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

2. 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

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

5. VC Support Activities
Procurement
Technology development
Human resource management
Firm infrastructure

6. 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

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

8. 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

10. 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

11. 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

12. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

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

25. 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

26. Let’s Try Some XML!