McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-1 BUSINESS DRIVEN TECHNOLOGY Chapter Three: Strategic Initiatives for Implementing Competitive Advantages

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 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 Summarize the importance of enterprise resource planning systems

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-3 CHAPTER THREE OVERVIEW Introduces three high-profile strategic initiatives: – Supply chain management (SCM) – Customer relationship management (CRM) – Enterprise resource planning (ERP)

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-4 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

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-5 SUPPLY CHAIN MANAGEMENT Four basic components of supply chain management include: – Supply chain strategy – strategy for managing all resources to meet customer demand – Supply chain partners – partners throughout the supply chain that deliver finished products, raw materials, and services. – Supply chain operation – schedule for production activities – Supply chain logistics – product delivery process

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-6 SUPPLY CHAIN MANAGEMENT Wal-Mart and Procter & Gamble (P&G) SCM

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-7 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

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-8 SUPPLY CHAIN MANAGEMENT Effective and efficient SCM systems effect on Porter’s Five Forces

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 3-9 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

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved 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

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CUSTOMER RELATIONSHIP MANAGEMENT CRM overview

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved 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 enterprisewide decisions by viewing enterprisewide information on all business operations Keyword in ERP is “enterprise”

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved ENTERPRISE RESOURCE PLANNING Organizations typically operate by functional areas or functional silos

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved ENTERPRISE RESOURCE PLANNING ERP’s goal – every department or functional area work together sharing common information and not be a “silo” The organization must maintain a consistent IT infrastructure – IT infrastructure – hardware, software, and telecommunications equipment that, when combined, provide the underlying foundation to support the organization's goals

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved ENTERPRISE RESOURCE PLANNING Organizations use many integration tools to integrate IT infrastructures including: – Intranets – an internalized portion of the Internet, protected from outside access, that allows an organization to provide access to information and application software to only its employees – Enterprise information portals (EIPs) – an Internet site owned and operated by an organization to support its operations.

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved ENTERPRISE RESOURCE PLANNING Start

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved ENTERPRISE RESOURCE PLANNING Large ERP vendors include – SAP – PeopleSoft – Oracle Most ERP solutions include SCM and CRM components

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved OPENING CASE STUDY QUESTIONS How Levi’s Got Its Jeans into Wal-Mart 1.Which of Porter’s Five Forces did Levi’s address through the implementation of its updated supply chain management system? 2.Evaluate how Levi’s can gain business intelligence through the implementation of a customer relationship management system 3.Create an argument against the following statement: “Levi’s should not invest any resources to upgrade its current supply chain management system”

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER THREE CASE Consolidating Touchpoints for Saab Saab required a consolidated customer view among its three primary channels: – Dealer network – Customer assistance center – Lead management center

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER THREE CASE QUESTIONS 1.Explain how implementing a CRM system enabled Saab to gain a competitive advantage 2.Estimate the potential impact to Saab’s business if it had not implemented a CRM system 3.What additional benefits could Saab receive from implementing a supply chain management system?