ABSTRACT
Michael Porter’s model helps organisations to focus on where most value can be added to an organisation. Porter also stated that the value chain of several organisations within a supply chain could be analysed to identify where the value-adding activities are within a supply chain – he referred to this as the ‘value network’. In 1985, when Porter introduced the Value Chain, around 60% of most Western economies’ workforces were active in manufacturing industries. The Value Chain can also be used to identify areas that are non-value-adding, which are potential targets for outsourcing to a more economic service provider. The Value Chain is made up of two types of activities: primary and support. The Value Chain can also be used to demonstrate where cost is added – and thus highlight the relative balance between added-value and cost within a function.
