Value Chain Analysis and Sales Logistics R/3 Text Chapters 4 & 5

Strategic Significance (1) “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 3 3

The Value Chain Firm Infrastructure Human Resources Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Sales & Marketing Service 4 4

Primary VC Activities Inbound logistics Outbound logistics Operations inventory control, vehicle scheduling, returns to supplier, etc. Outbound logistics collecting, order processing, delivery, etc. Operations machining, packaging, assembly, etc. Marketing & sales advertising, promotion, quoting Service installation, repair, training

VC Support Activities Procurement Technology development Human resource management Firm infrastructure

Transforming the Value Chain (2) Office Automation Firm Infrastructure Work Force Planning Systems Human Resources Management Technology Development CAD Procurement EDI Inbound Logistics Operations Outbound Logistics Sales & Marketing Service Automated Warehousing Computerized ordering Equip. Maintenance Computer-Controlled Machine Automated Shipment Scheduling 7 7

Mapping R/3 Text to VC Chapter 8 and 12 External Accounting/Treasury Mgt Chapter 9 Human Resources Management Controlling Chapter 10 Procurement Chapter 7 Inbound Logistics Operations Outbound Logistics Sales & Marketing Service Chapter 5 Chapter 5 Chap 11 and 13 Chapter 6 and 7 Chapter 5 7 7

Strategic Significance (2) 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” 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 Supplier VC Firm VC Channel VC Buyer VC 5 5

Porter’s Five Forces Model Interaction between opportunities and threats Threat of new entrants Bargaining Power of Buyers of Suppliers Threat of Substitute Products or Services Rivalry Among Existing Competitors 7

Individual Company VC Every company activity can be categorized into primary or support activity 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 6 6

R/3 and the VC 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 copier machine, AMCC, Dell computer

Standard Order Handling Scenario Mailing campaign Monitor sales activity Possible customer inquiry Customer RFQ processing Order entry Delivery processing Goods issue processing Billing Possible rebate processing

VC for Direct Sale to Industrial Customer Outline Agreement Sales Support Sales inquiry/ Quotation proc Quality Managment Shipping Transportation Sales Order Warehouse Management Credit Management Customer Rebate Processing Billing Information System Personnel selection Foreign Trade

Standard Order Handling Scenario (1) Cust mail Campaign to Be carried out Mailing Campaign processing ^ Customer Inquires about products Sales activity Is agreed upon Sales activity Is to be prepared Direct mail Campaign Is sent Customer RFQ processing XOR XOR Sales Activity processing Inquiry Items rejectec Quotation Reason occurred Quotation to Be created From inquiry XOR Quotation to Be created From contract

Standard Order Handling Scenario (2) Customer Quotation Processing ^ XOR Quotation Items are rejected Stand Order w/o Quote ref received Stand. Order w/ref to quote received Quotation Is sent Quotation Is Valid Framework Agreement Is Agreed w/ref ^ ^ ^ Framework Agreement is To be created XOR XOR Standard Order Processing Framework Agreement Processing XOR

Standard Order Handling Scenario (3) XOR Rejection Notice sent to customer ^ Order is released Order Confirmation sent Sales Requirements created ^ ^ Cash Management Make-to Order Production Repetitive Manufacturing Production For Lot Size Delivery Processing Process Manufacturing XOR Delivery Cannot be created

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 Transportation Planning Shipment Is determined Quality Management Transportation processing COGLAS GmbH - Logistics Solutions Goods issue Processing for Stock material XOR Goods issue Is posted Shipping Notification generated

Standard Order Handling Scenario (5) Billing ^ Export papers Are created/ sent Billing doc Is released For billing Billing doc Is sent ^ Profitability Analysis w/ Flex. Stand costing Cash Management Profitability Analysis w/ Overhead cost Profitability Analysis w/ Allocation costing Profitability Analysis w/ Static stand costing Customer processing

More Complex Sales Scenarios Contract handling & agreements Third party order handling Customer consignment handling Cash orders Rush orders Make-to-order Returns handling

Buy/Sell Overview R/3 Buy R/3 Sell Marketplace BBP B/C B/C BC BC BC BC Select catalog item Send Purchase Order B/C B/C BC BC BC BC Create Sales Order XML XML R/3 Buy IDoc Marketplace IDoc R/3 Sell B/C Pick Pack Ship Goods Receipt ERS A/P Receive Order Confirmation Create Purchase Order Confirmation EFT Payment Create Purchase Order Access Marketplace via BBP BBP

Let’s Try Some XML!