Chapter 3 - Strategic Initiatives for Implementing Competitive Advantages

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

• 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

• 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

 

 

 

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 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 enterprise wide 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

 

• CRM overview

 

 

 

Business Process Reengineering

• Business process - a standardized set of activities that accomplish a specific task, such as processing a customer's order
• Business process reengineering (BPR) - the analysis and redesign of workflow within and between enterprise

          - The purpose of BPR is to make all business processes best-in-class

 

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

 

 

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 enterprise wide information on all business operations
• Keyword in ERP is "enterprise"