Chapter 3 – Strategic Initiatives for implementing Competitive Advantages

Strategies initiatives

- Organizations can undertake high-profile strategic initiatives including;

• Supply chain management (SCM)
• Customers relationship management (CRM)
• Business process re engineering (BPR)
•  Enterprise resources planning (ERP)

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
• -          Four basic components of supply chain management include;

o        Supply chain strategy – strategy for managing all resources to meet customers demand

o       Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials and services

o      Supply chain operation – schedule for production activities

o     Supply chain logistics – product delivery process

• -          Effective and efficient SCM systems can enable an organization to;

o      Decrease the power of its buyers

o      Increase its own supplier power

o      Increase switching costs to reduce the threat of substitute products or services

o     Create entry barriers thereby reducing the threat of new entrants

o    Increase efficiency while seeking a competitive advantages through cost leadership

Customers Relationship Management (CRM)

• -          Its 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 enterprise wide level
• -          CRM can enable an organization to;

o      Identify types of customers

o      Design individual customer marketing campaign

o      Treat each customer as a individual

o      Understand customer buying behaviors

  

Business Process Re engineering (BPR)

• -          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

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

• -          Re engineering the Corporation – book written by Michael Hammer and James Champy that recommends seven principles for BPR
• -          Finding Opportunity Using BPR

o     A company can improve the way it travels the road by moving from foot to horse and then horse to car

o     BPR looks at taking a different path, such as an airplane which ignore the road completely

o     Types

Enterprises Resource Planning (ERP)

• -          It  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”.
• -          ERP systems collect data from across an organization and correlates the data generating an enterprise wide view

Question?

1.       Explain supply chain management and its role in business

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

3.       Summarize the importance of enterprise resource planning system

4.       Identify how an organization can use business process re engineering to improve its business