Chapter 3

Strategic Initiatives for

Implementing Competitive
Advantages

McGraw-Hill/Irwin 2008 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 including testing, packaging, and preparation
for delivery.
4. Supply chain logistics product delivery processand
elements including orders, warehouses, carriers,
defective product returns, and invoicing. 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 Porters Five Forces

3-9
 Customer Relationship
Management
Customer relationship management
(CRM) involves managing all aspects of a
customers relationship with an organization
to increase customer loyalty and retention
and an organization's profitability

Many organizations, such as Air Asia,

Maxis, other on9 businesses 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 customers 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

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Business Process Reengineering
Reengineering the Corporation
book written by Michael Hammer and James Champy
that recommends seven principles for BPR:
radical redesign and reorganization of an enterprise
(wiping the slate clean)
necessary to lower costs and increase quality of service
and that information technology was the key enabler for
that radical change.
They suggested seven principles of reengineering to
streamline the work process and thereby achieve
significant improvement in quality, time management,
and cost.
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3-15
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
airplane which ignore the
road completely 3-16
Finding Opportunity Using BPR
Progressive Insurance Mobile Claims Process

3-17
 Finding Opportunity Using BPR
Types of change
an organization
can achieve,
along with the
magnitudes of
change and the
potential
business benefit

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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

3-19
 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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Enterprise Resource Planning
Sample data from a sales database

3-21
Enterprise Resource Planning
Sample data from an accounting database

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Enterprise Resource Planning
ERP systems collect data from across an
organization and correlates the data
generating an enterprisewide view

3-23
 Why it is important to
have an enterprisewide
view of data

3-24