Value chain analysis examines the separate business activities that create value for customers. Activities include inbound logistics, operations, outbound logistics, marketing and sales, and services. Each activity adds value and the goal is to offer more value than the costs of the activities. A competitive advantage can be gained by analyzing and improving the value chain. Tata Motors uses value chain analysis to gain efficiencies. For inbound logistics, it has long-term contracts with suppliers and uses IT for transparency. Its operations include training programs and distributed manufacturing. Outbound logistics utilizes stockyards and contracts. Marketing identifies customer needs and sales targets institutional clients. Services provides easy access to spare parts and workshops.

1. Value Chain
Analysis
SOURAB KESAR

2. Value Chain Analysis
Introduction:
 Every business activity is composed of number of separate tasks which
ultimately lead to value creation in terms of company’s products/
services
 These activities put together in a successive sequence of value addition
we get a chain of activities called value chain
 The goal of these activities is to offer the customer a level of value that
exceeds the cost of the activities, thereby resulting in a profit margin
 Chain of activities starting from new material purchase to delivery of
finished products
 Every activity in a chain adds some value to the product, may it be cost
cutting or value addition
 A competitive advantage can be achieved by analyzing and
restructuring the value chain to provide lower cost or better
differentiation

3. Value
Cost advantage
Differentiation
Advantage

4. Porter’s Generic Value Chain
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Services
SUPPORTED BY →
Firm’s Infrastructure
HR Management
Technology Development
Procurement

5. Inbound Logistics:-

6. Inbound Logistics:-

7. Value Chain Analysis
 Inbound Logistics:-
The receiving & warehousing of raw materials & their
distribution to manufacturing as they required.
Case of Tata Motors:
 Long term contract with service provider’s – transporters and agents.
 Transparency and monitoring through deployment of IT – all
transactions through SAP.
 Efficient storage facilities – easy storage and retrieval.

8. Operations:-

9. Value Chain Analysis
 Operations:-
 The process of transforming inputs into finished
products/services
 Apprentice Trainee Course – ensuring stable source of skilled
manpower.
 Automated manufacturing processes.
 Distributed manufacturing – Assembly units at South Africa, Thailand,
Bangladesh, Brazil etc.
 Capacity Utilization – Mercedes Benz cars make use of Tata Motors
paint shop facilities. .

10. Outbound Logistics

11. Value Chain Analysis
 Outbound Logistics:-
The warehousing & distribution of finished goods
 Stockyards, all across the country.
 Long term contracts with transporter’s – higher volume of business to
transporters ensures competitive price.
 Regional Sales Office and Vehicle Dispatch Section linked through
SAP.
 Efficient security system for prevention of any kind of pilferage.

12. Marketing & Sales:-

13. Marketing & Sales:-

14. Value Chain Analysis
 Marketing & Sales:-
The identification of customer needs and the generation
of sales
 Clear identification of product requirements, leading to development
of innovative products – Tata 207 DI, Tata Ace
 Independent teams for addressing the requirements of institutional
customers – Defense, State Transport Units
 Helping to augment the scarce resources – Fiat selling vehicles
through Tata dealerships, in return Tata has access to Fiat’s
technology and unutilized capacity.
 Large network of dealers

15. Services:-

16. Value Chain Analysis
 Services:-
The support of customers after the products & services
are sold to them
 Easy availability of spare parts.
 Efficient collection of data from field and communication to the
respective plants.
 Large network of workshops – Dealer workshops and TASS.
 Training facilities – for dealer

17. Value Chain Analysis
Supported By
 Infrastructure:-
Organizational structure, control systems, company culture etc.
 Human Resource Management:-
Employee Recruiting, hiring, T&D, Compensation
 Technology Development:-
Technologies to support value creating activities
 Procurement:-
Purchasing inputs like materials, supplies, equipment

18. Value Chain & Value System of TATA
motors
Inboun
d
Logistic
s
Operation
s
Marketing Servic
e
Outboud
Logistics
Suppliers , Contractors
SAP , VCM
SAP , CRM - DMS
Strategic Alliances
Transporters, Convoy
Drivers Association
Dealer Network, Marketing
Research Firms, Vehicle
Financing
Regional Warehouses,
Dealer Workshops,
Distributors, TASS

21. Value Chain Analysis