CHAPTER 3: STRATEGIC INITIATIVE FOR IMPLEMENTING COMPETITIVE ADVANTAGE

STRATEGIC INITIATIVE FOR COMPETITIVE ADVANTAGE

1     1.   .Supply chain management (SCM)
2.     Customer relationship management (CRM)
3.     Business process reenginering (BPR)
4.     Enterprise resource planning (ERP)

Business process is a standardized set of activities that accomplish a specific task, such as processing a customer’s order.

SUPPLY CHAIN MANAGEMENT (SCM)

Supply chain includes all parties involved, directly or indirectly, in obtaining raw materials or a product.

·         Supply chain management (SCM) – the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

·         Five Basic Supply Activities

·         Five basic component 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 to customer.

EFECTIVE AND AFFICIENT 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 product or services

·         Create entry barriers thereby reducing the treat of new entrants

·          Increase efficiencies while seeking a competitive advantage through cost leadership

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

·         Customer relationship management (CRM) – managing all aspects of a customer’s relationship with and organization to increase customer loyalty and retention and an organization’s profitability.

·         CRM allows an organization to gain insight into customers’ profitability.

·         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:

-          Identifying types of customers

-          Design individual customer marketing campaigns

-          Treat each customer as an individual

-          Understand customer buying behaviors

·         THREE PHASES OR CRM

 - REPORTING: help organization identify their customers across other application.

- ANALYSIS: help organization segment their customers into categories such as best and worst customers.

 - PREDICTING: help organization predict customer behavior, such as customers risk of leaving.

BUSINESS PROCESS REENGINEERING (BPR)

Business process is 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.

·         Reengineering the cooperation – book written by Michael Hammer and James Champy that recommends seven principles of BPR:

1.       Organization around outcomes, not task.

2.       Identify all the organization’s processing and prioritize them in order to redesign urgency.

3.       Integrate information processing work into the real work that produces the information.

4.       Treat geographically dispersed resources as through that were centralized.

5.       Link parallel activities in the workflow instead of just integrating their result.

6.       Put decision point where the work is performed, and built control into the process.

7.       Capture information once and at the source. 

·         A company can improve the way it travel 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.

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

·         PITFALL OF BPR is fails to keep up with competitors.

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 decision by viewing enterprisewide information on all business operation.

·         Keyword in ERP is “enterprise”.

EPR system collect data from across an organization and correlates the data generating an enterprisewide view.