In a previous article I discussed measuring the utility or full satisfaction an end consumer can receive from your goods and services. You can get to that article here click.

When examining the performance of your business outcomes, knowing the maximum utility available from your goods and services is important. Where do you start to look? The quality of the utility in your goods at services can be impacted by what we call the value chain. This this very different to the supply chain. In this article I focus on talking about the difference and the potential for impacting business outcomes.

In the world of business, there are two terms that are often used interchangeably, but actually refer to two very different concepts: supply chain and value chain. While they may seem similar at first glance, understanding the nuances between these two concepts is crucial for any business that wants to optimize its operations and stay competitive.

Exactly what is the difference between supply chain and value chain?

At its simplest level, the supply chain refers to the network of suppliers, manufacturers, distributors, and retailers involved in the production and delivery of a product or service. It involves all the steps necessary to get a product or service from the manufacturer to the end consumer, including sourcing raw materials, manufacturing, transportation, storage, and distribution.

The value chain, on the other hand, encompasses all the activities that a company performs in order to create value for its customers. It includes not just the supply chain activities, but also the upstream and downstream activities that occur before and after the product is made and delivered.

In other words, the value chain is a broader concept that includes everything from the initial design of a product to after-sales service and support. It focuses on adding value to the product or service at every step of the way, with the ultimate goal of delivering the highest possible value to the customer.

Why is it important to understand the difference between supply chain and value chain? For one, it can help companies identify areas where they can improve their operations and increase their overall value proposition to customers. By analyzing each step in the value chain, companies can identify inefficiencies and opportunities for optimization, whether it's streamlining the supply chain, improving product design, or enhancing customer service.

Additionally, understanding the value chain can help companies better differentiate themselves from their competitors. By focusing on adding value at every step of the process, companies can create a unique and compelling value proposition that sets them apart from the competition.

In today's rapidly evolving business landscape, understanding the difference between supply chain and value chain is more important than ever. By optimizing their operations and creating a differentiated value proposition, companies can stay competitive and thrive in the long run.

Examining a value chain you will discover multiple layers in direct line of sight of your end consumer, and also adjacent. Is important to include in your consideration third party influences in the value chain that impact the maximum utility you can achieve from your goods and services.

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