Chapter 3 Strategic Initiatives for Implementing Competitive Advantages

This chapter introduces high-profile strategic initiatives that an organization can undertake to help it gain competitive advantages and business efficiencies - supply chain management, customer relationship management, business process re engineering, and enterprise resource planning.

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. The four basic components of supply chain management :

• Supply chain strategy : The strategy for managing all the resources required to meet customer demand for all products and services.
• Supply chain partners : The partners chosen to deliver finished products, raw materials and services including pricing, delivery and payment processes along with partner relationship monitoring metrics.
• Supply chain operation : The schedule for production activities including testing, packaging and preparation for delivery. Measurements for this component include productivity and quality.
• Supply chain logistics : The product delivery processes and elements including orders, warehouses, carriers, defective products returns, and invoicing.

When total supply chain is effectiveness and profitability is achieved, means the organization has achieve good productivity.

 

Effectiveness and efficient supply chain management 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 advantages through cost leadership.

Customer Relation 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.

 

Business Process Reengineering (BPR) is the analysis and redesign of workflow within and between enterprises. The concept of BPR traces its origins to management theories developed as early as the 19th century.

 

 

Seven Principles of Business Process Reengineering

1. Organize around outcome, not tasks.
2. Identify all the organization's processes and prioritize them 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 the process.
7. Capture information once and the source. 

Enterprise Resource Planning (ERP) integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make decisions by viewing enterprise wide information on all business operations.