{"id":9267,"date":"2018-08-23T12:29:41","date_gmt":"2018-08-23T12:29:41","guid":{"rendered":"https:\/\/sg.syspro.com\/blog\/porters-value-chain-model-and-erp\/"},"modified":"2021-03-04T14:50:07","modified_gmt":"2021-03-04T14:50:07","slug":"porters-value-chain-model-and-erp","status":"publish","type":"post","link":"https:\/\/sg.syspro.com\/blog\/supply-chain-management-and-erp\/porters-value-chain-model-and-erp\/","title":{"rendered":"Porter\u2019s Value Chain Model and ERP"},"content":{"rendered":"

Every business leader understands the importance of a sound strategy<\/strong> to take their business to the next level. Developing this strategy requires a close analysis of the business and a keen understanding of the key drivers. But knowing what to analyse is sometimes tricky.<\/p>\n

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This is when the hard work starts \u2013 fortunately there are a number of strategy gurus who have already done the hard work for us by assembling a number of very useful frameworks that focus the analysis efforts onto key areas of the business.\u00a0 So which frameworks should we use?<\/p>\n

The analysis should start at a high level and use a few generic frameworks which provide some valuable insights into the business and highlight a few critical areas that will need further scrutiny.\u00a0 As the scrutiny delves deeper into the industry specifics and business functionalities, we employ the specific frameworks developed to analyse those areas of the business.<\/p>\n

Michael Porter of Harvard Business School developed a number of very useful frameworks, one of which, Porter\u2019s Value Chain Analysis, <\/strong>I\u2019m going to discuss in this blog.<\/p>\n

Porter\u2019s Value Chain Analysis<\/strong><\/p>\n

Every organization, whether supplying goods or services,<\/a><\/strong> has a value chain<\/a> <\/strong>i.e. the collection of activities that are performed by a company to create value for its customers. Porter\u2019s Value Chain Analysis dissects the organization\u2019s activities into a generic value chain and highlights the key tenets of Value Creation in the Value Chain.\u00a0 Value Creation creates a competitive advantage for the organization.<\/p>\n

The strength of Porter\u2019s Value Chain Analysis is the focus on the systems and activities with customers as the central principle, rather than on departments and expense categories. It links systems and activities to each other and demonstrates what effect this has on costs and profit.<\/p>\n

Using <\/strong>Porter\u2019s Value Chain Analysis<\/strong><\/p>\n

While it appears to be a straightforward, the framework looks at a number of key aspects in a business.<\/p>\n

The model is depicted below, and has separated the generic activities of the organization into nine key activities. These nine activities are further grouped into:<\/p>\n

\"Porters<\/p>\n