Supply Chain Vs Value Chain : Do you know the difference

Ever Wondered what is the difference between a value chain and a supply chain?

If you haven't thought about it; now is the time! In case you know the answer then you must be one among the brilliant souls who has ever walked down on earth; In case you don't read on to enrich yourself with one of the management fundamentals.

In common practice, a supply chain and a value chain are complementary views of an extended

Enterprise with integrated business processes:

• Both chains enables the flows of products and services in one direction, and of value as represented by  demand and cash flow in the other.
• Both chains overlay the same network of companies.
• Both are made up of companies that interact to provide goods and services.

Then where lies the difference?

When we talk about supply chains, however, we usually talk about a downstream flow of goods and supplies from the source to the customer. Value flows the other way. The customer is the source of value, and value flows from the customer, in the form of demand, to the supplier. That flow of demand, sometimes referred to as a “demand chain” is manifested in the flows of orders and cash that parallel the flow of value, and flow in the opposite direction to the flow of supply. 

Thus, the primary difference between a supply chain and a value chain my friend is a fundamental shift in focus from the supply base to the customer.

Supply chains focus upstream on integrating supplier and producer processes, improving efficiency and reducing waste, while value chains focus downstream, on creating value in the eyes of the customer.