My final post on value chains is an actual example. There are lots of posts on value chains but I don’t see many examples so I thought it would be interesting to quickly perform an analysis and show the final result. In this exercise we are going to be focusing on the internal value chain of Krispy Kreme doughnut which is a vertically integrated business so the internal and industry value chains are very similar.
What does an example of a value chain look like?
Developing a value chain from an external point of view is quite difficult as a lot of the support activities are not easy to analyse, so for this exercise I have focused on on only the primary activities of Krispy Kreme.
Most of the data was gathered from financial reports, analyst reports, press releases and other research and PR articles.
Krispy Kreme internal value chain example
Supplying fresh doughnut mix to all stores:
- Begins with the secret recipe (formulation and consistency)
- Unique taste
- The mix is centrally produced, controlled and consistent and distributed to all stores and franchises
Manufacturing of proprietary doughnut-making equipment:
- Design and manufacture of the proprietary doughnut making equipment
- This is then sold to stores for profit and ensures consistency of end product
Retail distribution channels:
- Mixture and equipment is distributed to large factory stores from central hubs
- Mix of factory stores that supply smaller stalls and kiosks
- Outsourced retail channels in service stations and Walmart
Fresh doughnut and doughnut theatre store experience:
- Worldwide locations
- Doughnuts are freshly baked and produced each day
- Original glazed sign
- Large capacity for production
- Simple product line
- Targeted local campaigns (no above the line campaigns)
- Store demand is driven by word of mouth
- Very recognisable brand
- A lot of brand loyalty
- Drives demand for franchise opportunities