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Assessing Value and Supply Chains

Do you know the value that your organization adds? How are customers’ lives improved by your products or services? Figuring out the answers to these questions is just one part of the bigger picture of how your organization creates value. To get the full picture, you also want to look at your organization’s value chain.

Value chains

Value chains are sequences of activities through which your organization delivers value to customers. These activities work together to generate value, as well as the resulting demand and cash flow this creates.

In most organizations there are nine value-added activities. Inbound logistics, operations, outbound logistics, marketing and sales, and services are primary activities directly related to the products and services your organization creates.

The other four services — infrastructure, human resources management, technology development, and procurement — are secondary activities. While they don’t provide value directly, your organization wouldn’t be able to function without them.