Digital transformation is changing the value chain with the impact of new technology at the core of the business strategy. Now, we have to view the traditional components of value chains in a new way.
What are the signs that we are seeing impacting many industries today? Read on to know more.
Digital Transformation and Value Chain: Definition and Examples
Digital transformation is the process of developing a digital platform for a company. It can also be for delivering different services.
This transformation involves a company’s entire value chain. The aim is to stay relevant and competitive. Especially in the current ever-changing business environment. Transformation is also effective for either B2B or B2C purposes.
A value chain is an analysis of how the various processes within a company work together. As a result, it allows them to provide products and services for the end customer.
It is also a model that shows how activities in an organization are interconnected. At the same time, it shows how they can affect one another.
The main purpose of this analysis is to create an efficient structure. So, it can help a company achieve its objectives.
In this article, we will look at both terms i.e., digital transformation and value chain. We will also see the impact of digital transformation on the value chain.
Components of Value Chain
A value chain is an organizational analysis tool. Then, it shows how it creates value from the perspective of a company.
In this model, a company is viewed as a set of activities that work together to deliver products or services to customers. The various activities have four main areas:
- Customer interface: It includes sales, customer service, marketing, etc.
- Operations: All functions needed to transform inputs from suppliers into outputs for customers.
- Information systems: All IT-related functions are included. They help organizations transform the inputs and outputs. They also empower them to deliver products and services at a reasonable cost. Lastly, they help the company collect data for better decision-making. These functions include IT, accounting/finance, operations research, etc.
- Intermediary business: Suppliers of raw materials and components, packaging, and logistic companies. These are referred to as value chain partners. They act as an interface between the company and its customers.
Digital Transformation and Value Chain: Impact on Value Chain and Customer Interface
The customer interface is the first point between a company and its customers and suppliers. It involves sales, customer service, marketing, etc.
Digital transformation is changing how businesses interact with their customers and business partners. For one, it can lead organizations to use social media to interact with their customers. They can now provide a better level of service to their customers.
In other words, they can make the customer feel connected and engaged. As a result, they become loyal to a brand.
Digital technologies are helping companies achieve better sales results. This is mainly because of the improved level of personalization. Overall, digital transformation is creating a positive impact on the customer interface.