McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, All Rights Reserved Chapter 3 Strategic Initiatives for Implementing Competitive Advantages

3-2 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

3-3 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

3-4 Leadership

3-5 Strategic Initiatives To gain competitive advantage organizations can undertake high-profile strategic initiatives including: –Supply chain management (SCM) –Customer relationship management (CRM) –Enterprise resource planning (ERP) –Business process reengineering (BPR)

3-6 Supply Chain Management A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer 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

3-7 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 including pricing, delivery, and payment processes 3.Supply chain operation – schedule for production activities including testing, packaging, and preparation for delivery 4.Supply chain logistics – product delivery process including orders, warehouses, carriers, defective product returns, and invoicing.

3-8 SCM software can enable an organization to generate efficiencies by automating and improving the information flow throughout and among the different supply chain component.

3-9 SCM

3-10 Serious supply chain problem

3-11 Supply Chain Management Wal-Mart and Procter & Gamble (P&G) SCM

3-12 The SCM system save time, reduce inventory and decrease order-processing cost for P&G. P&G passes on these saving to Wal-Mart in the form of discounted prices.

3-13 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

3-14 Supply Chain Management Effective and efficient SCM systems effect on Porter’s Five Forces

3-15 No supply problem here

3-16 Videos Keeping the Global Supply Chain Moving (6 mins)Keeping the Global Supply Chain Moving Fresh Produce Supply Chain Management ( 2 mins)Fresh Produce Supply Chain Management

3-17 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

3-18 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

3-19 Charles Schwab’s CRM Case Charles Schwab recouped the cost of a multimillion- dollar CRM system in less than two years –The system allowed Schwab to segment its customers in terms of serious and nonserious investors –The CRM system looked for customers that had automatic withdrawal from a bank account as a sign of a serious investor –The CRM system looked for stagnant balances as a sign of a nonserious investor –Charles Schwab could then focus efforts on selling to serious investors, and spend less time attempting to sell to nonserious investors

3-20 Customer Relationship Management CRM overview

3-21 Videos What is CRM? ( 7 mins)What is CRM?

3-22 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 –The purpose of BPR is to make all business processes best-in-class

3-23 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 an airplane which ignore the road completely

3-24 Finding Opportunity Using BPR Progressive Insurance Mobile Claims Process

3-25 Videos Business Process Management ( 6 mins)Business Process Management Workflow - Improving Business Processes ( 2 mins)Workflow - Improving Business Processes

3-26 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

3-27 Enterprise Resource Planning Sample data from a sales database

3-28 Enterprise Resource Planning Sample data from an accounting database

3-29 Professor Liengme on a bad day

3-30 Enterprise Resource Planning ERP systems collect data from across an organization and correlates the data generating an enterprisewide view