Chapter 3

Strategic Initiatives for Implementing Competitive

Advantages

Sears’ loyalty programs involvedcustomers passed copies of thecatalog on to friends and relatives

Sell productsthrough a catalog

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Learning Outcomes

List and describe the four basic components of supply chain management

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

Summarize the importance of enterprise resource planning systems

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Three strategic initiatives: Overview

Supply chain management (SCM) Customer relationship management (CRM) Enterprise resource planning (ERP)

Trek’s IT systems increased sales by 25-30 percent

Customer places an order for a Trek bike with a storeStore (such as local sporting goods store) receives the orderStore receives the payment from the customerStore orders the bike from TrekStore sends payment to Trek

Trek orders materials from its suppliers, such as packaging material, metal, & accessoriesTrek sends payments to suppliersTrek receives materials from suppliersTrek assembles the bikeTrek ships the bike to the storeCustomer picks up the Trek bike from the store

The steps typically taken when a customer buys a bike from Trek

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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 SCM: Supply chain strategy – strategy for managing all

resources to meet customer demand Supply chain partners – partners throughout the supply

chain that deliver finished products, raw materials, and services.

Supply chain operation – schedule for production activities

Supply chain logistics – product delivery process

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Wal-Mart and Procter & Gamble SCM

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Effective and efficient SCM systems effect on Porter’s Five Forces 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

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Customer Relationship Management

CRM – involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's 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: Identify types of customers Design individual customer marketing campaigns Treat each customer as an individual Understand customer buying behaviors

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CRM overview

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Enterprise resource planning (ERP)

ERP integrates all departments and functions throughout an organization into a single IT system so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations

ERP’s goal – every department or functional area work together sharing common information and not be a “silo”

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Briefly explain the differences betweenSCM, CRM, and ERP

SCM systems focus specifically on suppliers

CRM systems focus specifically on customers

ERP systems focus on everything, all processes, departments, and operations for an enterprise

Organizations typically operate by

functional areas or functional silos

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Enterprise resource planning (ERP)

Organizations use many integration tools to integrate IT infrastructures including: Intranets – an internalized portion of the

Internet, protected from outside access, that allows an organization to provide access to information and application software to only its employees

Enterprise information portals (EIPs) – an Internet site owned and operated by an organization to support its operations.

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ERP Vendors

Large ERP vendors include SAP PeopleSoft Oracle

Most ERP solutions include SCM and CRM components

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How Levi’s Got Its Jeans into Wal-Mart

Which of Porter’s Five Forces did Levi’s address through the implementation of its updated supply chain management system?

Evaluate how Levi’s can gain business intelligence through the implementation of a customer relationship management system

Create an argument against the following statement: “Levi’s should not invest any resources to upgrade its current supply chain management system”

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CASE QUESTIONS

Explain how implementing a CRM system enabled Saab to gain a competitive advantage

Estimate the potential impact to Saab’s business if it had not implemented a CRM system

What additional benefits could Saab receive from implementing a supply chain management system?