Information system is a collection of hardware, software and people working together to collect, store, sort, and process information. Value chain is one of the ways to gain advantage over other organizations. It is a model which strips down the organizations’ activities into primary and secondary activities.
Primary activities are directly related to the production and distribution of the organizations’ products or services. Primary activities consists of inbound logistics, operations, sales and marketing, service and out bound logistics. Inbound logistics gets the materials needed to make the product. Operations makes the products. Sales and marketing sell the product. Service maintain and repair product. Outbound logistics deliver the product to the customers.
Secondary activities allow the primary activities to deliver. It consists firm infrastructure, human resources, technology and procurement. Firm infrastructure consists of administration and management while human resources consists of hiring employees and training them. Technology can improve the products and its processes and procurement refers to purchasing inputs for the firm. This value chain can be supported by supply chain system as it is shown in the diagram above that it is part of the ‘firm’ in the supply chain system. A supply chain is a system that forms a relationship between the organization and its suppliers to produce and distribute a specific product as well as the steps it needs to take to get the product to the customers. This helps organization in reducing costs and increase the speed of the production cycle.
(Diagram 1, Value chain of Pizza Hut)
(Source: Singhal, 2013, UCVC Assignment -1, Value ChainofPizza Hut)
The diagram 1 above is about the value chain used in Pizza Hut. It is said that they used this model as a mean to create customer value. Based on the diagram, the inbound logistics is shown to purchase raw materials and will probably use management information system (MIS) as it helps in monitoring, controlling and administering the activities. Operations consists of preparation of pizzas and other food and will also use MIS. Outbound logistics described the process of delivery and also uses MIS. Marketing and sales tells of accommodating to their targeted audience’s tastes based on the allocations of the outlets and probably uses sales and marketing system. Service and supports describes the condition of delivered pizza, communication with the customers and of online order and be managed by MIS.
The secondary activities supports the primary activities by describing how it gets the required inputs while maintaining the quality to keep the customer satisfied (procurement). It also takes in feedback from customers to keep improving with the use of technology. Human resources focuses on hiring new workers and providing them training.
In the support activities, infrastructure probably uses transaction processing system to keep track of transactions through fund collections. Human resource management uses human resource management system as it mainly manages the organization’s workforce. Technology Development uses manufacturing and production system which plans, develop and maintains the facilities responsible for productions. Procurement will probably use MIS to ensure the resources are acquired properly.
Another company that uses value chain to gain a competitive advantage is Starbucks. In the primary activities, they will select the best coffee beans (inbound logistics), operations “in 65 countries”, served in-store (outbound logistics), invest in quality over quantity for marketing and sales and aim “at building customer loyalty” for service. The support activities consist of infrastructure which aim at nice atmosphere and good customer service, human resource which hire and motivates employees to work marked, using technology in making coffee and communicating with customers and forming a relation with suppliers for best quality raw materials. By using value chain, Starbucks reach more success as it helps with keeping in check with their objectives and provides steps to fulfill.
Thus, the value chain helps Pizza Hut with achieving their goals of providing the best services by dividing the activities which use different information systems to act as a guide to achieve their goal. With smaller steps, the organization is clear with their goals and be able to follow the chain to achieve them. Therefore, value chain helps organizations to make clear of achieving their goals with smaller steps to be supported by supply chain that connects the organizations with suppliers and customers.