1. Chapter 2: The value chain
The production of goods and services is the result of the efforts of many organisations – a complex web of contracts and co-operation known as the supply chain or the value system.
E-Commerce ©David Whiteley/McGraw-Hill, 2000

2. The supply chain Manufacturing Inputs:
Components (e.g. wheels, seats, etc.)
Sub-assemblies (e.g. engine, gearbox, etc.)
Sales and Distribution:
Wholesale (e.g. import agent)
Retail (e.g. local main dealer)
E-Commerce ©David Whiteley/McGraw-Hill, 2000

3. Logistics chains Transport Storage Paperwork (Orders, Invoices, etc)
Each supply chain transaction adds cost without adding intrinsic value.
e-Commerce can be applied to the supply chain to reduce costs or improve service.
E-Commerce ©David Whiteley/McGraw-Hill, 2000

4. Porter’s value chain model
Primary Activities:
Inbound Logistics
Operations (Production)
Outbound Logistics
Marketing and Sales
Service
E-Commerce ©David Whiteley/McGraw-Hill, 2000

5. Porter’s value chain model
Support Activities:
Procurement
Technology Development
Human Resources Management
Firm Infrastructure
E-Commerce ©David Whiteley/McGraw-Hill, 2000

6. Linked value chains Inbound Logistics —from Suppliers
Outbound Logistics —from Customers
E-Commerce ©David Whiteley/McGraw-Hill, 2000

7. Porter’s value system Overall organisational competitive advantage:
(Inter-organisational value chain)
Overall organisational competitive advantage:
efficiency of the company
quality of its products
plus
efficiency and quality of suppliers
efficiency of wholesalers (Channel)
efficiency of retailers
The analysis of overall supply chain is called value system
E-Commerce ©David Whiteley/McGraw-Hill, 2000

8. Automotive assembly value system
Inbound Logistics:
Large number of suppliers
Vast number of components
Process:
Just-in-time (JIT) manufacture
Outbound Logistics:
Limited number of Main Dealers
E-Commerce ©David Whiteley/McGraw-Hill, 2000

9. Food supermarkets value system
Inbound Logistics:
Large number of suppliers
Vast number of products
Process:
Retail
Outbound Logistics:
Vast number of Consumers
E-Commerce ©David Whiteley/McGraw-Hill, 2000

10. Insurance value system
E-Commerce ©David Whiteley/McGraw-Hill, 2000

11. Insurance value system
Inbound Logistics:
No significant suppliers (financial / re-insurance partners)
Process:
Administrative
Outbound Logistics:
Sales through agents
Sales through brokers
Direct sales
E-Commerce ©David Whiteley/McGraw-Hill, 2000

12. e-Commerce in the value chain
Electronic Value Chain:
Reduced time frame
Changed cost structures
Re-engineered Value Chain:
Just-in-time manufacture
Quick response supply
Efficient document processing
Competitive advantage
E-Commerce ©David Whiteley/McGraw-Hill, 2000

13. Chapter 2 – Exercise 1
Consider the value system of the insurance industry, for sales to the public, and comment on the advantages and disadvantages of the three sales channels that are outlined.
E-Commerce ©David Whiteley/McGraw-Hill, 2000

14. Chapter 2 – Exercise 2
Outline the value system of an organisation you know. Identify linkages where e-Commerce might be usefully applied.
E-Commerce ©David Whiteley/McGraw-Hill, 2000