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Chapter 3 Strategic Initiatives for Implementing Competitive Advantages.

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1 Chapter 3 Strategic Initiatives for Implementing Competitive Advantages

2 Sears’ loyalty programs involved customers passed copies of the catalog on to friends and relatives Sell products through a catalog

3 3 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

4 4 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

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6 Customer places an order for a Trek bike with a store Store (such as local sporting goods store) receives the order Store receives the payment from the customer Store orders the bike from Trek Store sends payment to Trek Trek orders materials from its suppliers, such as packaging material, metal, & accessories Trek sends payments to suppliers Trek receives materials from suppliers Trek assembles the bike Trek ships the bike to the store Customer picks up the Trek bike from the store The steps typically taken when a customer buys a bike from Trek

7 7 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

8 8 Wal-Mart and Procter & Gamble SCM

9 9 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

10 10 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

11 11 CRM overview

12 12 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”

13 13 Briefly explain the differences between SCM, 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

14 Organizations typically operate by functional areas or functional silos

15 15 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.

16 16 ERP Vendors Large ERP vendors include SAP PeopleSoft Oracle Most ERP solutions include SCM and CRM components

17 17 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”

18 18 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?


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