RWC 3 Bruswick and Whirlpool Improving SupplyChain Results

RWC 3: Bruswick and Whirlpool. : Improving Supply-Chain Results What is the business value of SCM systems for Brunswick and Whirlpool? Business value: – Reduction of inventory arising from a pulled demand focus – Integration and replacement of a disparate number of homegrown systems, with a reduction in support, maintenance and development costs, as well as increased data integrity and sharing – Integration of the manufacturing environment into broader corporate applications such as forecasting, planning and budgeting – Streamlining of manufacturing operations, resulting in cost savings – Just-in-time inventory

Does the business value of SCM depend upon what type of business a company is in? Explain SCM has a greater impact in certain types of organization, and there are environments where it would be counterproductive. • The key to a successful SCM implementation is that it matches the operational focus of the organization. • For manufacturing environments with well-defined final products and parts stand to gain the most from this type of technology. • Custom-manufacturing, one-of-a-kind environments, on the other hand, are ill-suited to profit from the benefits of increased supplier, manufacturing process, and customer, integration. • Organizations in the services sector would be unlikely to adopt SCM since they lack a manufacturing process at all.

How does Brunswick’s approach to SCM differ from that of Whirlpool’s? Is one approach superior to all others? Why or why not? All approaches explored in these cases focus on the integration of different parts or stages of the supplier-to-customer chain. Brunswick: looking to consolidate/upgrade its supplies and distribution operations and get better handle on its data and “bottom- line” Whirlpool is Looking for “top-line” growth, It is looking for seamless integration from supplier to retailers like IKEA

RWC 2: Artificial Intelligence: The Dawn of the Digital Brain What is the business value of AI technologies in business today? What value might exist if Jeff Hawkins can build a machine to think like humans? • • • AI software helps engineers create better jet engines. AI technology boosts productivity by monitoring equipment and signaling when preventive maintenance is needed. Use of neural networks for detecting credit-card fraud. Used to qualify for debit card insurance. Shifts through a deluge of data to uncover patterns and relationships that would elude an army of human searches. Predicting customer behavior for companies such as banks. A machine which can think like a human could accomplish all of the above and more. The ability to apply human-like reasoning would result in more sophisticated search engines, better fraud detection, and a wide variety of new products previous unimagined.

Why has artificial intelligence become so important to business? Benefits would include: – Potential for mining cost-savings and revenueboosting ideas. – More accurately target promotions to customers and prospects. – Helping users set up predictive models. – Reduce the time it takes the bank to develop a model by 50% to 70%. – Developing applications such as a model to predict customer “churn, ” the rate at which customers come and go.

Why do you think banks and other financial institutions are leading users of AI technologies? What are the benefits and limitations of this technology? Some AI (benefits) would include: – – Detecting credit-card fraud. Use of predictive models to understand customer behavior. Revenue enhancing. Cost reduction. Some Limitations would include: • • • Biggest stumbling block is getting the data. Accessing the correct data needed for predictive models (limited to only account data prepared weekly and monthly when daily customer activity data is needed). Dealing with disparate data sources. Systems integration and interface work is needed. Domain specific

Strategic Impact of Information Technology

Learning Objectives 1. Identify basic competitive strategies and know how a business can use IT to confront the competitive forces it faces. 2. Identify several strategic uses of IT and show they give competitive advantages to a business. 3. Understand how business process reengineering frequently involves the strategic use of IT.

Learning Objectives 4. Understand the business value of using Internet technologies to become an agile competitor or to form a virtual company. 5. Understand how knowledge management systems can help a business gain strategic advantages.

Enabling technology Information technology allows operations, strategies and competitive advantages not possible before. Operational dependency occurs when time, volume or other physical conditions makes IT unique to perform a task. It is related to the organization's EFFICIENCY. l Strategic impact occurs when a policy, strategy or product uniquely requires IT for its implementation. It is related to the organization's EFFECTIVENESS. l

Porter’s Five Forces of Competitive Position Supplier Power, eg: brand reputation geographical coverage product/service level quality relationships with customers bidding processes/capabilities New Market Entrants, eg: entry ease/barriers geographical factors incumbents resistance new entrant strategy routes to market Competitive Rivalry, eg: number and size of firms industry size and trends fixed v variable cost bases product/service ranges differentiation, strategy Buyer Power, eg: buyer choice buyers size/number change cost/frequency product/service importance volumes, JIT scheduling Product/Technology development, eg: alternatives price/quality market distribution changes fashion and trends legislative effects © alan chapman 2005, based on Michael Porter's Five Forces of Competitive Position Model. Not to be sold or published. More free online training resources are at www. businessballs. com. Alan Chapman accepts no liability.

