VALUE CHAIN ANALYSIS :

VALU
E AL AMOUNT (i.e. TOTAL
 THE VALUE IS THE TOT
REVENUE) THAT BUYERS ARE WILLING TO PAY
FOR A FIRM’S PRODUCTS.
 THE DIFFERENCE BETWEEN THE TOTAL VALUE
(OR REVENUE) AND THE TOTAL COST OF
PERFORMINGALL OF THE FIRM’S ACTIVITIES
PROVIDES THE MARGIN .
 THE VALUE CHAIN IS A TOOL DEVELOPED BY DR.
MICHAEL PORTER(HARVARD BUSINESS
SCHOOL)
 What is the value
chain?
 Porter’s definition includes all activities to
design, produce, market, deliver, and support
the product/service.
 The value chain is concentrating on the activities
starting with raw materials till the conversion
into final goods or services.
 Two categories:
 Primary Activities (operations, distribution,
sales)
 Support Activities (R&D, Human Resources)
 TYPES OF VALUE
CHAIN:
• Value Chain is categorized into types based
on the type of organizations.

• Manufacturing based.
• Service based.
• Both manufacturing and service based.
 What is value chain
•
analysis?
Used to identify sources of competitive
advantage
• Specifically:
– Opportunities to secure cost advantages
– Opportunities to create
product/service differentiation
• Includes the value-creating activities of all
industry participants
 Value Chain Model
(FISH BONE DIAGRAM)

SUPPORT Firm Infrastructure (General Management)

ACTIVITIES
Human Resource Management

Technology Development

Procurement

Inbound Ops. Outbound Sales & Service and

Logistics Marketing Support
Logistics

PRIMARY ACTIVITIES
 TYPES OF FIRM
•
ACTIVITIES
Primary activities: • Support Activities:
Those that are involved in the Those that merely support
creation, sale and transfer of the primary activities
products (including after-  Human resources
sales service) (general and
 Inbound logistics admin.)
 Operations  Tech. development
 Outbound logistics  Procurement
 Sales and marketing
 Service and support
PRIMARY
ACTIVITIES
 Value Chain Model
from Michael E. Porter’s Competitive
Advantage
Firm Infrastructure (General Management)
SUPPORT Human Resource Management
ACTIVITIES
Technology Development

Procurement

Inbound Operation Outbound Sales & Service and

s Logistics Marketing Support
Logistics

PRIMARY ACTIVITIES
 PRIMARY
ACTIVITIES
1. INBOUND LOGISTICS
- CONCERNED WITH RECEIVING, STORING, DISTRIBUTING INPUTS
(e.g. HANDLING OF RAW MATERIALS, WAREHOUSING, INVENTORY
CONTROL)

2. OPERATIONS
- COMPRISE THE TRANSFORMATION OFTHE INPUTS INTO THE
FINAL PRODUCT FORM (E.G. PRODUCTION, ASSEMBLY, AND
PACKAGING)

3. OUTBOUND LOGISTICS
-INVOLVE THE COLLECTING, STORING, AND DISTRIBUTING THE
PRODUCT TO THE BUYERS (e.g. PROCESSING OF ORDERS,
WAREHOUSING OF FINISHED GOODS, AND DELIVERY)
 PRIMARY
ACTIVITIES
4. MARKETING AND SALES
-Identification of customer needs and generation of
sales. (e.g. ADVERTISING, PROMOTION, DISTRIBUTION)

5. SERVICE
-INVOLVES HOW TO MAINTAIN THE VALUE OF THEPRODUCT
AFTER IT IS PURCHASED.(e.g. INSTALLATION, REPAIR,
MAINTENANCE, AND TRAINING)
SUPPORT
ACTIVITIES
 Value Chain Model
from Michael E. Porter’s Competitive
Advantage
SUPPORT
ACTIVITIES
Firm Infrastructure (General Management)

Human Resource Management

Technology Development

Procurement

Inbound Ops. Outbound Sales & Service and

Logistics Marketing Support
Logistics

PRIMARY ACTIVITIES
 SUPPORT
ACTIVITIES
1. FIRM INFRASTRUCTURE
The activities such as Organization structure, control system,
company culture are categorized under firm infrastructure.
2. HUMAN RESOURCE MANAGEMENT
Involved in recruiting, hiring, training, development and
compensation.
3. TECHNOLOGY DEVELOPMENT
These activities are intended to improve the product and the process,
can occur in many parts of the firm.
4. PROCUREMENT
Concerned with the tasks of purchasing inputs such as
raw materials, equipment, and even labor.
USES OF VALUE CHAIN ANALYSIS:

