What’s the difference between a supply chain and a value chain?

The main focus for UK funding bodies is for companies to produce innovative products, technologies or services that are significantly ahead of others in the field. Within the process of applying for grant funding, you will need to be thinking about the logistics of your supply and value chains. But what is the difference between supply and value chains?

Supply Chain

A supply chain is the complex relationship between a company and its suppliers. From raw materials to producing and distributing a specific product or service, the supply chain represents the steps taken from raw materials to get the product or service to market.

Supply chains are multidisciplinary and highly collaborative bringing great benefit to a company through integrated and diversified resources, reduced logistics costs, improved logistics efficiency, and high quality of the overall product or service.

Management of a supply chain follows:

• Sourcing (finding a least expensive supplier for those goods)
• Procurement (concerned with acquiring goods and services, within your guidelines i.e. fair trade, carbon neutral, sustainable, local etc.)
• Conversion (processing of raw materials i.e. from minerals to circuit boards)
• Assembly (adding your circuit board into your computer)
• Logistics (the ability to send your product out)Adding value to a product or service (putting an Operating System and other software on your computer for the user

Value Chain

The value chain gives a company the ability to create value exceeding the cost of providing its good or service to customers, through five steps:

• Inbound logistics: receiving, warehousing and inventory control to reduce time for clients from purchase
• Operations: value-creating activities that transform inputs into products, such as developing an app or software
• Outbound logistics: activities required to get a finished product to a customer, having a strong and accessible network for sales
• Marketing and sales: activities associated with getting a buyer to purchase a product, including making people aware of the product
• Service: activities that maintain and enhance a product’s value, such as customer support

Maximising the activities in any one of these steps allows a company to have a competitive advantage over its industry competitors.

A successful value chain needs connections between consumer demand and what a company produces. Value chains main focus is on product testing, innovation, research and development and marketing.

Risks 

Risk management is an imperative role in most organisations. Usually, there are big decisions and risks associated with the elements of supply and value chains. Decisions regarding relationships with suppliers, development and expansion of assets, and approaches to different customer groups. Risks involve anything that could impact markets, politics, technology, society and natural disasters and “Acts of God”.

Value and supply chain risks differentiate from finance and business process risks as they cannot typically be quantified using historical data, but instead require considerable expert judgment. The only way to predict these risks and their impacts on your business is to have customised “real” investments and strategic change plans- these help you in creating near-term value by changing risk perceptions, and long-term value by changing risk exposure.

When applying for grant funding you will need to think about your own supply and value chains. How resilient are they to sudden changes? Do they add real value? Are they sustainable, diversified, and in-line with your own company ethics? You will need to consider all of these things in your application.

To recap: the Supply chain is the process between producing and distributing the product, dealing with the suppliers and logistics of getting the product to market; the Value chain is a set of activities carried out by the company which maximises the competitive advantage.

Using the expertise of a professional grant writer who has a deep understanding of the nuances and benefits supply and value chains can have on your business can help to highlight your business’ stability and potential to succeed. So, let us help to translate this information into a language that the funders will understand. Give your project the best chance of securing grant funding by getting in contact with the Granted team.

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