Chapter 3

Strategic
Initiatives for
Implementing
Competitive
Advantages

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

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

Strategic Initiatives
Organizations can undertake highprofile strategic initiatives including:
Supply chain management (SCM)
Customer relationship management (CRM)
Business process reengineering (BPR)
Enterprise resource planning (ERP)

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

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.
3. Supply chain operation schedule for
production activities
4. Supply chain logistics product delivery
process

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

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 leadershi

Supply Chain Management

Effective and efficient SCM systems effect
on Porters Five Forces

Customer Relationship
Management
Customer relationship management

(CRM) involves managing all aspects of a

customers 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

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

Customer Relationship
Management
CRM overview

Business Process
Reengineering
Business process a standardized set of
activities that accomplish a specific task,
such as processing a customers 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

Business Process
Reengineering
Reengineering the Corporation book
written by Michael Hammer and James
Champy that recommends seven principles
for BPR

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

Finding Opportunity Using BPR

Progressive Insurance Mobile Claims
Process

Finding Opportunity Using BPR

Types of
change an
organization
can achieve,
along with the
magnitudes of
change and
the potential
business
benefit

Pitfalls of BPR
Fails to keep up with competitors

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
Keyword in ERP is enterprise

Enterprise Resource Planning

Sample data from a sales database

Enterprise Resource Planning

Sample data from an accounting database

Enterprise Resource Planning

ERP systems collect data from across an
organization and correlates the data
generating an enterprisewide view