#3 ; STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

Strategic initiative

Organizations can undertake high-profile strategic initiatives including:

ᴥ        Supply chain management (SCM)

ᴥ        Customer relationship management (CRM)

ᴥ        Business process reengineering (BPR)

ᴥ        Enterprise resource planning (ERP)

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 supply chain management include:

              i.            Supply chain strategy – Strategy for managing all resources to meet customer demand

            ii.            Supply chain partner – Partners throughout the supply chain that deliver finished  products, raw materials, and services.

          iii.            Supply chain operation – Schedule for production activities

          iv.            Supply chain logistics  – Product delivery process

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

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

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.

·         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:

 ü  Identify types of customers

 ü  Design individual customer marketing campaigns

 ü  Treat each customer as an individual
  ü  Understand customer buying behaviors

Business Process Reengineering (BPR)

Ø  Business process

·         A standardized set of activities that accomplish a specific task, such as processing a customer’s order.

Ø Business process re-engineering (BPR)

·        The analysis and redesign of workflow within and between enterprises.

·         The purpose of BPR is to make all business processes best-in-class.

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

SEVEN PRINCIPLES OF BUSINESS PROCESS RE-ENGINEERING

1)      Organize around outcomes, not tasks.

2)      Identify all the organization’s process and prioritize then 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 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.

Pitfalls of BPR

ᴥ        Fails to keep up with competitors

Enterprise Resource Planning

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 enterprise wide
         information on all business

         operations.

·         Keyword in ERP is “enterprise”.

·         Data from a sales database.

·         Data from an accounting database.

·         ERP systems collect data from across an organization and correlates.

·         The data generating an enterprise wide view.