How To Draw a Value Chain Diagram

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Value chain is a concept that was created by Michael Porter. This concept is widely used in business management and is a great model to improve a company’s work. The value chain diagram consists of all the activities from the procurement of the goods to the distribution of the final product to be available for the consumers. The value chain helps a company increase their profit. All the activities that the product passes through add value to the final product. The result is the final product is worth more than the activities that it went through.

Here are some tips on how to draw a value chain diagram:

  1. Value Chain Framework. In order to draw a value chain diagram for your company, you must first know the framework of the concept. The value chain diagram consists of the primary activities of the company. These are the inbound logistics, the operations, the outbound logistics, marketing and sales and the service. These are all the stages that a product goes through before making it to the consumers. You can look for a template online that has these elements.
  2. Inbound Logistics. The first step in the chain is inbound logistics. Inbound logistics consist of getting resources for the product and receiving it. You can also include other components in the inbound logistics, such as the storing of the raw materials and the inventory control.
  3. Operations. Operations is the second step in the chain. The activities in the operations consist of assembly and manufacturing of the final product, testing, packaging and managing of the distribution. This is the step in the industry chain where the product is tested before it goes to the market.
  4. Outbound Logistics. Outbound logistics is described as the activities that are done in order for the final product to reach the consumers. This includes the managing of the deliveries and orders and also the distribution plan for the product.
  5. Marketing and Sales. The marketing chain is one of the most crucial steps in the value chain. This is where the products are advertised to the consumers. The effectiveness of the marketing technique used may have a great impact on the success of the product. This chain consists of activities, such as promotions, pricing and selling of the product.
  6. Service. Service is the last step in the marketing chain. This consists of the activities done to increase the value of the product. Service basically means the customer support that the customers receive from the company.
  7. Diagram.  You can create your diagram by filling up the details on each value chain. You can use a template to help you. This diagram will help you to see the problem areas in your company so that you can improve them. You will also be able to have a competitive advantage against other companies when you are successful in the value chain.

These are the elements that you need to consider in order to draw your own value chain diagram. In order to be successful, the final product in the value chain must have more value than all the activities done in the value chain combined. 


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