Discussion: Inbound /Outbound Logistics

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Discussion: Inbound /Outbound Logistics

Discussion: Inbound /Outbound Logistics

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The value chain framework suggests that competition stems from two sources: lowering the cost to perform activities and adding value to a product or service so that buyers will pay more. To achieve true competitive advantage, a firm requires accurate information on elements outside itself. Lowering activity costs achieves an advantage only if the firm possesses information about its competitors’ cost structures. Even though reducing isolated costs can improve profits temporarily, it does not provide a clear competitive advantage unless the firm can lower its costs below a competitor’s. Doing so enables the firm to lower its prices as a way to grow its market share.

For example, many Web sites sell memory to upgrade laptops. But some sites, such as crucial.com, have an option that automates the process prior to the sales process. These sites have the “Crucial System Scanner Tool,” which scans the customer’s laptop, identifies the current configuration and the capacity, and then suggests com- patible memory upgrade kits. The customer uses the scanner, which identifies the configuration of the laptop, and automatically opens a Web page with the appropriate memory upgrades. The customer does not have to figure out the configuration or requirements; it’s done automatically. By combining a software program like its configurator with the sales process, crucial.com has added value to the customer’s experience by automating a key process.


Human Resources



Inbound Logistics

Outbound Logistics

Operations Marketing and Sales


Materials handling Delivery

Manufacturing Assembly

Order processing Shipping

Product Pricing Promotion Place

Customer service Repair

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FIGURE 2.5 Value chain of the firm. Source: Adapted from Michael Porter and Victor Millar, “How Information Gives You Competitive Advantage,” Harvard Business Review (July–August 1985), reprint no. 85415.

c02.indd 41 11/26/2015 6:20:49 PM
42 Strategic Use of Information Resources


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