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McGraw-Hill/Irwin The M cGraw-Hi ll Companies, All Rights Reserved

CHAPTER 3

Strategic Initiatives forImplementing Competitive

Advantages

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LEARNING OUTCOMES

3.1 List and describe the four basic

components of supply chain

management

3.2 Explain customer relationship

management systems and how they can

help organizations understand their

customers

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3-3

LEARNING OUTCOMES

3.3 Summarize the importance of enterprise

resource planning systems

3.4 Identify how an organization can use

business process reengineering to

improve its business

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3-4

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)

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3-5

SUPPLY CHAIN MANAGEMENT

Supp ly Chain Management(SCM)

involves the management of information

flows between and among stages in a

supply chain to maximize total supplychain effectiveness and profitability

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3-6

SUPPLY CHAIN MANAGEMENT

Four basic components of supply chain

management include:

1. Supply chain strategystrategy for managing all

resources to meet customer demand2. Supply chain partnerpartners throughout the

supply chain that deliver finished products, raw

materials, and services.

3. Supply chain operationschedule for productionactivities

4. Supply chain logisticsproduct delivery process

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3-7

SUPPLY CHAIN MANAGEMENT

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

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SUPPLY CHAIN MANAGEMENT

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 threatof new entrants

Increase efficiencies while seeking a competitive

advantage through cost leadership

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SUPPLY CHAIN MANAGEMENT

Effective and efficient SCM systems effect

on Porters Five Forces

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3-10

CUSTOMER RELATIONSHIP

MANAGEMENT

Customer relat ionsh ip m anagement(CRM)involves managing all aspects of acustomers relationship with an organization

to increase customer loyalty and retentionand an organization's profitability

Many organizations, such as CharlesSchwab and Kaiser Permanente, haveobtained great success through theimplementation of CRM systems

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3-11

CUSTOMER RELATIONSHIP

MANAGEMENT

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

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3-12

CUSTOMER RELATIONSHIP

MANAGEMENT

CRM overview

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3-14

BUSINESS PROCESS

REENGINEERING

Reengineering the Corporationbook written

by Michael Hammer and James Champy that

recommends seven principles for BPR

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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 anairplane which ignore the

road completely

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Finding Opportunity Using BPR

Progressive Insurance Mobile Claims Process

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Finding Opportunity Using BPR

Types of change

an organization

can achieve,

along with themagnitudes of

change and the

potentialbusiness benefit

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ENTERPRISE RESOURCE

PLANNING

Enterpr ise resou rce p lann ing (ERP)

integrates all departments and functions

throughout an organization into a single IT

system so that employees can makedecisions by viewing enterprisewide

information on all business operations

Keyword in ERP is enterprise

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ENTERPRISE RESOURCE

PLANNING

Sample data from a sales database

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ENTERPRISE RESOURCE

PLANNING

Sample data from an accounting database

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ENTERPRISE RESOURCE

PLANNING

ERP systems collect data from across an

organization and correlates the data

generating an enterprisewide view

OPENING CASE STUDY QUESTIONS

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OPENING CASE STUDY QUESTIONSAppleMerging Technology, Business, and

Entertainment

1. Evaluate how Apple can gain business

intelligence through the implementation of a

customer relationship management system

2. Create an argument against the following

statement: Apple should not invest any

resources to build a supply chain

management system

3. Why would a company like Apple invest in

BPR?

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CHAPTER THREE CASEGot Milk? Its Good For You Unless it is Contaminated!

A contamination crisis shattered the dairy

industry in China when babies

mysteriously started developing kidney

stones from contaminated baby formula

A chemical called melaminean additive

used to make plastic - was discovered in

the milk supply of one of China's third-

largest dairy producers

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CHAPTER THREE CASE

QUESTIONS

1. Explain why the supply chain can dramatically

impact a companys base performance?

2. List all of the products that have could possiblybe affected by a problem in the United States

milk supply chain?

3. How can a CRM system help communicate

issues in the supply chain?

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CHAPTER THREE CASE

QUESTIONS

4. How could BPR help uncover issues in a

companys supply chain?

5. What are the pros and cons for

Starbucks outsourcing the growing of its

coffee beans to Chinese farmers?