Value Chain Analysis and Sales
Logistics
R/3 Text Chapters 4
&5
Strategic Significance (1)
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“Value Chain”, the company’s activities are divided into the
technologically and economically distinct activities that the
company performs in doing business
“Value Activities”, are nine generic activities (split in two categories:
primary and support) which value is the amount that buyers are
willing to pay for a product or service
“Primary activities” are those involved in the physical creation of
the product or service
“Support activities” provide the inputs and infrastructure that allow
the primary activity to take place
The Value Chain
Firm Infrastructure
Human Resources Management
Technology Development
Procurement
Inbound Operations
Logistics
Outbound Sales &
Logistics Marketing
Service
Primary VC Activities
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Inbound logistics
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Outbound logistics
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machining, packaging, assembly, etc.
Marketing & sales
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collecting, order processing, delivery, etc.
Operations
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inventory control, vehicle scheduling, returns to
supplier, etc.
advertising, promotion, quoting
Service
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installation, repair, training
VC Support Activities
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Procurement
Technology development
Human resource management
Firm infrastructure
Transforming the Value Chain (2)
Firm Infrastructure
Office Automation
Human Resources Management
Technology Development
Work Force Planning Systems
CAD
Procurement
EDI
Inbound Operations
Logistics
Outbound Sales &
Logistics Marketing
Service
Automated Warehousing
Computerized ordering
Equip. Maintenance
Computer-Controlled Machine
Automated Shipment Scheduling
Mapping R/3 Text to VC
External Accounting/Treasury Mgt
Chapter 8 and 12
Human Resources Management
Controlling
Chapter 9
Chapter 10
Procurement
Chapter 7
Inbound Operations
Logistics
Outbound Sales &
Logistics Marketing
Chapter 5
Service
Chapter 5
Chapter 6 and 7
Chap 11 and 13
Chapter 5
Strategic Significance (2)
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Supplier VC
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A company’s value chain is a system of interdependent
activities
A value chain for a company in a particular industry is
embedded in a larger stream of activities that it is called “Value
System”
Firm VC
Channel VC
Buyer VC
Linkage among activities not only connect value activities
inside a company but also create interdependence between its
value chain and those of its suppliers and channels
Porter’s Five Forces Model
Threat of new
entrants
Bargaining Power
of Suppliers
Rivalry Among
Existing Competitors
Bargaining Power
of Buyers
Threat of Substitute
Products or Services
Interaction between opportunities and threats
Individual Company VC
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Every company activity can be categorized into
primary or support activity
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start with generic VC and subdivide into discrete
activities
categorize those activities that contribute best to a
firm’s competitive advantage
can compare company VC to industry VC
R/3 and the VC
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Allows company to restructure activities on VC
Business reference scenarios are structured
around primary and support VC activities
Text is organized around VC activities
See VC examples
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copier machine, AMCC, Dell computer
Standard Order Handling Scenario
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Mailing campaign
Monitor sales activity
Possible customer
inquiry
Customer RFQ
processing
Order entry
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Delivery processing
Goods issue processing
Billing
Possible rebate
processing
VC for Direct Sale to Industrial
Customer
Sales
Support
Sales inquiry/
Quotation proc
Customer
Outline
Agreement
Sales Order
Shipping
Credit
Management
Billing
Personnel
selection
Foreign
Trade
Customer
Rebate
Processing
Information
System
Quality
Managment
Transportation
Warehouse
Management
Standard Order Handling Scenario (1)
Cust mail
Campaign to
Be carried out
Mailing
Campaign
processing
^
Sales activity
Is to be
prepared
Sales activity
Is agreed
upon
Customer
Inquires about
products
Direct mail
Campaign
Is sent
Customer
RFQ processing
XOR
XOR
Sales Activity
processing
Quotation to
Be created
From contract
Inquiry
Items
rejectec
Quotation to
Be created
From inquiry
XOR
Quotation
Reason
occurred
Standard Order Handling Scenario (2)
Customer
Quotation
Processing
^
XOR
Stand Order
w/o Quote ref
received
Stand. Order
w/ref to quote
received
Quotation
Is sent
^
Quotation
Is Valid
^
Quotation
Items are
rejected
^
XOR
XOR
Standard
Order
Processing
Framework
Agreement
Processing
XOR
Framework
Agreement Is
Agreed w/ref
Framework
Agreement is
To be created
Standard Order Handling Scenario (3)
XOR
Rejection
Notice sent to
customer
^
Order is
released
Order
Confirmation
sent
Sales
Requirements
created
^
Cash
Management
^
Delivery
Processing
XOR
Delivery
Cannot be
created
Make-to
Order
Production
Repetitive
Manufacturing
Production
For Lot
Size
Process
Manufacturing
Standard Order Handling Scenario (4)
^
XOR
Delivery is
Relevant
For billing
Delivery is
Relevant for
shipment
^
Material
For quality
Check is
available
Shipping papers
Are created/
transmitted
Delivery is
Not relevant
For shipment
Shipment
Is
determined
Quality
Management
COGLAS GmbH - Logistics Solutions
Goods issue
Is posted
Transportation
Planning
Goods issue
Processing for
Stock material
XOR
Transportation
processing
Shipping
Notification
generated
Standard Order Handling Scenario (5)
Billing
^
Export papers
Are created/
sent
Billing doc
Is released
For billing
Billing doc
Is sent
^
Cash
Management
Profitability
Analysis w/
Overhead cost
Profitability
Analysis w/
Flex. Stand
costing
Profitability
Analysis w/
Allocation
costing
Profitability
Analysis w/
Static stand
costing
Customer
processing
More Complex Sales Scenarios
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Contract handling &
agreements
Third party order
handling
Customer consignment
handling
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Cash orders
Rush orders
Make-to-order
Returns handling
Buy/Sell Overview
Requisite
Catalog
• Select catalog item
• Send Purchase Order
• Create Sales Order
XML
XML
R/3 Buy
IDoc
IDoc
BC
B/C
• Goods Receipt
• ERS
• A/P
• Create Purchase
Order
Marketplace
BC
• Pick
• Pack
• Ship
•Receive Order
Confirmation
• Create Purchase
Order Confirmation
• Access Marketplace via BBP
BBP
R/3 Sell
• EFT Payment
Let’s Try Some XML!