STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES CHAPTER THREE STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

LEARNING OUTCOMES Identify how an organization can use business process reengineering to improve its business 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

STRATEGIC INITIATIVES Organizations can undertake high-profile strategic initiatives including: Business process reengineering (BPR) Supply chain management (SCM) Customer relationship management (CRM) Enterprise resource planning (ERP)

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

USING MIS TO IMPROVE BUSINESS PROCESSES Workflow – Includes the tasks, activities, and responsibilities required to execute each step in a business process

MANAGING BUSINESS PROCESSES Businesses gain a competitive edge when they minimize costs and streamline business processes

MANAGING BUSINESS PROCESSES Business facing process - Invisible to the external customer but essential to the effective management of the business Customer facing process - Results in a product or service that is received by an organization’s external customer

MANAGING BUSINESS PROCESSES The Order-to-Delivery Process

BUSINESS PROCESS MODELING Business process modeling (or mapping) - The activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities, in a structured sequence Business process model - A graphic description of a process, showing the sequence of process tasks, which is developed for a specific As-Is process model To-Be process model

BUSINESS PROCESS MODELING

BUSINESS PROCESS MODELING

BUSINESS PROCESS MODELING

BUSINESS PROCESS MODELING

BUSINESS PROCESS MODELING

BUSINESS PROCESS MODELING

USING MIS TO IMPROVE BUSINESS PROCESSES

USING MIS TO IMPROVE BUSINESS PROCESSES

SUPPLY CHAIN MANAGEMENT Supply Chain Management (SCM) – The management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and profitability

BASICS OF SUPPLY CHAIN The supply chain has three main links: Materials flow from suppliers and their “upstream” suppliers at all levels Transformation of materials into semifinished and finished products through the organization’s own production process Distribution of products to customers and their “downstream” customers at all levels

BASICS OF SUPPLY CHAIN Organizations must embrace technologies that can effectively manage supply chains

SUPPLY CHAIN MANAGEMENT Five basic supply chain activities

SUPPLY CHAIN MANAGEMENT Supply Chain Example

SUPPLY CHAIN MANAGEMENT Walmart and Procter & Gamble SCM Example

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

SUPPLY CHAIN MANAGEMENT Effective and Efficient SCM Systems Effect on Porter’s Five Forces

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

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

CUSTOMER RELATIONSHIP MANAGEMENT

EVOLUTION OF CRM CRM reporting technology – Help organizations identify their customers across other applications CRM analysis technologies – Help organization segment their customers into categories such as best and worst customers CRM predicting technologies – Help organizations make predictions regarding customer behavior such as which customers are at risk of leaving

EVOLUTION OF CRM

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”

ENTERPRISE RESOURCE PLANNING Sample data from a sales database A B C D E F G 1 OrderDate ProductName Quantity Unit Price Unit Cost Customer ID SalesRepID 2 Monday, January 04, 2010 Mozzarella cheese 41 5 $ 24.15 S15.35 AC45 EX-107 3 Monday, January 04 2010 Romaine lettuce 90.65 $15.06 $14.04 EX-109 4 Tuesday, January 05 2010 Red onions 27.15 $12.08 $10.32 ACS7 EX-104 5 Wednesday January 06 2010 67.25 $15.16 $10.54 A096 6 Thursday, January 07 2010 Black olives 79.26 $12.18 $9.56 A044 7 Thursday. January 07 2010 46.52 $15.24 $11.54 AC32 8 Thursday January 07 2010 52.5 $15.26 $11.12 AC84 9 Friday January 03 2010 39.5 $12.55 $9.54 A0103 10 Saturday January 09 2010 66.5 $15.98 AC4 11 Sunday, January 10, 2010 58.26 $15.97 $9.50 A0174 12 Sunday January 10 2010 Pineapple 40.15 $33.54 $22.12 EX-I04

ENTERPRISE RESOURCE PLANNING Sample data from an accounting database A B C D E F G H I J 1 OrderDate ProductName Quantity Unit Price Total Sales Unit Cost Total Cost Profit Customer SalesRep 2 04-Jan-10 Mozzarella cheese 41 24 984 18 738 246 The Station Debbie Fernandez 3 Romaine lettuce 90 15 1,350 14 1,260 Roberta Cross   4 05 Jan-10 Red onions 27 12 324 8 216 108 Bert’s Bistro Loraine Schultz 5 06-Jan-10 67 1,005 938 Smoke House 6 07-Jan-10 Black olives 79 948 474 Flagstaff House 7 46 690 644 Two Bitts 52 780 728 Pierce Arrow 9 08-Jan-10 39 468 312 156 Mamma’s Pasta Place 10 09-Jan-10 66 990 924 The Dandelion 11 10-Jan-10 58 870 812 Carmens

ENTERPRISE RESOURCE PLANNING ERP systems collect data from across an organization and correlates the data generating an enterprisewide view

LEARNING OUTCOME REVIEW Now that you have finished the chapter please review the learning outcomes in your text