Value Chain

For my new business, I’d need to understand what my value chain is, so I can give my product a perceived value and quality different than perhaps just buying a cd from a friend. The value chain consists of:

Upstream Management

1. Raw Materials

2. Inbound Logistics/Inbound tracking systems

3. Warehouse and Storage/Raw Material Inventory Control Systems

4. Production/Process Control Systems Downstream Management

5.Finished Product Storage/Automated Storage and Retrieval systems

6. Outbound Logistics/Distribution Planning Systems

7. Marketing and Sales/Promotion Planning Systems

8.Customer Service/Customer Service Tracking and Control Systems

I imagine the low cost and undamaged quality of the cd is most important, followed by the customer’s desire to legally (we’ll assume its legal to do this) obtain the music, and their desire to financially support an artist. We’d have a brick-and-mortar location to make sure cd’s are undamaged so buying customers won’t receive damaged or the wrong cd. So for each chain of the value chain, I’d make sure certain care is taken with these thoughts to add the most value for the cheapest costs to these products.

1.    1  Raw Materials:

Keep the materials needed for shipping cd’s low. Nothing too fancy, but safe and secure enough to keep a cd from being damaged during travel. For the shipping of cd’s to our brick and mortar location we’d probably give instructions for the best way to do so. Also, containers and space is need to temporarily hold and ensure quality of cd’s. In addition to the materials, I imagine personnel are also included in this category. The use of these personnel sis to ensure the quality of the cd’s. This makes us reliable and safe, features often lost in casual commerce online on places you can find cheaper used products like Craigslist or eBay.. The low cost of materials means we have a better chance to beat out buying from bigger businesses like Amazon.

2.    2  Inbound logistics/Inbound tracking systems

Not as big as an issue or something that can be really fleshed out. Smaller company that can’t really handle tracking systems on small purchases like cd’s, especially when our goal is to keep shipping costs low

3.    3  Warehouse and Storage/Raw Material Inventory Control Systems

Keep cd’s in clean and stable conditions and containers. Monitor the demand our business needs for shipping materials

4.    4  Production/Process Control Systems Downstream Management

Make sure they’re the advertised quality (we’d need conditions and requirements to sell cd’s with the right qualifications to be certain levels of quality).

 5. Finished Product Storage/Automated Storage and Retrieval systems

Probably keep in same or close storage space as the inbound cd’s. Keep costs of running business low as possible.

6.    6  Outbound Logistics/Distribution Planning Systems

Use decent quality, but low costing materials to ship cd’s to the buyer.

7.   7   Marketing and Sales/Promotion Planning Systems

Not sure if sales or promotion systems are needed as it is run by customer’s demand. We can market with the idea that we can ensure the artist receives money if the customer wants to spend a small amount more.  Our product at this point is shipped and stored at low costs, of high enough quality to be of the needed value of the customer, and cheaper than buying new and from larger companies. Cd’s are lossless and when burned will give the listener the same quality as on the cd. The formats used in the illegal downloading of music might be of lesser quality. While not free, using our business ensures the buyer that they are getting the highest quality version of the wanted music.

8.   8   Customer Service/Customer Service Tracking and Control Systems

No tracking systems again for shipped products, but customer service should be top priority. Friendly and intelligent customer service personnel to keep the feeling of small, everyman type run business. Even without tracking, customers should be assured they would receive their product in a certain timespan without worrying about it. This will be tricky as larger companies can send free products incase the shipped one never arrived, or arrived damaged. Our smaller company would need to keep shipping secure as buying new cd’s would be taxing.