CHAPTER 3 : STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

Learning Outcomes

• Explain supply chain management and its role in business.
• Explain customer relationship management systems and how they can help organizations understand their customers.
• Summarize the importance of enterprise resource planning systems.
• Identify how an organization can use business process re-engineering to improve its business.

SUPPLY CHAIN MANAGEMENT

Involve the management of information flows between and among stages in a supply chain to maximize total supply chain  effectiveness and profitability.

Components Of Supply Chain Management

1. Supply chain strategy : The strategy for managing all the resources required to meet customer demand for all products and services.
2. Supply chain partners : The partners chosen to deliver finished products,raw materials, and services including pricing, delivery, and payment processes along with partner relationship monitoring metrics.
3. Supply chain operation : The schedule for production activities including testing, packaging, and preparation for delivery. Measurements for this component include productivity and quality.
4. Supply chain logistics : The product delivery processes and elements including orders, warehouses, carriers, defective product returns and invoicing.

Effective and efficient supply chain management 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.

CUSTOMER RELATIONSHIP MANAGEMENT

• Involves managing all aspects of a customer's relationship with an organization to increase customer royalty and retention and an organization's profitability.
• Allows an organization to gain insights into customers' shopping and buying behaviors in order to develop and implement enterprise-wide strategies.

Typical CRM System :

• Customers contact an organization through various means including call centers, web access, email, faxes and direct sales. A single customer may access an organization multiple times through many different channels.
• It tracks every communication between the customer and the organization and provides access to CRM information within different systems from accounting to order fulfillment.

CRM Strategy :

• There are many technical components of CRM, which is actually a process and business goal simply enhanced by technology.
• CRM system can help an organization identify customers and design specific marketing campaigns tailored to each customer, thereby increasing customer spending.
• Also allows an organization to treat customers as individuals, gaining important insights into their buying preferences and behaviors and leading to increased sales, greater profitability, and higher rates of customer royalty.

BUSINESS PROCESS REENGINREERING

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 process the best-in-class.

Seven Principles Of BPR

1. Organize around outcomes, not tasks.
2. Identify all the organization's processes and prioritize them in order of redesign urgency.
3. Integrate information processing work into the real work that produces the information.
4. Treat geographically dispersed resources as though they were centralized.
5. Link parallel activities in the workflow instead of just integrating their results.
6. Put the decision point where the work is performed, and build control into the process.
7. Capture information once and at the source.

ENTERPRISE RESOURCE PLANNING (ERP)

Integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make desicions by viewing enterprise wide information on all business operations.

How can ERP improve an organization business?

• Many organizations fail to maintain consistency across business operations.
• If a single department decides to implement a new system without considering the other departments, inconsistencies can occur throughout the company.
• Not all systems are built to talk to each other and share data, and if sales suddenly implements a new system that marketing and accounting cannot use or is inconsistent in the way it handles information, the company's operations becomes siloed.
• The issue ERP intends to solve is that knowledge within a majority of organization currently in silos that are maintained by a select few, without the ability to be shared across the organization, causing inconsistency across business operations..