve appropriate level of quality and prices. The linkage in the value system has to be managed. The physical linkage involve goods handling, transport, warehousing. And including following aims to accomplish: 
  1. Pre-Sale: Finding supplier & agreeing terms 
  2. Execution: Order, delivery 
  3. Settlement: Invoice, payment 
  4. After-sales: Supportive services  
Use of e-commerce technologies is definitely improving performance of linkage: 
  1. Just-in-time manufacturer or quick response supply 
  2. Efficient document processing (less documenting error)

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