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Value Chain Management (VCM)

Value chain management [involves] ... analysing every step in the process ranging from the handling of raw material to end users, providing them with the greatest value at the lowest cost (Koontz and Weihrich).

Information about Value Chain Management (VCM)

VCM includes performance management and monitoring of various processes (Ijioui et al., 2007). Value chain managers rely heavily on value chain analysis, as it enables a detailed insight into each supply chain subsystem and its activities and allows for strategy development to maximise value at the lowest total cost (Khanna, 2008).

Value reflects the utility of a product or service and is defined as the benefit derived by the end-user and is most often measured by price or incurred charge. The net added value (NAV) at each stage of the chain (and overall) usually reflects the difference between price and cost (capital, operating, direct, indirect) (CIPS: Procurement’s role in the generation and capture of value in supply chains; Rainey, 2007). The primary means of achieving and sustaining value in the supply chain are: optimising net value (NV) to end users at the lowest possible total cost and optimising net added value for each intermediate participant in the chain (CIPS: Procurement’s role in the generation and capture of value in supply chains).

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