Chapter 3 - STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

Supply Chain Management (SCM)

It involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

There are four (4) basic components of supply chain management:

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.

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

Effective and efficient SCM systems can enable an organization to:

• Decrease the power of its buyer
• 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 efficiency while seeking a competitive advantage through cost leadership

Effective and efficient SCM systems effect on Porter's Five Forces

Custom Relationship Management (CRM)

• It 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.
• 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 customer
• design individual customer marketing campaigns
• treat each customer as an individual
• understand customer buying behaviors

CRM overview

Business Process Reengineering (BPR)

• A standardized set of activities that accomplish a specific task, such as processing a customer's order.
• The analysis and redesign of workflow within and between enterprises.
• The purpose of BPR is to make all business processes best-in-class. 
• Reengineering ther 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 taking a different path, such as an airplane which ignore the road completely.

Progressive Insurance Mobile Claim Process

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

Enterprise Resource Planning (ERP)

• Integrates all departments and functions throughout an organization into a single IT syste, so that employees can make decisions by viewing enterprisewide information on all business operations.
• Keyword in ERP is "enterprise".

Sample data from a sales database

Sample data from an accounting database

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