As my understanding, activities in a supply chain emphasize more on timing, quality, and lower costs for delivering goods or service to customers both considering both short-term and long-term needs, while a value chain is the collection of activities (production, marketing, logistics, services) from a value-adding viewpoint, which may focus on all add-value processes, including both the delivery of goods/services and the improvement of goods/services.

http://en.wikipedia.org/wiki/Value_chain

Supply Chain concerns about receiving the product from suppliers and dispatching it to final destination. It is mainly the movement of materials from the source to the final customer. On the other hand, all the parameters of value chain are same as supply chain except processing / grading before final dispatch. We should add value to the goods that are moving  in a value chain while the goods moving through a supply chain typically do not gain value in the process. 

Supply chain management originates from operations management and the definition is "the integration of suppliers, manufacturers, warehouses and stores to that merchandise is produced and distributed to the right locations at the right time while containing costs and maintaining service levels."

Value chain (http://en.wikipedia.org/wiki/Val...) originates from business management and was popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market.

So supply chain can also fit the value chain definition in the case of creating and delivering physical products.

I agree with Venkata's view that the supply chain concept is consistent with the value chain concept in the case of physical goods. I would also clarify Masoud's response by noting that the only reason goods would move through a supply chain is if value is added. If there is no value to be gained (added) by transporting goods to another location, for example, no one would pay the transportation cost to do it. Arbitrage (between locations, time periods, or product forms) will not occur unless those who arbitrage expect to profit. Thus, in both value chains and supply chains, value is added.

Well practically there is no difference between supply chain and value chain if you take only the view of movement of physical goods or processes that add value, however supply chain concept is more complex, because we are talking about movement of physical goods, information, financial and monetary funds also managing relationships with parteners (producers, suppliers, wholesalers, retailers...).

Dear Ilaria

to my understanding any "value chain" is also a "supply chain" and vice-versa. I cannot think of a supply chain dscnnected from a value chain, and the reverse is also true. So, they ought to be the same thing.

What differs is the point of view. Value chain is viewed from the customer side, so the relevant aspect is the value-for-money that it can provide customers with.

On the other side supply chain emphasizes the suplier point of view, so it is about material and information flows, costs, sevice level, etc.

I agree with all explanations of value and supply chain. Having said that, how about stepping back and think of the value definition which has been stated by Naylor et al. 1999. Product/Service is determined by four factors: cost, time, quality and service level. The value is defined by the end-user/customer and goes into the supply chain. Therefore, value is created through the flows of information and materials through the whole supply chain. Value started from zero at the supplier point and becomes maximum at the satisfied customer point. I would say that supply chain is the carrier and deliver of the value chain.

Mostly an interchangeable concept in modern phase. Earlier when Supply Chain was used it usually referred to the supply network. At that phase value was a parameter or a element of the supply chain. Later the development and as the importance of supply chain increased it started generating value in all segments from start point till the end point this transformed as the concept of value chain. So now its just the same coin as Supply chain is no more than a value chain. This could be from perspective of customers, manufacturers, suppliers any node of the connectivity.

to my understanding value chain is the process or activities by which we adds value to product or anything.

supply chain is a subset of value chain.

I completely agree with Professor Rameshwar Dubey that the question is very fundamental; however, it is very relevant.

One is largely the process of value delivery and other is more holistic in terms of value creation and delivery. Generally in today's flexible model of operations can be used interchangeably.

supply chain and a value chain are complementary views of an extended

enterprise enabling the flows of products and services in one direction.

supply chain refers to downstream flow of goods and supplies from the source to the customer however Value flows in other direction.

Supply chain integrates supplier and processes, improving efficiency and

reducing waste, while value chains focus on creating value to the customer.

Dear Girish Upreti:

Please elaborate following for readers' better understanding of subject since it is interesting-

'Supply chain refers to downstream flow of goods and supplies from the source to the customer however Value flows in other direction'

Thanks and regards.

in my point of view, supply chain leads to value for the companies and supply chain members. Therefore, supply chain is pre-requisite for the value chain and value chain creates by supply chain

I agree with Hamidreza Panjehfouladgaran that somehow supply chain is pre-requisite for the value chain.

Value chain and supply chain are correlated and recently at some cases used interchangeably. However, for the general understanding it may be said supply chain is the flow of materials from left (suppliers) upto right (consumers/end users) and the value chain is the other way round (right to left) that is the flow of info/ communication. But this should be taken as a rigid format, each supply chain has its own way.

I agree with Venkata Prasad Palakiti. In my understanding the value chain is the Porter value chain, thus including the internal activities (primary and support) performed by a company from a strategic perspective.

Supply chain management is an operations management concepts that deals with efficient planning and execution of operational activities (source, make, deliver) along the chain, thus benefiting from the integration with suppliers and customers. The SCOR model can provide you a good reference.

In between you can find the "global value chain" (GVC) model. The GVC model (you can check out papers by Gary Gereffi) takes into account that for many industries production activities are fragmented among different companies and dispersed globally. The GVC framework proposes a map of what is produced where, from an industry perspective, and introduces the key concept of governance. 

However, these three views belong to different streams of literature so the boundaries between each other are sometimes overlapped.

although many researchers use them as synonymous terms. I think the value chain includes both supply chain and demand chain

Dear Ilaria ,

Please, read this study that contained the difference between value chain and supply chain.  

Bringing the question to bear on the classic effectiveness versus efficiency debate....A value chain emphasizes internal integration while supply chain emphasizes external integration. The latter is under the purview of logistics management while the former is about competitive advantage. Might also be useful to think of value chain as the part of the ecosystem within the direct control of the firm, and how to effectively ensure that the interfaces therein are optimized. Value delivered is said to accord with the firm's value statement. Supply chain is the business ecosystem that comprises stakeholders outside of the firms jurisdiction, optimizing interfaces with these parties result in cost efficiencies.

