Value chain analysis concepts from "summary" of Cost and Management Accounting by Dr. M.P. Gupta,Dr. Ajai Gupta
Value chain analysis is a powerful tool to enhance business performance by identifying areas of activity that add value to the product or service. It helps companies optimize operations and reduce costs by understanding activities and the amount of resources used. It also enables companies to identify areas of potential growth and develop strategies to increase value.- Value chain analysis is an operational tool used to identify the main activities that add value to a firm's operations and its cost-grabbing opportunities.
- By uncovering value chain costs, businesses are able to better understand their various costs and figure out the best ways to improve their cost savings and profitability.
- Companies use this type of analysis to gain insight into their processes, enabling them to cut indirect costs or reduce variability in the process and make better decisions for sustainable growth and development.
- It efficiently organizes the business into primary and support activities, based on which you can develop strategies with more efficiency.
- Its key functions include quality control, production scheduling, purchasing and inventory management.
- With this technique, company’s resources are used in the most efficient manner while taking into consideration the Quality, Cost and Speed factors.
- Analyzing these activities can provide firms a better understanding of the competitive landscape that will help them evaluate potential partnerships and industry collaborations.
