CHAPTER 3: Strategic Initiatives for Implementing Competitive Advantages

Supply Chain Management

  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 are:

1.            Supply chain strategy - the strategy for managing all the resources required to meet customer demand for all products and services.

2.            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.

3.            Supply chain operation - the schedule for production activities including testing,packaging and preparation for delivery. Measurements for this component include productivity and quality.

4.            Supply chain logistics - the product delivery processes and elements including orders,warehouse, carriers, defective product returns, and invoicing.  

Effective and Efficient Supply Chain Management's Effect on Porter's Five Forces

  Effective and efficient supply chain management 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 efficiency while seeking a competitive advantage through cost leadership.

Customer Relationship Management

  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 overview

Based on the figure,its provides an overview of a typical CRM system. Customers contact an organization through various means including call centers, web access, email, faxes, and direct sales. A single customer may access an organization multiple times through many different channels. The CRM system tracks every communication between the customer and the organization and provides access to CRM information within different systems from accounting to order fulfillment. Understanding all customer communications allows the organizations to communicate effectively with each customer.

CRM Strategy

  

  It is important to realize that CRM is not just technology, but also a strategy that an organization must embrace on an enterprise level.Although there are many technological components of CRM, it is actually a process and business goal simply enhanced by technology. Implementing a CRM system can help an organization identify customers and design specific marketing campaigns tailored to each customer, thereby increasing customer spending. A CRM system also allows an organization to treat customers as individuals, gaining important insights into their buying preferences and behaviors and leading to increased sales, greater profitability,and higher rate of customer loyalty.

Business Process Re-engineering

  A business process is a standardized set of activities that accomplish a specific task, such as processing a customer's order. Business process re-engineering (BPR) is the analysis and redesigns of workflow within and between enterprises. The concept of BPR traces its origins to management theories developed as early as the 19th century. The purpose of BPR is to make all business process the best-in-class.

Seven Principles of Business Process Re-engineering

Finding Opportunity Using BPR

  Companies frequently strive to improve their business processes by performing tasks faster, cheaper, and better.

Better, Faster, Cheaper of BPR

  Based on the figure that displays different ways to travel the same road. A company could improve the way that it travels the road by moving from foot to horse and then from horse to car. However, true BPR would look at taking different path. A company could forget about traveling on the same old road and use an airplane to get to its final destination. Companies often follow the same indirect path for doing business, not realizing there might be a different, faster and more direct way of doing business.

Pitfalls of BPR 

  One hazard of BPR is that the company becomes so wrapped up in fighting its own demons that it fails to keep up with its competitors in offering new products or services. While American Express tackled a comprehensive re-engineering of its credit card business, MasterCard and Visa introduced a new product- the corporate procurement card. American Express lagged a full year behind before offering its customers the same service.

Enterprise Resource Planning

  Today's business leaders need significant amounts of information to be readily accessible with real-time views into their businesses so that decisions can be made when they need to be, without the added time of tracking data and generating reports.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.

Auto Insurance Claims Processes