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Unraveling Value in a Value Chain

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The concept of value chain is used to analyse international trade which comprises of full range of activities that are required to bring a product from its conception, through its design, its sourced raw materials and intermediate inputs, its marketing, its distribution and its support to the final consumer. Simply put, the global value chain includes all of the people and activities involved in the production of a good or service and its global level supply, distribution and post sales activities (also known as the supply chain). GVC is similar to Industry Level Value Chain but encompasses operations at the global level.

Value chain analysis includes value-creating activities of all industry participants. With a combination of firm’s primary activities like Logistics, Operations, Marketing, Services and support activities like Infrastructure, Human Resource Management, Technology and Procurement, a firm can stay out of ‘No Profit Zone’ and can be a step ahead with its competitors. A fine example of an efficient supply chain and an equally reliable value chain is – Amazon, with its robust operations and awe-inspiring technological advancements, has set an example in itself. The main powerhouse of Amazon is the quality control in inventory, a comprehensive market research, warranty and maintenance, good administrative and financial infrastructure and a highly proficient R&D team.

Amazon recently has come up with a new augmented reality feature for iPhone users, dubbed AR view, that lets customers place virtual versions of products into real-world scenes before buying, allowing them to see how that toaster or coffee maker will look on the kitchen counter when the real one arrives. Another feature is Amazon key, wherein whenever a delivery comes to a customer’s door, the lock first helps Amazon verify that the driver is at the correct address at the appropriate time. It then starts recording video and unlocks the door, capturing the entire visit.

With many e-commerce players active globally, what differentiates Amazon with others is the consistency by which it has managed its Value Chain worldwide. Numerous case-studies have been published for its operational and administrative success and it continues to be a prime example for the firms who wish to achieve similar benchmarks. This also holds the fact that many firms are fixating on ‘Value Chain Optimization’ as a need to systematically examine the activities and to monitor cost and performance on a regular basis.


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