value chain

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Value Chain

The set of activities whereby a company take raw materials and turns them into finished products by adding value at each step. For example, take a conglomerate that controls every step of a supply chain. It may have a timber division that cuts down trees, which adds value to the wood because it can then be used. It then sends the timber to the milling division, which adds value by refining the timber into planks of wood. The carpentry department refining the planks adds value by making them into a table, which can then be sold to a customer.

The value chain analyzes how much value each activity adds to the final product against how much each step costs. The two may not be equivalent; making a table may add a great deal to the wood's value without costing very much. Analyzing the value chain is one strategy a company can use to identify and cut costs in a way that maximizes profit.

value chain

see VALUE ADDED CHAIN, VALUE CHAIN ANALYSIS, VALUE CREATED MODEL.
References in periodicals archive ?
Manufacturing Paradoxes: Foreign Ownership, Governance, and Value Chains in China's Light Industries.
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Today is day one for businesses that want to gain visibility into and control over their value chains," said Phil Myers, president and CEO of Cyclone Commerce.
the collaborative commerce company, today announced Cyclone Community Director, an application to help enterprises automate and manage the provisioning of their value chains in order to support the growing trend to in-source management of strategic value chain partners.
value chains from both graphical and hierarchical standpoints.