Value chain in external and internal logistics: example and types

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The value chain in logistics is a key element, since it helps to understand the importance of logistics activity and why.

The value chain in logistics is a key element, since it helps to understand the importance of logistics activity and why. This is because beyond the product itself, the customer pays for an overall experience. If you want to know a little more about this concept and all the implications it has, keep reading and we will tell you about it.

What is the value chain in logistics?
When it comes to understanding what the logistics value chain is, it is convenient to take as a reference the value chain concept according to Michael Porter , the author who coined the term. For Porter, the value chain is the result of the different stages that a product goes through during its production until it reaches the hands of the consumer. Each of these stages, which take place both inside and outside a company, improve the quality of the product.

That is, they add value. In this way, the value chain according to Michael Porter is a process that enriches the product as a whole, and that contributes to the user or consumer experience being full and complete beyond the strictly material element that constitutes the purchased product. Hence, the importance of the supply chain is not only physical or material, but must also take into account less tangible aspects, which is evident in supply chain strategies .

An important aspect that must be taken into account when talking about value chain and supply chain is that two basic types of value chain must be distinguished: value chain in internal logistics and value chain in external logistics .

Value chain in internal logistics
The value chain in internal logistics refers to the logistics processes that the products undergo within the same company. For example, the process that allows the flow of materials to be carried out so that a raw material is transformed into a manufactured product.

Value chain in external logistics
The value chain in external logistics refers to the logistics processes 海外集運 that take place outside the production site and that, although they do not transform the product, they do contribute to providing it with more value. For example, the process that allows a manufactured product to reach the consumer in just one or two days instead of a longer period of time.

In this way, logistics and the supply chain work together to ensure that the products reach the consumer both on time and in the correct form. In addition, it must also be taken into account that, depending on the case, one type or another of methodology can be applied for the design of the supply chain .

Types of value chain of a company
Although the logistics value chain is one of the most important, it is by no means the only value chain for a company .

In this sense, in a company we can also find other types of value chains such as the following:

Conception value chain : refers to the different processes an idea has to go through from the time a new product is launched on the market until the product is manufactured. In this sense, the process of identifying a consumer need, as well as devising possible solutions, choosing one of them or developing tests and prototypes, among others, are different phases of the design value chain that contribute to increasing the value of the product. .

Production value chain : The production value chain is easy to identify, as it refers to the different transformation phases that products go through from being simple raw materials to becoming manufactured and ready to be marketed.
All of these, in addition to the logistics value chain, are examples of a company's value chain . All of them work together, and contribute to a business running smoothly and generating value and wealth with its activity. Hence the special importance of conducting an assessment of the supply chain and the performance of the supply chain to ensure that it is optimal.

Example of value chain in logistics
The best way to understand what value chain and supply chain in logistics are is through an example of supply chain in logistics:

Take as a reference a company that manufactures computers. These computers leave the factory and are shipped to a warehouse, where they are kept until sales take place. Once a sale is made, the computer must be collected from warehouse shelves and properly packaged for shipment to the buyer's address. Once the order leaves the warehouse, it must be transported in the most efficient way possible, previously establishing the route to be followed to distribute that and the rest of the orders. Upon arrival at the place of destination, the computer must be delivered in a timely manner, as agreed with the buyer.

This whole process is an example of a value chain in logistics . Why? What has the whole process contributed to the computer that left the factory when its manufacture was completed?

Strictly speaking, the computer that left the factory has not undergone any transformation since it left the place of production until it reached the hands of the buyer. However, all the logistical flow that has been suffered in between is what has allowed the buyer to have his computer a few days after making the purchase.

If this entire example of a logistics value chain and its process did not exist , the buyer would not have been able to obtain his computer in a timely manner as he wished. In this way, although the logistics value chain does not physically transform the product, it does transform it in terms of value, since the customer's purchasing experience is notably enriched by this process.