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According to the value chain model (Porter, 1985), the activities conducted in any manufacturing organization can be divided into two parts: primary activities and support activities. The five primary activities are those activities in which materi- als are purchased, processed into products, and delivered to customers. They are: 1. Inbound logistics (inputs) 2. Operations (manufacturing and testing) 3. Outbound logistics (storage and distribution) 4. Marketing and sales 5. Service The primary activities usually take place in a sequence from 1 to 5. (An ex- ception to this sequencing is Dell Computer’s build-to-order strategy, as described in IT at Work 3.4.) As work progresses according to the sequence, value is added to the product or service in each activity. To be more specific, the incoming ma- terials (1) are processed (in receiving, storage, etc.), and in this processing, value is added to them in activities called inbound logistics. Next, the materials are used in operations (2), where significant value is added by the process of turning raw materials into products. The products need to be prepared for delivery (packag- ing, storing, and shipping) in the outbound logistics activities (3), and so more value is added in those activities. Then marketing and sales (4) attempt to sell the products to customers, increasing product value by creating demand for the com- pany’s products. (The value of a sold item is much larger than that of an unsold one.) Finally, after-sales service (5) such as warranty service or upgrade notifica- tion is performed for the customer, further adding value. All of these value- adding, primary activities result (it is hoped) in profit. Primary activities are supported by the following support activities: 1. The firm’s infrastructure (accounting, finance, management) 2. Human resources management 3. Technology development (R&D) 4. Procurement Each support activity can support any or all of the primary activities, and the support activities may also support each other. A firm’s value chain is part of a larger stream of activities, which Porter calls a value system. A value system includes the suppliers that provide the inputs necessary to the firm and their value chains. Once the firm creates products, they pass through the value chains of distributors (which also have their own value chains), all the way to the buyers (customers). All parts of these chains are in- cluded in the value system. Gaining and sustaining a competitive advantage, and supporting that advantage by means of IT, requires an understanding of this entire value system.