• The sources of the competitive advantage of a firm can be seen from

its discrete activities and how they interact with one one another.
• The value chain is a tool for systematically examining the activities of a
firm and how they interact with one another and affect each other’s cost
and performance.
• A firm gains a competitive advantage by performing these activities
better or at lower cost than competitors.
• Helps you to stay out of the “No Profit Zone”
• Presents opportunities for integration
• Aligns spending with value processes
 VERTICAL
LINKAGES:
• LINKAGES CAN ALSO EXIST OUTSIDE THE FIRM; FOR
INSTANCE THERE IS A LINKAGE BETWEEN A FIRM’S CHAIN
AND THE VALUE CHAIN OF ITS SUPPLIERS AND
CHANNELS.

e.g. THE ACTIVITIES OFTHE RAW MATERIALS SUPPLIERS AFFECT

THE ACTIVITIES OF THE FIRM. SIMILARLY, THE ACTIVITIES OF
THE DISTRIBUTOR ALSO AFFECT THE FIRM.
APPLYING THE VALUE CHAIN TO AN INDUSTRY

• THE VALUE CHAINS OFTHE DIFFERENT

FIRMS WITHIN AN INDUSTRY VARY FROM
ONE ANOTHER.
• IN FACT, THE DIFFERENCES IN THE VALUE
CHAINS AMONG THE DIFFERENT INDUSTRY
PLAYERS PROVIDE THE SOURCE OF
COMPETITIVE ADVANTAGES BETWEEN THESE
PLAYERS.
 TATA MOTORS
(A Manufacturing Based
Company)
Value Chain & Value System of TATA motors
Transporters, Convoy Drivers Dealer Network, Marketing
Association Research Firms, Vehicle
Financing

SAP , VCM

Inbound Outbound
Operations Marketing Service

Logistics Logistics

SAP , CRM - DMS

Suppliers , Contractors
Regional Warehouses, Dealer
Workshops, Distributors, TASS

Strategic Alliances
PRIMARY
ACTIVITIES
Inbound
Logistics
Long term contract with service provider’s – transporters
and agents.
 Personnel at regional offices for over seeing the smooth
transit
of goods.
Transparency and monitoring through deployment of IT –
all transactions through SAP.
 DTL (daily transport logistics) supplies for critical high value
items.
 Efficient storage facilities – easy storage and retrieval.
Operation
sCapital Equipment Manufacturing division – tooling development
capabilities of global standard.
 Apprentice Trainee Course – ensuring stable source of skilled manpower.
Kaizen & TPM(total productive management) team – continuous drive
to improve efficiencies.
 Automated manufacturing processes.
Distributed manufacturing – Assembly units at South
Africa, Thailand, Bangladesh, Brazil etc.
 Maintenance – technical competence.
 Capacity Utilization – Mercedes Benz cars make use
of Tata Motors paint shop
facilities.
Outbound
Logistics
 Stockyards, all across the country.
Long term contracts with transporter’s – higher volume
of business to transporters ensures competitive price.
Regional Sales Office and Vehicle Dispatch Section linked through
SAP.
 Efficient security system for prevention of any kind of pilferage.
Marketing &
Sales
 Structured approach to understanding the requirements of individual
customers
– QFD’s conducted at regular intervals.
Clear identification of product requirements, leading to development
of innovative products – Tata 207 DI, Tata Ace
 Pan India presence and global footprint.
Independent teams for addressing the requirements of institutional customers
– Defense, State Transport Units
 Helping to augment the scarce resources – Fiat selling vehicles through Tata
dealerships, in return Tata has access to Fiat’s technology and unutilized capacity.
Quick assessment of the changing market dynamics and consumer preferences
– Tata 407 LCV
 Large network of dealers – use of technology (CRM-DMS).
Servic
e Easy availability of spare parts.
Efficient collection of data from field and communication to
the respective plants.
 Pan India presence, as well as global presence.
 Large network of workshops – Dealer workshops and TASS.
 Training facilities – for dealer end and TASS personnel.
SUPPORT
ACTIVITIES
Procuremen
t E procurement initiative.

