Porter's 5 Forces Buyers’ bargaining Power Buyers were demanding reduced delivery times so that they could hold lower inventory levels. Substitute Products Alternative alcoholic products such as ice beers, premium beers as well as product shifts as the result of changing social habits New Entrants The globalisation of the brewing industry meant that there was increasing competition from foreign brewers.

Competitive Forces Model Product differentiation Superior delivery service. Focused differentiation It tailored its supply chain to particular customer’s requirements. Tight linkages with customer and suppliers Used IT/IS to tie in with customers IT systems. Cost leadership Used BPR of the supply chain to lower cost.

Value Chain Model Added value through supply chain management by compressing the times when no value was being added to the process ; and Reducing sources of uncertainty through the active cooperation of key players in each value chain. By reducing uncertainty, total service is improved and overall cost is reduced.

Demand Flow Leadership From “push” to “pull”. A pull philosophy results in high inventory levels, high operating costs, and poor customer service Demand flow leadership involves: A response to customer demand which encourages reduced inventories and costs, and enhanced customer service. A "flow" though the process. This leads to a top- down, totally integrated approach to achieve customer satisfaction. Leadership to harness the energy of change, to pursue continuous improvement, and to achieve peak-to-peak performance

3 Factors The changes were predominantly driven by the IS department and not the people involved in the actual business processes At the same time, the IS department divested itself of responsibility for the management of technology There was a failure to have an overall long- term plan for the development and implementation of the IS systems.

IS Led the way Relationship of IS with business units Expertise Need to align IS and Business strategy IS success could not be measured because it was entwined with other business untis

Implementation Initial catalyst (hardware upgrade) Standard software – quick development Decentralisation - Users became process owners Freeing up of resources (freeze on development, outsourcing) IS Dept. became business focused not technology focused IS Dept became team oriented not functional based

Criticisms No change management strategy No impact analysis No strategic analysis

Further IS Developments Extended into production, inventory, property and equipment management as a whole. Incorporate GPS and handheld PC dynamic management of the inventory, conveyance resources and personnel efficiencies in management, communication and service in responding to delays, changing priorities, traffic situations etc. Extended the system into markets outside the beverage sector and to other product categories in the existing market

Further IS Developments Datamining Intellectual property and information that gives a competitive advantage must be protected with adequate confidentially clauses and remedies. Use of Internet technology

Outsourcing Performance measures assessed against critical goals including outcomes, costs and the time schedule. Intellectual property and information that gives a competitive advantage protected Outsource the delivery system to a contractor who can reduce costs by spreading the process out over many industries and developing specialist expertise. However, Heineken may: Lose control over the information compiled in their delivery process; and Expose their system to competitors.