Chapter 3
Strategic Initiatives for
Implementing Competitive
Advantages
Sell products
through a catalog
Sears’ loyalty programs involved
customers passed copies of the
catalog on to friends and relatives
Learning Outcomes
 List and describe the four basic components
of supply chain management
 Explain customer relationship management
systems and how they can help organizations
understand their customers
 Summarize the importance of enterprise
resource planning systems
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Three strategic initiatives: Overview
 Supply chain management (SCM)
 Customer relationship management (CRM)
 Enterprise resource planning (ERP)
Trek’s IT systems increased sales by 25-30 percent
4
The steps typically taken
when a customer buys a bike from Trek
Trek orders materials from its
suppliers, such as packaging
material, metal, & accessories
Trek sends payments to
suppliers
Trek receives materials from
suppliers
Trek assembles the bike
Trek ships the bike to the store
Customer picks up the Trek
bike from the store
Customer places an order for a Trek bike with a store
Store (such as local sporting goods store) receives the order
Store receives the payment from the customer
Store orders the bike from Trek
Store sends payment to Trek
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
 Four basic components of SCM:




Supply chain strategy – strategy for managing all
resources to meet customer demand
Supply chain partners – partners throughout the supply
chain that deliver finished products, raw materials, and
services.
Supply chain operation – schedule for production
activities
Supply chain logistics – product delivery process
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Wal-Mart and Procter & Gamble
SCM
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Effective and efficient SCM systems effect on
Porter’s Five Forces
 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
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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
 CRM is not just technology, but a strategy, process,
and business goal that an organization must embrace
on an enterprise wide 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
10
CRM overview
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Enterprise resource planning (ERP)
 ERP integrates all departments and functions
throughout an organization into a single IT system so
that employees can make enterprise wide decisions
by viewing enterprise wide information on all
business operations
 ERP’s goal – every department or functional area
work together sharing common information and not
be a “silo”
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Briefly explain the differences between
SCM, CRM, and ERP
SCM systems focus
specifically on
suppliers
CRM systems focus
specifically on
customers
ERP systems focus on everything, all
processes, departments, and operations
for an enterprise
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Organizations typically operate by
functional areas or functional silos
Enterprise resource planning (ERP)
 Organizations use many integration tools to
integrate IT infrastructures including:


Intranets – an internalized portion of the
Internet, protected from outside access, that
allows an organization to provide access to
information and application software to only its
employees
Enterprise information portals (EIPs) – an
Internet site owned and operated by an
organization to support its operations.
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ERP Vendors
 Large ERP vendors include



SAP
PeopleSoft
Oracle
 Most ERP solutions include SCM and CRM
components
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How Levi’s Got Its Jeans into Wal-Mart
 Which of Porter’s Five Forces did Levi’s address
through the implementation of its updated supply
chain management system?
 Evaluate how Levi’s can gain business
intelligence through the implementation of a
customer relationship management system
 Create an argument against the following
statement: “Levi’s should not invest any
resources to upgrade its current supply chain
management system”
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CASE QUESTIONS
 Explain how implementing a CRM system
enabled Saab to gain a competitive
advantage
 Estimate the potential impact to Saab’s
business if it had not implemented a CRM
system
 What additional benefits could Saab receive
from implementing a supply chain
management system?
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