Global Sourcing Team – China , a key destination for sourcing
essential items like tires, power steering units etc., Steel
procured
from Belarus
 Long term relationships with a stable and loyal pool of
suppliers.
 Technology driven procurement – SAP and VCM.
Strategic subsidiaries & JV’s – TACO group of companies , Tata
Cummins
Centralized Strategic Sourcing for key components – FIP’s,
Steel etc.
 Group resources – Tata Steel and Tata International .
Technology Development
Approximately 2% of the annual profits of the company
invested in research and development.
Knowledge portal – helps employees keep abreast with the
latest technologies.
 Extensive prototype building and testing facilities.
 Strategic partnerships – MDI (France), Fiat etc.
 Formal benchmarking process.
 “Technology Day” organized across all plant locations.
Human
Resource
 Vast pool of technically competent engineers and managers.
Focus on development of technical capabilities – Technical
Training Center’s, Alliance with technical Institutes
 Focus on development of managerial capabilities – MTC’s
, TMTC, executive training programs at premier business
schools
 Career advancement schemes – ESS, FTSS
Firm
Infrastructure
 Multi – Location facilities
 Strong leadership – under the aegis of Tata
Sons
 Best in class prototype building facilities
 Technology – SAP
 Large product portfolio
 WALLMART
(A Service Based
Company)
WALLMART’S VALUE
CHAIN
 THANK
U…PRESENTED
…… BY:
JAYA PRAKASH NAIDU.YALLA(09MBI023)
KUNDANA .A(09MBI065)
D.S.C.GUPTA(09MBI073) MONISH.R.M.
(09MBI105) SANKHAR(09MBI125)
VEENA V(09MBI124)
• http://www.srpgroup.co.in/logistics/companies/tatamotors.htm
• http://www.tatamotors.co.th/en/careers-detail.php?c=33
• http://www.fvlmagazine.com/Article.aspx?aid=161
• http://www.sap.com/india/about/company/successes/pdfs/Tata_Motors.pdf
• http://archive.ciol.com/ec/cio-speak/tata-motors-implements-sap-for-end-to-end-supply
- chain-integration/151207102235/0/
• http://books.google.co.in/books?id=Q2MNPPUq1v0C&pg=PA262&lpg=PA262&dq=vcm+tata+
motors+ltd&source=bl&ots=8VLnwpIieL&sig=uumCnws2Qd79EraSP-
KGVauJDtI&hl=en&sa=X&ei=n8BCUej9IcOHrQfU2YDwBw&sqi=2&ved=0CEgQ6AEwBA#v=one
page&q=vcm%20tata%20motors%20ltd&f=false
(263 page)
http://customercare-cv.tatamotors.com/customer-care/customer-services.asp

http://suppliers.tatamotors.com/Project_Docs/rfq_terms_conditions.pdf
http://customercare.tatamotors.com/manual/indigo-XL-OMSB.pdf
http://www.indiastudychannel.com/projects/4754-Tata-motors.aspx
• CRM Initiatives at TATA Motors Ltd.

Given that the customer is king (or queen), it would be logical to presume that establishing —
and nurturing — a relationship with such royalty is a priority for enterprises looking to sell a
product or service. Fact is, it may be a priority but organisations rarely pay more than lip
service to what goes by the grandiose nomenclature of customer relationship management.
For Tata Motors, though, this has always been an imperative.
It made eminent sense for India’s premier automobile company — with over 1 million
customers, 22,000 employees and a geographically fragmented business that operates out of
1,600 locations in a notoriously cyclic business environment — to put many eggs in the
relationship management basket. But this was an idea cooked in the cauldron of adversity.
Tata Motors got started on what it has tagged the customer relationship management-dealer
management system (CRM-DMS) at the turn of the millennium, when it was battling to
regain relevance at a difficult time in its history. That’s when it realised that survival in the
auto business depended on managing its relationships with its customers, dealers and anyone
else who had a deep connection with the mother company.
This was no mean task, considering the scale and complexity of the issues involved. Two
parameters — customers, and their interface with the company, the dealers — were the
critical links in a complex chain that Tata Motors had to deal with. The solution led to the
emergence of Tata Motors’ integrated CRM-DMS, which is today the largest such application
in the automobile industry worldwide, linking to more than 1,200 dealers across India and
tracking the needs of some 25,000 customers.
Tata Motors had no standard or benchmark to model its solution on when the relationship
concept was first considered, back in 2002. The company realised that it had to look at the
business in a fundamentally different way. Instead of selling to the customer,...