The core purpose of the value chain is the fact that it integrates all the resources and the interesting element of the value chain is that is starts from the vendor’s vendor. Value chain management focuses a lot on minimizing the waste in the operations and it stresses a lot on reducing error oriented production. The value chain of an organization maximizes the financial resources and capacity-based solutions. The process keeps the organization running on optimum efficiency and provides effective results in comparison to their competitors. Therefore, it can be stated quite easily that value chain management of an organization optimizes the value of the customer’s customer (Sanders 2009).
The value chain is usually considered as the chain of different activities and the products that are included in the value chain pass through different activities and through value chain the value is added at every step. Value chain management produces a chain of activities that gives more added values to the products as compared to the sum of added values of all other activities. At every step certain level of cost is incurred but the activities of cost cannot be mixed with the value chain (Krajewski & Malhotra 2006). In order to understand this phenomenon the example of diamond cutter can be used and through cost incurred and the value added in the final product this phenomenon can be easily understood. A diamond cutter adds value in the final product and the cutting activity of the diamond cutter possess very low cost but this process adds much value in the final product. That is the reason why investors and individuals prefer a cut diamond because it is much more valuable than a cut diamond.
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