A value chain describes how value is created and linked in processes through a chain of activities. The value chain is also referred to as a process chain or service chain.

Structure of a value chain

To analyze a value chain, a company’s value-adding activities are divided into primary and supporting activities.

The primary activities are activities related to the creation and distribution of the company’s services.

These include:

• Inbound logistics
• Production
• Marketing and sales
• Outbound logistics
• Service

The supporting activities help the primary activities to remain functional and enable the company to perform. They are a prerequisite for the successful execution of the primary activities.

The supporting activities include:

• Company infrastructure
• Human Resource Management
• Technology Development
• Procurement

The goal of these activities is to identify a company’s competitive advantages. The analysis of the individual processes should help to create a marketable end product.

Value Chain Diagram (VCD)

The value chain diagram is used to get started with business process modeling. In a value chain diagram, the core and support processes of an organization are modeled.

Possible structure-forming relationships between the individual value chains are as follows:

• The functional organizational structure, i.e. the representation of different hierarchy levels in which the process-oriented super-/subordination is represented by the decomposition of subfunctions (e.g. “corporate process” is superordinate to the three processes “product development”, “production optimization” and “sales processing”).
• The process structure, i.e. the representation of the sequence in which the value-added processes take place (e.g. “product development” → “production optimization” → “sales processing”).

For more information, see Integration of the stationary trade into the value chain of e-commerce.

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