MICHEL PORTER ‘S VALUE

CHAIN MODEL
Meaning
Diagram
Explanation
Example
Submitted to:
Anushka Ma’am
Submitted by:
Vrutika Gandhi
A - 5019
 MEANING
 A value chain is a set of activities that an organization carries out to
create value for its customers.
 Porter proposed a general-purpose value chain that companies can
use to examine all of their activities, and see how they're connected.
 The way in which value chain activities are performed determines
costs and affects profits, so this tool can help to understand the
sources of value for the organization.
 EXPLANATION
Primary Activities

 Inbound Logistics : Includes receiving, storing, inventory control,

transportation scheduling.
 Operations : Includes machining, packaging, assembly, equipment
maintenance, testing and all other value-creating activities that
transform the inputs into the final product.
 Outbound Logistics : The activities required to get the finished product
to the customers: warehousing, order fulfillment, transportation,
distribution management.
 Marketing and Sales : The activities associated with getting buyers to
purchase the product including channel selection, advertising,
promotion, selling, pricing, retail management, etc.
 Service : The activities that maintain and enhance the product’s value,
including customer support, repair services, installation, training, spare
parts management, upgrading, etc.
 EXPLANATION
Support Activities

 Procurement : Procurement of raw materials, servicing, spare parts,

buildings, machines, etc.
 Technology Development : Includes technology development to
support the value chain activities, such as Research and
Development, Process automation, design, redesign.
 Human Resource Management : The activities associated with
recruiting, development (education), retention and compensation of
employees and managers.
 Firm Infrastructure : Includes general management, planning
management, legal, finance, accounting, public affairs, quality
management, etc.
 EXAMPLE – DOMINO ‘S PIZZA
 DOMINO’S PIZZA Founded as a single store in 1960 & today
stands as the recognized world leader in pizza delivery.
 From the beginning, Domino’s have been dedicated to the best
of service, quality products and delivery excellence.
 Each day, more than 1 million customers enjoy hot, delicious
Domino’s Pizza products on every inhabited continent on
Earth, because they operate over 10,000 stores in more than
70 countries
 each and every store dedicated to our focus of providing
great-tasting pizza – whether it be delivered directly to your
door or available for carryout.
 They pioneered the pizza delivery business back in 1960 &
total system sells more than 500 million pizzas worldwide
every year.
DOMINO ‘S PIZZA – PRIMARY
ACTIVITIES
DOMINO ‘S PIZZA – PRIMARY ACTIVITIES

 Inbound logistics – Receiving & storing :

 Domino Pizza store described as "more a logistics company
than food service, since supply chain management is the
factor that differentiates the winners from the losers" in this
business
 Domino’s requires every truck to have a full load in order to
control freight expenditure.
 The system knows the weight and dimensions for each
product as well as the volume and weight restrictions of the
trucks, and whether they are company-owned vehicles or for-
hire carriers.
 The optimization logic builds fully loaded trucks of all the
product needed for a particular delivery, thereby reducing
transportation costs.
DOMINO ‘S PIZZA – PRIMARY ACTIVITIES
 Domino's Pizza has 8,000 stores in 54 countries and
sales of $4.6 billion which is known for development of
centralized ingredient logistics systems.
 Operation of Domino’s Pizza :
 It include shipping grain and processed to be stored
in the dough and then put into storage refrigeration
trucks for delivery to retail outlet.
 Outbound logistics :
 It make use of scooters, bikes, fleet-footed delivery boys
and vans
 Marketing & Sales of Domino’s Pizza :
 They offer Pizza Fresh, Warm and messages can
be less than 30 minutes is to address.
DOMINO ‘S PIZZA – PRIMARY ACTIVITIES

 Service of Domino s’ Pizza : Associated with providing service to

enhance or maintain the value of the product

 Effective use of procedures to solicit customer feedback and to act

on information
 Quick response to customer needs and emergencies
 Ability to furnish replacement parts
 Effective management of parts and equipment inventory
 Quality of service personnel and ongoing training
 Warranty and guarantee policies
DOMINO ‘S PIZZA – PRIMARY ACTIVITIES
 Other Services:
 Payments Module Enables Consumers :
After customers order their pizza types through
websites online, the payment can be made via credit card, gift
card, or cash. Total bill also will appear on the screen.
 Domino's Pizza Delivery Order : Domino's
Pizza deliver orders fast delivery system that allows the
customer without the need to come into place. Domino's
Pizza is recognized as the leader of services among the best
pizza in the world. orders can take less than 30 minutes more
than it's free.
 This pizza uses quality materials.
 Waiting for pizza for less than 15 minutes if the
reservation place outlet.
 Pizza stays warm when got home because it uses a special box
DOMINO ‘S PIZZA – SUPPORT ACTIVITIES

 Procurement : Function of purchasing inputs used in the

firm’s value chain.
 Procurement of raw material inputs

 Development of collaborative “win-win” relationships with

suppliers
 Effective procedures to purchase advertising and media
services
 Analysis and selection of alternate sources of inputs to
minimize dependence on one supplier
 Ability to make proper lease versus buy decisions.
DOMINO ‘S PIZZA – SUPPORT ACTIVITIES

 Technology Development :
 Domino's Pizza uses software from Prescient Systems Inc. estimates
that added to the ERP system from PeopleSoft.
 Besides Domino's use of information systems Manugistics Inc., to
schedule and create routes for delivery trucks. Each truck has a
computer system in it that will insert data into the time and
attendance system from Kronos Inc. that connects the human
resources module of PeopleSoft.
 To anticipate the market, Domino's conduct data mining with
software dai Cognos Inc. and Hyperion Solutions Crop.
 Domino's has used a variety of other applications before
implementing ERP company. The company found that the old
application require different data fields that are not provided by ERP.
DOMINO ‘S PIZZA – SUPPORT ACTIVITIES
For example: The system routes notify truck drivers, store which will be
visited and in what order. ERP systems do not have a data field to
specify the order of delivery. Therefore the Domino's management
decided to take the drastic step of modifying the ERP software to
incorporate related fields that are not available in the ERP.

 Human Resource Activities :

 Involved in the recruiting, hiring, training, development, and
compensation of all types of personnel
 Effective recruiting, development, and retention mechanisms for
employees
 Quality relations with trade unions

 Quality work environment to maximize overall employee

performance and minimize absenteeism
 Reward and incentive programs to motivate all employees
DOMINO ‘S PIZZA – SUPPORT ACTIVITIES

 Firm Infrastructure :
 It supports the entire value chain and not individual activities
 Effective planning systems

 Ability of top management to anticipate and act on key

environmental trends and events
 Ability to obtain low-cost funds for capital expenditures and
working capital
 Excellent relationships with diverse stakeholder groups

 Ability to coordinate and integrate activities across the value chain

 Highly visible to inculcate organizational culture, reputation, and

values
THANK YOU