According to Michael Porter (1985), there are two kinds of activities can be conducted from any organization. They are primary activities and support activities.
The five primary activities deals with material are purchased, processed into products and delivered to customer. These activities form in the chain from manufacturing to servicing afterwards. The work progresses according to the sequence, value is added to product at each activity.
1. Inbound logistics: the value chain starts from this point with adding value by processed for incoming materials (receiving, storage...).
2. Operations: the materials are used, which adds important values to process by bring raw materials to products or services.
3. Outbound logistics: the delivery (packaging, storing, shipping) for products adds more value to the process.
4. Marketing and Sales: this step tries to sell products to customer and adds value to process by increasing demand of market to products.
5. Service: such as warranty service or upgrade notification is performed for customer to adding after-sale values to process.
These primary activities are supported by the following support activities:
1. Organizational infrastructure
2. HR management
3. Technology development
4. Procurement
Each support activities can support to any or all primary activities, they also can support to each other.
The value chain model can be used in difference ways. The first one, company analysis can apply it, by systematically evaluating the company's key process and core competencies. A second one, an industry analysis can identify various activities then search for specific information system to handle these activities. Finally, the value chain can be used either individual company or industry by overlapping different types of information system to support activities.
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