Thank you Shian-Loong for bringing up such an interesting (and novel, for me) angle of the two concepts. 

The difference between a value chain and a supply chain is that a supply chain is the process of all parties involved in fulfilling a customer request, while a value chain is a set of interrelated activities a company uses to create a competitive advantage.

The idea of value chain was pioneered by Michael Porter. Five steps in the value chain give a company the ability to create value that exceeds the cost of providing its good or service to customers. Maximizing the activities in any one of the five steps allows a company to have a competitive advantage over competitors in its industry. The five steps or activities are inbound logistics, operations, outbound logistics, marketing and sales, and service.

Inbound logistics include receiving, warehousing and inventory control. Operations include value-creating activities that transform inputs into products. Outbound logistics include activities required to get a finished product to a customer. Marketing and sales are activities associated with getting a buyer to purchase a product. Service activities include those that maintain and enhance a product's value, such as customer support.

The supply chain comprises the flow of all information, products, materials and funds between the different stages of creating and selling a product. Every step in the process, from creating a good or service, manufacturing it, transporting it to a place of sale, and then selling it is a company's supply chain. The supply chain includes all functions involved in receiving and filling a customer request. These functions include product development, marketing, operations, distribution, finance and customer service.

I think they include the same elements and members, the difference depends on different perspectives, how do you look to chain.  value chain focuses on value added by each member whereas supply chain focuses on flow among members of chain

The main difference is in a "goal" presentation. Supply chain present the process flow. For example, how is the service provided to final customer. Supply chain presents the individual activities in time flow...The Value chain can be the same like the supply chain (the construction), but the value chain present how and mainly where is the value added to the process (activities) as Ghazi Al-Weshah written above.

Thank you all. I think both are the same side of the coin. If we talk about value added, it can be found in a supply or value chain. At the same time, both involve actors, decision points, social and economic blind spots, cultures, technologies, aspirations, priorities, controls, strategies etc to fulfill an order for the customer. The only small difference is that one is pushy and the other pully. The issue here is academic differentiation and knowledge contribution so much demanded in research, however such results in confusion as we see here.

I can see that there is a big consensus about the difference between the two concepts. This helped me consolidate my understanding of both. Thanks everyone for your contribution. 

I add 5 coins. I think the Porter's Value Chain focused mostly on internal processes of creating the product or service value. But it uses advantages of suppliers and distribution channels. Here is a set of steps for each player how to get best input and output conditions to get the best profit from available alternatives.

The supply chain value combine interests of different players in a supply chain from a manufacturer to a customer and finally provide Added Value to customer (B2B or B2C). I see this process like a changing of the margin structure and profit share like part of margin.

From what I have read and observed,

a value chain is an organised linkage between various actors who are involved in the product processes from production to delivery of the product to a market. Even though it is sometimes referred to as supply chain, value chain is actually a specific type of supply chain.

Supply chain on the other hand refers to a set of linkages between actors where there are no binding or sought-after formal requirements except when the goods, services and financial arrangements are transacted.

while value chains include horizontal and vertical interdependent linkages, supply chain only pertains to the delivery of a product from one supplier to another.

Raghed IBRAHIM Esmaeel

Thank you

Value chain will try to add value to the product/service.

Supply Chain will try to deliver the product as per the customer expectations and in time delivery.

Supply chain is from the source to the customer whilst value chain flows from consumer to supplier

Nowadays, treating value chain and supply chain differently is becoming irrational. They are being demanded in an interchangeable approach at this time.

the easiest way i was given to remember the difference is that one is internal to your company (your value chain) and the other is all organisations linked to that process ie the supply chain. See attached

The linking of these separate value chains creates a larger system known as a SUPPLY CHAIN.

In common parlance, a supply chain and a value chain are complementary views of an extended enterprise with integrated business processes enabling the flows of products and services in one direction, and of value as represented by demand and cash flow in the other. The differences between supply chain and value chain are given below:

1. Meaning

Various activities, individuals, and businesses that are involved in the transfer of products from one place to another are integrated into a supply chain. Value chain, in contrast, are all those activities that are involved in adding or enhancing the value of a product in each step till it gets to the final customer.

2. Origin

The supply chain is a part of operations management, while the value chain is a part of business management.

3. Focus

In the supply chain, materials and products are transferred from one place to another, while the primary focus of the value chain is offering value for the product, in terms of its price or service.

4. Main objective

The key objective of the supply chain is to offer complete satisfaction to the customers, but this is not the case with the value chain, which mainly seeks to provide value-added products to customers.

5. Order of activities

The supply chain starts with product requests and concludes when the product is delivered to the consumer. On the other hand, the value chain commences when the request is made by the customer. Here, customer needs are examined after which it goes back to production to determine what changes can be brought in the product to fulfill their requirements

Definitely, there is a strong relationship between supply chain and value chain however, there is a slight difference between the two business terminologies. Supply chain looks at the supply of the raw material stage and the functions that are involved from that stage to the final consumer whiles value chain looks at the value addition that is made to the product to improve customer satisfaction or value.

The most confusing matter to figure out is that the value chain is still a conceptual and somewhat abstract concept in operation. In contrast, the supply chain is an operational, actual matter that mainly involves routes and logistics, such as manufacturing/production lines. The value chain in the other hand can execute the process (i.e.) in simulation mode and use scenarios to get the best value our of the operation without doing the operation stage first, when the VCA becomes valuable to the firm and to the customer it starts to generate values for both that are then applied operationally on the Supply such as Optimized Supply (duration, prices, quality) - this only one part from the confusion VCA versus SCM