CHAPTER 3
Strategic Initiatives for
Implementing Competitive
Advantages
McGraw-Hill/Irwin
© The McGraw-Hill Companies, All Rights Reserved
LEARNING OUTCOMES
3.1
List and describe the four basic
components of supply chain
management
3.2
Explain customer relationship
management systems and how they can
help organizations understand their
customers
3-2
LEARNING OUTCOMES
3.3
Summarize the importance of enterprise
resource planning systems
3.4
Identify how an organization can use
business process reengineering to
improve its business
3-3
STRATEGIC INITIATIVES
• Organizations can undertake high-profile
strategic initiatives including:
– Supply chain management (SCM)
– Customer relationship management (CRM)
– Business process reengineering (BPR)
– Enterprise resource planning (ERP)
3-4
SUPPLY CHAIN MANAGEMENT
• Supply Chain Management (SCM) –
involves the management of information
flows between and among stages in a
supply chain to maximize total supply
chain effectiveness and profitability
3-5
SUPPLY CHAIN MANAGEMENT
•
Four basic components of supply chain
management include:
1. Supply chain strategy – strategy for managing all
resources to meet customer demand
2. Supply chain partner – partners throughout the
supply chain that deliver finished products, raw
materials, and services.
3. Supply chain operation – schedule for production
activities
4. Supply chain logistics – product delivery process
3-6
SUPPLY CHAIN MANAGEMENT
• Wal-Mart and Procter & Gamble (P&G) SCM
3-7
SUPPLY CHAIN MANAGEMENT
• Effective and efficient SCM systems can
enable an organization to:
– Decrease the power of its buyers
– Increase its own supplier power
– Increase switching costs to reduce the threat of
substitute products or services
– Create entry barriers thereby reducing the threat
of new entrants
– Increase efficiencies while seeking a competitive
advantage through cost leadership
3-8
SUPPLY CHAIN MANAGEMENT
• Effective and efficient SCM systems effect
on Porter’s Five Forces
3-9
CUSTOMER RELATIONSHIP
MANAGEMENT
• Customer relationship management
(CRM) – involves managing all aspects of a
customer’s relationship with an organization
to increase customer loyalty and retention
and an organization's profitability
• Many organizations, such as Charles
Schwab and Kaiser Permanente, have
obtained great success through the
implementation of CRM systems
3-10
CUSTOMER RELATIONSHIP
MANAGEMENT
• CRM is not just technology, but a strategy,
process, and business goal that an organization
must embrace on an enterprisewide level
• CRM can enable an organization to:
–
–
–
–
Identify types of customers
Design individual customer marketing campaigns
Treat each customer as an individual
Understand customer buying behaviors
3-11
CUSTOMER RELATIONSHIP
MANAGEMENT
• CRM overview
3-12
BUSINESS PROCESS
REENGINEERING
• Business process – a standardized set of
activities that accomplish a specific task, such
as processing a customer’s order
• Business process reengineering (BPR) – the
analysis and redesign of workflow within and
between enterprises
– The purpose of BPR is to make all business
processes best-in-class
3-13
BUSINESS PROCESS
REENGINEERING
• Reengineering the Corporation – book written
by Michael Hammer and James Champy that
recommends seven principles for BPR
3-14
Finding Opportunity Using BPR
• A company can improve the
way it travels the road by
moving from foot to horse and
then horse to car
• BPR looks at taking a
different path, such as an
airplane which ignore the
road completely
3-15
Finding Opportunity Using BPR
• Progressive Insurance Mobile Claims Process
3-16
Finding Opportunity Using BPR
• Types of change
an organization
can achieve,
along with the
magnitudes of
change and the
potential
business benefit
3-17
ENTERPRISE RESOURCE
PLANNING
• Enterprise resource planning (ERP) –
integrates all departments and functions
throughout an organization into a single IT
system so that employees can make
decisions by viewing enterprisewide
information on all business operations
• Keyword in ERP is “enterprise”
3-18
ENTERPRISE RESOURCE
PLANNING
• Sample data from a sales database
3-19
ENTERPRISE RESOURCE
PLANNING
• Sample data from an accounting database
3-20
ENTERPRISE RESOURCE
PLANNING
• ERP systems collect data from across an
organization and correlates the data
generating an enterprisewide view
3-21
OPENING CASE STUDY QUESTIONS
Apple – Merging Technology, Business, and
Entertainment
1. Evaluate how Apple can gain business
intelligence through the implementation of a
customer relationship management system
2. Create an argument against the following
statement: “Apple should not invest any
resources to build a supply chain
management system
3. Why would a company like Apple invest in
BPR?
3-22
CHAPTER THREE CASE
Got Milk? It’s Good For You – Unless it is Contaminated!
• A contamination crisis shattered the dairy
industry in China when babies
mysteriously started developing kidney
stones from contaminated baby formula
• A chemical called melamine – an additive
used to make plastic - was discovered in
the milk supply of one of China's thirdlargest dairy producers
3-23
CHAPTER THREE CASE
QUESTIONS
1. Explain why the supply chain can dramatically
impact a company’s base performance?
2. List all of the products that have could possibly
be affected by a problem in the United States
milk supply chain?
3. How can a CRM system help communicate
issues in the supply chain?
3-24
CHAPTER THREE CASE
QUESTIONS
4. How could BPR help uncover issues in a
company’s supply chain?
5. What are the pros and cons for
Starbucks outsourcing the growing of its
coffee beans to Chinese farmers?
3-25