Chapter 3

Strategic Initiatives for Implementing Competitive Advantage

Strategic Initiatives

IT-dependent strategic initiatives refer to the use of IT to create
competitive advantage through efficiency improvements,
differentiation, and channel domination. They include:

 i)   Supply Chain Management (SCM)
 ii)   Customer relationship management (CRM)
 iii)  Business process reengineering (BPR)
 iv)  Enterprise resource planning (ERP)

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Supply Chain Management (SCM)

Supply chain management, then, is the active management of
supply chain activities to maximize customer value and achieve
a sustainable competitive advantage. It represents a conscious
effort by the supply chain firms to develop and run supply chains
in the most effective & efficient ways possible.

         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.

      Example: Wal-Mart and Procter & Gamble (P&G) SCM

    Effective and efficient SCM systems can enable an organization to:

          

          i)  Decrease the power of its buyers

          ii)  Increase its own supplier power

          iii)  Increase switching costs to reduce the threat of substitute products or 

              services

         iv) Create entry barriers thereby reducing the threat of new entrants

          v) Increase efficiencies while seeking a competitive advantage through cost leadership

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

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Customer Relationship Management (CRM)

CRM entails all aspects of interaction that a company has with
its customer, whether it is sales or service-related. CRM is
often thought of as a business strategy that enables businesses to:

• Understand the customer
• Retain customers through better customer experience
• Attract new customer
• Win new clients and contracts
• Increase profitably
• Decrease customer management costs

CRM Overview

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Business Process Reengineering (BPR)

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

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

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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 enterprisewide information 

   on all business operations.

•  Keyword in ERP is “enterprise”

Sample data from a sales database:

Sample data from an accounting database:

       •  ERP systems collect data from across an organization and
   correlates the data generating an enterprisewide view