Chapter 3: Strategic Initiatives for Implementing Competitive Advantages
1.0 Strategic Initiatives
Making critical change happen can be challenging in most significant line of business. Obviously, when a large company decides to make a significant change – as Intel, GE and Microsoft have in the past year – it requires a coordinated, cross line of business projects to succeed and to improve performance. Even in smaller organizations that are light on their feet, changes that involve more than one group must be well orchestrated and have the active support of all of the groups involved.
A strategic initiative is one that:
· The significant impact on the organization result
· Requires cross-functional support to succeed
Businesses designed to use strategic sourcing suitably be able to observe gone up effort and reduced values; read more about it model on the subject of our favorite page (Patrick Webb)
The use of Strategic Initiatives will help to:
· Bring discipline and rigour to planning and execution
· Ensure that the timing and achievement of milestone and deliverables are agreed upon and managed
· Tie investment of CAPEX and OPEX to specific and measurable outcomes
· Enable issues to be addressed and resolved proactively, before they jeopardize outcomes
Organizations can undertake high-profile strategic initiatives including:
· Supply chain management (SCM)
· Customer relationship management (CRM)
· Business process reengineering (BPR)
· Enterprise resource planning (ERP)
2.0 Supply Chain Management
Managing flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs.
Also known as a logistics network, a supply chain is a system of organized processes for the streamlined transport of goods information from end to end. But the strategic architecture of workload is not enough, your production line needs to be monitored and managed by a responsible carrier. Not only does supply chain management mean that your goods leave the factory floor hot off the presses, but with cargo storage management, transportation logistics, digital processing and reliable service, your operations can be simplified and transformed into automated efficiency
2.1 Supply Chain Strategy
Chances are you’ve heard the term supply chain strategy. . There’s some truth to this definition, but supply chain strategy really is broader; it defines how the supply chain should operate in order to compete. Supply chain strategy is an iterative process that evaluates the cost benefit trade-offs of operational components. Business strategy involves leveraging the core competencies of the organization to achieve a defined high-level goal or objective. It also includes the analytic and decision-making process surrounding what to offer. That being said, most companies have a business strategy, but are unlikely to have overtly designed a supply chain strategy. one good reason is to operationalize and support your business strategy. At some point, a business strategy must be executed and typically this is done through the operational components of a company. Supply chain strategy also focuses on driving down operational costs and maximizing efficiencies. By providing a clear purpose, the organization keeps sight of the strategy and is able to devise tactical steps to achieve these goals. Another reason for having a supply chain strategy is to establish how you work with your supply chain partners, including suppliers, distributors, customers, and even your customers’ customers. As the marketplace becomes more competitive, it is critical to reinforce existing relationships and work together. And for all these reasons, a well executed supply chain strategy results in value creation for the organization.
2.2 Supply Chain Partner
In order to maintain pace with today’s increased competition, larger organizations are becoming more dependent on suppliers. Outsourcing has become a way of life at many companies as they are looking toward suppliers for solutions. It is important to address varying definitions of collaboration and supplier development to discern different viewpoints. Though there are similarities between the definitions, each definition covers something that the others do not.
2.3 Supply Chain Operation
Supply chain operations within an organization should be constantly reviewed to identify where improvements can be made or deficiencies eliminated. One method to help do this is to perform a series of benchmarking tests on their supply chain processes. Benchmarking or goal setting allows a company to assess the opportunities they may have for improving a number of areas in their supply chain including productivity, inventory accuracy, shipping accuracy, storage density and bin-to-bin time. The benchmarking process can provide a company some estimate of the benefits achieved by the implementation of any improvements. It also to prepare schedule for production activities.
2.4 Supply Chain Logistic
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and often security. Today the complexity of production logistics can be modeled, analyzed, visualized and optimized.
2.5 Effective and Efficient SCM System
Efficiency and Effectiveness are the two basic that commonly used in a business. Efficiency SCM means measure the performance of the SCM itself such as the output, availability and the respond from other users about the supply chain management performance. While effectiveness means the respond that the customers give to the company through organization process. Efficiency is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort. The SCM system can enable an organization to:
w Decrease the power of its buyer
w Increase its own supplier power
w Increase switching costs to reduce the threat of substitute products or service
w Create entry barriers thereby reducing the threat of new entrants
w Increase efficiencies while seeking a competitive advantages through cost leadership
3.0 Customer Relationship Management
CRM (customer relationship management) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth.
According to one industry view, CRM consists of:
· Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.
· Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices)
· Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.
· Providing employees with the information and processes necessary to know their customers understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners.
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
3.1 Customer Relationship Management
4.0 Business Process Reengineering
Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order.
Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises. The purpose of BPR is to make all business processes best-in-class
Thorough rethinking of all business processes, job definitions, management systems, organizational structure, work flow, and underlying assumptions and beliefs. BPR's main objective is to break away from old ways of working, and effect radical (not incremental) redesign of processes to achieve dramatic improvements in critical areas (such as cost, quality, service, and response time) through the in-depth use of information technology. Also called business process redesign. Process reengineering focuses on simplification and elimination of wasted efforts. A central idea of process reengineering is that all activities that do not add value to a product or service should be eliminated. Activities that do not add value to a product or service that customers are willing to pay for are known as non value added activities. For example moving large batches of work in process from one work station to another is a non value added activity. To some degree just in time (JIT) involve process reengineering as does total quality management (TQM). These management approaches often overlap.
4.1 Seven Principles of Business Process Reengineering
· Organize around results and outcomes, not tasks
· Have those who use the output of the process perform the process
· Subsume information-processing work into the real work that produces the information
· Treat geographically dispersed resources as though they were centralized
· Link parallel activities instead of integrating their results
· Put the decision point where the work is performed, and build control into the process
· Capture information once at the source
5.0 Enterprise Resource Planning
Accounting oriented, relational database based, multi-module but integrated, software system for identifying and planning the resource needs of an enterprise. ERP provides one user-interface for the entire organization to manage product planning, materials and parts purchasing, inventory control, distribution and logistics, production scheduling, capacity utilization, order tracking, as well as planning for finance and human resources. It is an extension of the manufacturing resource planning (MRP-II). Also called enterprise requirement planning.
Rebecca Gill, vice president of Technology Group International says:
"For almost twenty years we have had people ask for demonstration copies of our ERP software, so they may play with it at their leisure. For years we have said no and we've done so with good reason. An ERP package is an advanced system. It isn't Microsoft Office and it isn't an iPhone. You can't simply turn it on and expect it to run without training."
5.2 Enterprise Resource Planning System
An enterprise resource planning system, or ERP, gives businesses an information technology tool that combines and integrates the various information systems it uses into one comprehensive system to manage operations. An ERP typically includes finance and accounting, human resources, supply chain and inventory, and manufacturing information systems. Its purpose is to facilitate the flow of information among all departments in an organization, and manage data sharing with outside systems, such as suppliers, business partners, clients and regulatory agencies.
Ø Ayers , J. B. (2010). Supply chain project management. (2 ed.). United states of America : CRS Press Taylor and Francis Group.
Ø Hammer, Michael; Champy, James. Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business, New York. 1993.
