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What Is Value Chain in Retail?


Retailers have been talking about "digital transformation" for over five years now, but there's a new term in retail that has unfolded on the heels of retailers' digital transformation. That term is "value chain," and the concept of the evolution of the supply chain into a value chain. 

The value chain is a complex and interconnected series of activities that spans from product creation to customer satisfaction. For senior IT retail executives, understanding the value chain is essential, as it serves to transform an organization's supply chain from a cost center into the backbone of value creation.

The retail value chain is the sequence of activities and processes involved in delivering a product or service to consumers. It encompasses every stage, from the initial concept to the final purchase and post-purchase support, including returns. This concept was popularized by Michael Porter in his book "Competitive Advantage," highlighting how organizations can gain a competitive edge by optimizing these activities.

What Defines a Value Chain in Retail?

Components of the retail value chain can include: Inbound and outbound logistics; operations; marketing; sales; customer service; IT infrastructure; human resources; procurement, and more. Key pillars of value chain success include: Agility, resiliency, collaboration, and sustainability.

Technology that will transform supply chains from a simple functional (and often linear) system to a holistic, integrated network focused on value creation include: Artificial intelligence; machine learning; automation, last mile and delivery systems, enterprise resource planning (ERP); IoT; cloud computing; digital twins; advanced analytics and data driven marketing efforts.

Achieving end-to-end retail collaboration is essential to establish a functioning value chain. Understanding the value chain and strategically applying IT solutions is essential in navigating the evolving landscape of the retail industry. To learn more attend Value Chain Tech in 2024. 

Value Chain Resources

See these articles for more on the value chain:

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