Connecting value chain and supply chain

Armando O. Cavanha F. (MSc) and Ronaldo M. L. Martins (MSc)

Abstract

One of the important lacks in the value chain and supply chain studies is the connection of these two flows. Value chain is focused on inbound resources, processes, clients, products, businesses, while supply chain concentrates on several tiers of providers and suppliers and its relationship details and categories. Both functions are complex and dynamic enough, requiring to work harmonically.This text intents to discuss the two sequences and delineates a connection methodology.

Methodology

The essence of this approach in the industry is based on the migration of demands from core businesses levels to easy and simple information cycles to be understood by all players.The objective is to allow low level tiers the capacity to realize demands and identify competences to provide goods, services and solutions.The vision of the working structure should also support its clear and intelligible description, including those which are not part of the businesses sequences.Once described the main activities of a referenced industry, the technique indicates to drilldown the process vertically to reach a 3rd or 4th level of activity, deep enough to understand clearly the action or task the process requires.

Just after this first step done, cross activities should be analyzed, those ones that permeate (horizontally) all vertical processes described above. One of the purposes for this technique is to promote the demystification of the jargon and complicated technical content, which, in many cases, can turn difficult the presence of new comers to the desired supply chain.It also allows the identification of supply lacks and the reconfiguration of strategies to elaborate, implement and solve technological, commercial and local content gaps.Those initiatives can be used in the vertical levels as in the horizontal cross functions as well.

The first step of the methodology consists drawing 10 or 15 main processes of the productive sequence or value chain, from left to right, from the beginning to the end of the process.

Just after this first step, a second one needs to draw the second level processes, with 3 to 4 activities drilled down. It is enough 3 or 4 levels at the first approach, obtaining a reasonable knowledge of the entire productive sequence and its details.After the last tier of the productive sequence, the first tier of the supply chain can be connected, known as first contact providers and suppliers. Once more drilldown in the providers and suppliers layers up to 3rd or 4th tier, deep enough to get a complete network.In addition to the vertical segments of the production sequence and the suppliers/providers tiers come to the systems cross-cutting functions, crossing the production sequence and supplier layers horizontally. These functions are, for example, logistics, information technology, training, catering and personal accommodation.One of the good results of the application of the methodology is the analysis of technology gaps, commercial options and productive collaboration network.

Conclusions

Supply chain connected to value chain and its mapping provides ability to correlated studies in an organized mode, allowing understand, communicate, deploy and plan corrective actions, as industrial movements, merging, reorganization, gap analysis and productive chains.