Quality along the Value Chain

The range of activities that brings a product or a service from its conception to its end use in a particular industry is referred to as the value chain, a term originally coined by Michael Porter. Value chains can be seen as a mechanism that allows producers, processors, and traders – separated by time and space – to gradually add value to products and services as they pass from one link in the chain to the next until reaching the final consumer (domestic or global).

In the globalized marketplace it is rather unusual for a single company to perform all the activities from product design, production of components, to final assembly and delivery to the ultimate user. Original equipment manufacturers source components from a myriad of sub-suppliers frequently across many countries. Agents handle the marketing and sales, and specialized freight haulers ensure the product is moved from the factory to the consumer. The manufacturers and suppliers draw from a range of technical, business and financial service providers, as well as public services. They depend on the national as well as global legislative context and socio-political environment. In a value chain the various business activities in the different segments become connected and to some degree coordinated – the value chain analysis covers the whole system in which the organization operates.

In each of the stages of the value chain the required QI services can be mapped and technical assistance can be designed to provide such services effectively and efficiently; otherwise the suppliers of products and services will not measure up to the minimum requirements in the world markets, i.e. remain in a sub-optimal business environment. Worse, if a country’s QIS does not meet international requirements, its producers may be unable to join international supply chains, e.g. entire ranges of products such as food of animal origin cannot be exported, at least to high income markets.