Question

Describe an IT company where you now work, planning to work or did work. Write a summary about how information systems were used in each step of the value chain.

Answer 1

It is my dream to be a part of IT giants Infosys. So that I will describe how Infosys using information system in value chain.

Value Chain Analysis of Infosys can offer various advantages:

1.1.1 Identify competitive advantage sources

By conducting the Value Chain Analysis of Infosys during the planning process, possible sources of competitive advantage can be identified. The firm/company is a collection of different activities that share relatedness to some extent. Infosys cannot trade all activities in the external market. The Value Chain approach suggests that a company can consider these activities as economic rent sources. These activities can also act as barriers to new entrants or cause cost disadvantages to competitors.

1.1.2 Identify complex inter-relationships and interdependencies

Infosys can identify various internal and external linkages among activities through the value chain lens. The internal linkages are- interrelationships between activities within same organisational units and external linkages are between business units of same or different firms. Studying these interrelationships can help a company take benefit from coordination and joint optimisation.

1.1.3 Improved flow of materials, information and finances

The use of Value Chain Analysis can optimise the finances, products and information flow of Infosys

• The improved information flow can help the company identify and exploit new opportunities and reduce external threats. The continuous Value Chain evaluation can result in timely filling important gaps that may affect a firm's productivity.
• The effective implementation of the Value Chain Analysis of Infosys can improve the material and product flow due to improved demand and sales forecasting. The inventory management also improves as Infosys can minimise the delays by tracking activities throughout the supply chain.
• Modern customers place high importance to the quick response and convenient access to the important product related information. The unexpected interruption in the information flow can affect the customer-supplier relationship. Infosys Value Chain Analysis and its implementation can highlight and remove the bottlenecks to the information flow.

Challenges associated with Value Chain Analysis of Infosys

• The company may lose its vision and overall strategy by dividing operations into different activities.
• Dividing the operations into primary and support activities may not be separable due to increased complexity.
• The division process can be time consuming and finding the required information can also be difficult.
• Effective value chain implementation does not only require familiarity but detailed expertise.
• Infosys may find it difficult to get required information if its Business Information System is not structured accordingly.

2. Porter’s Value Chain Analysis of Infosys

Porter's value chain model is highly popular in the business world. However, Infosys must not take it as a rigid, standalone framework by assigning the equal importance to all activities. The effective Value Chain Analysis requires Infosys to realise that all activities or functions do not require same scrutiny level. Hence, the first step of adapting the Porter Value Chain framework is to identify the importance of activities according to their role in product/service delivery process.

Here is the list of primary value chain activities at Infosys:

2.1 Primary Activities

The primary value chain activities of Infosys are directly involved in producing and selling the product to targeted customers. Analysis of primary value chain activities can improve the performance of Infosys as explained below.

2.1.1 Inbound Logistics

It is important to develop strong relationships with suppliers as their support is necessary to receive, store and distribute the product. Without analysing the in-bound logistics, Infosys can face various challenges in product development phases. Analysis of in-bound logistics requires a company to focus on every aspect of transformation from raw material to finished product. Some examples of inbound logistics are retrieving raw material, storing the inputs and internally distributing the raw material and components to start production.

2.1.2 Operations

The importance of analysing operational activities raises when raw material arrives, and Infosys is ready to process the raw material into the end product and launch it in the market. Some examples of operational activities are machining, packing, assembling and testing. Equipment repair and maintenance also falls into this category.

It includes both- manufacturing and service operations. Analysis of operational activities is important for improving productivity, maximising the efficiency and ensuring the competitive success of Infosys. The increased productivity can help Infosys to achieve consistent economic growth, increase profitability and set a powerful basis for competitive advantage.

2.1.3 Outbound Logistics

Outbound logistics include the activities that deliver the product to the customer by passing through different intermediaries. Some outbound logistics activities are material handling, warehousing, scheduling, order processing, transporting and delivering to the destination. Infosys can analyse and optimise the outbound logistics to explore competitive advantage sources and achieve its business growth objectives.

Because, when outbound activities are timely managed with optimal costs and product delivery processes put a minimum negative effect on the quality, it maximises the customer satisfaction and increases growth opportunities for the firm. Infosys should pay specific importance to its outbound value chain activities when its offered products are perishable and require quick delivery to the end customer.

Value Chain model depends on understanding the importance of all activities. After understanding the relative importance of identified value chain activities, Infosys should highlight areas where value can be added, cost efficiency can be achieved, differentiation basis can be set, or processes can be optimised.