Competitive Strategies Strategic Advantage Cost Leadership Differentiation Innovation Growth Alliance Other Strategies Rivalry of Threat of. Bargaining Competitors New Substitutes Power of Entrants Customers Suppliers Competitive Forces

Value Chain (Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). It evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage.

Primary Activities http: //www. marketingteacher. com/Lessons/lesson_value_chain. htm Primary activities are directly concerned with the creation or delivery of a product or service. • inbound logistics, • operations, • outbound logistics, • marketing and sales, • and service. Each of these primary activities is linked to support activities which help to improve their effectiveness or efficiency.

Inbound Logistics Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. Operations This is where goods are manufactured or assembled. Individual operations could include room service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a new car's engine. Outbound Logistics The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. Marketing and Sales In true customer orientated fashion, at this stage the organization prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. Service This includes all areas of service such as installation, after-sales service, complaints handling, training and so on.

Secondary Activities There are four main areas of support activities: • procurement • technology development (including R&D), • human resource management, and • infrastructure (systems for planning, finance, quality, information management etc. ).

Procurement This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. Technology Development Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. Human Resource Management (HRM) Employees are an expensive and vital resource. An organization would manage recruitment and selection, training and development, and rewards and remuneration. Firm Infrastructure This activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and control such as the accounting department.

Margin’ implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain.

Porter’s original Model

Value Chain System

Typical Value Chain Analysis • Analysis of own value chain – which costs are related to what activities • Analysis of Customer value chain • Identification of cost advantage • Identification of potential “value” added for the customer—lower cost/high performance-where does customer see “value”

Pater Keen an MIS Consultant “…. We have learned that it is NOT technology that creates a competitive edge, but the management process that exploits technology…”

IKEA has quickly evolved from a local Swedish home furnishing manufacturer into the largest home furnishing company in the world; partly by convincing their customer to perform the transport and assembly processes of the furniture manufacturing value chain. They have executed their strategy by building a worldwide sourcing network of high quality global manufacturers to support their growth. http: //www. ichnet. org/ICH%20 Value%20 Chain%20 White%20 Paper%20 v 2. 1. doc

Business processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools.

BPR http: //www. prosci. com/reengineering. htm BPR is the redesign of business processes and the associated systems and organizational structures to achieve a dramatic improvement in business performance

Why BPR? The business reasons: poor financial performance external competition erosion of market share or emerging market opportunities.

BPR It is the examination and change of five components of the business: • Strategy • Processes • Technology • Organization • Culture

Check out process Purpose of the process is to pay for and bag your groceries. The process begins with you stepping into line, and ends with you receiving your receipt and leaving the store. You are the customer (you have the money and you have come to buy food), and the store is the supplier.

Reengineering Business Processes Business Improvement Reengineering Level of Change Incremental Radical Process Change Improved New Version of Process Brand New Process Starting Point Existing Processes Clean Slate Frequency of Change One-time or Continuous Periodic One-time Change Time Required Short Long Narrow, Within Functions Past and Present Broad, Cross. Functional Future Typical Scope Horizon Participation Path to Execution Primary Enabler Risk Bottom-up Top-down Cultural Structural Statistical Control Information Technology Moderate High

The Virtual Company Interenterprise IS Alliance Subcontractors Alliance Major Supplier Boundary of a Firm Extranets Customer Response and Order. Fulfillment Teams Intranets Alliance Major Customer Manufacturing Teams Alliance Small Suppliers Cross-Functional Teams Engineering Teams Alliance Complementary Services

Virtual Company Strategies • Share Infrastructure and Risk with Alliance Partners • Link Complementary Core Competencies • Reduce Concept-to-Cash Time Through Sharing • Increase Facilities and Market Coverage • Gain Access to New Markets and Share Market or Customer Loyalty • Migrate from Selling Products to Selling Solutions