CHAPTER 3

STRATEGIC INITIATIVES for IMPLEMENTING COMPETITIVE ADVANTAGES

In this chapter, we learned about :

• List and describe the four basic components of supply chain management

• Explain customer relationship management systems and how they can help organizations understand their customers

• Summarize the importance of enterprise resource planning systems

• Identify how an organization can use business process reengineering to improve its business

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)

SUPPLY CHAIN MANAGEMENT

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

* 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

* 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

* Effective and efficient SCM systems effect on Porter’s Five Forces 

CUSTOMER RELATIONSHIP MANAGEMENT 

* 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 customers 

– Design individual customer marketing campaigns 

– Treat each customer as an individual

– Understand customer buying behaviors

  
BUSINESS PROCESS REENGINEERING

   
* It is 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 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
- Progressive Insurance Mobile Claims Process 
- Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

ENTERPRISE RESOURCE PLANNING

* It 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"