Strategic Initiatives for Implementing Competitive Advantages CHAPTER 03 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

LEARNING OUTCOMES 1.Explain supply chain management and its role in business. 2.Explain customer relationship management systems and how they can help organizations understand their customers. 3.Summarize the importance of enterprise resource planning systems. 4.Identify how an organization can use business process reengineering to improve its business. 3-2

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) 3-3

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 3-4

SUPPLY CHAIN MANAGEMENT The 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 4.Supply Chain Logistics—Product delivery process 3-5

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 3-6

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 3-7

CUSTOMER RELATIONSHIP MANAGEMENT CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprise-wide 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 3-8

CUSTOMER RELATIONSHIP MANAGEMENT 3-9

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 3-10

BUSINESS PROCESS REENGINEERING Reengineering the Corporation—Book written by Michael Hammer and James Champy that recommends seven principles for BPR 3-11

FINDING OPPORTUNITY USING BPR Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit 3-12

PITFALLS OF BPR One hazard of BPR is that the company becomes so wrapped up in fighting its own issues that it fails to keep up with its competitors in offering new products or services 3-13

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 enterprise-wide information on all business operations Keyword in ERP is “enterprise” ERP systems collect data from across an organization and correlates the data generating an enterprise-wide view 3-14

ENTEPRISE RESOUCE PLANNING 3-15