Value Chain And Supply Chain, The Difference Explained

Daily practice lead me to sharing my thoughts with you on the difference between a value chain and a supply chain. I noticed that these terms are used in all types of contextual discussions and I thought you might like my take on it.

A supply chain refers to the series of activities involved in bringing a product or service from its conception to delivery to the end customer. It typically involves the sourcing of raw materials, manufacturing, distribution, and logistics.

A value chain refers to the series of activities involved in creating, marketing, and delivering value to the customer. It encompasses the entire end-to-end process of creating value for customers, from product design to after-sales service.

Supply chains and value chains are essential for businesses, the key difference lies in their focus. Supply chain management focuses on optimizing costs and efficiency in the procurement, production, and distribution of goods and services. Value chain management, on the other hand, focuses on adding value to the product or service to differentiate it from competitors and satisfy customer needs.

In summary, a supply chain is concerned with getting the product or service to the customer as efficiently as possible, while a value chain is concerned with creating and delivering value to the customer through every step of the process.

Now in both value chain and supply chain you will find contracts. That makes the job of the contract manager so interesting.

Arjen van Berkum

Arjen van Berkum is a columnist, keynote speaker and motivator, with an eye for business ecosystems, innovation and disruption. In addition to his work as technology and contract management evangelist, he is a visiting lecturer at Delft University of Technology (TU Delft).