CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

StRaTeGiC iNiTiATiVeS:~

• Organizations can undertake high-profile strategic initiatives including:

1.  Supply Chain Management (SCM).
2.  Customer Relationship Management (CRM).
3.  Business Process Reengineering (BPR).
4.  Enterprise Resource Planning (ERP).

1. 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.
• For 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.

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

• Effective and efficient SCM systems can enable an organization to:

         -Decrease the power of its buyers.

         -Increase its own supplier power.

         -Increase switching cost 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:

2. CUSTOMER RELATIONSHIP MANAGEMENT (CRM):

• CRM 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.

• CRM overview:

3. BUSINESS PROCESS REENGINEERING:

• Business process - a standardized set of activities that accomplish a specific task, such as processing a customer's order.
• BPR - 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:

1. Organize around outcomes, not task.
2. Identify all the organization's processes and prioritize them in order of redesign urgency.
3. Integrate information processing work into the real work that produces the information.
4. Treat geographically dispersed resources as though they were centralized.
5. Link parallel activities in the workflow instead of just integrating their results.
6. Put the decision point where the work is performed, and build control into the process.
7. Capture information once and at the source.

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.

4.ENTERPRISE RESOURCE PLANNING (ERP):

>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”.

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