CII Institute of Logistics Virtual Class 1 19-Sep-15 Session 10 Selling Chain Management.

CII Institute of Logistics Virtual Class 1Apr 19, 2023

Session 10

Selling Chain Management

CII Institute of Logistics Virtual Class 2

Selling Chain ManagementWhat is Selling Chain Management?

Selling-chain management is defined as the application of technology to the activities in the whole life cycle of an order – from inquiry to order.

Companies will move away from automating discrete tasks, such as lead management, configuration, and pricing, and move toward an integrated info-structure that view order acquisition holistically, as an end-to-end process involving every department, from marketing to logistics.

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Selling Chain ManagementWhy Selling Chain Management?Sales forces and strategies under increasing pressure.

The availability of new sales channels, increased choice available to consumers, product and production flexibility, rapid changes in organizational strategies internally and externally and the increasing demands of customers are all increasing the complexity of the selling process.

Creation of a flexible, integrated and responsive sales process is critical to the emerging E-businesses. Stream lining and accelerating the information flow from customer to production and back is a critical skill that modern businesses have to develop.

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Benefits of Selling Chain Management

Increased ease of customer trading

Increased value to the customer

Ease of ordering and tailoring

Rising sales effectiveness and customer satisfaction

Consistency across all channels

Increased efficiency of Relationship management

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Enterprisewith

MultipleSales

Channels

Customers

Distributor

OEM Reseller

Self Service

Sales Force

Selling Chain Structures


- An integrated multi-channel order acquisition strategy, focusing on the buying process

Drivers

- Business ForcesMass customization/personalization, Costs of presale support and order errors, Multi-channels, Product complexity, Deregulation and M&A’s

- Technology ForcesLimited SFA functionality, Limited process functionality, Limited sales effectiveness


Selling Chain Management - Architecture

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Inquiry/Prospect

Customize Commit

Sales Lead

OrderLife Cycle

CoreProcess &

Technology

Integrated Selling Chain ApplicationsIntegrated Selling Chain ApplicationsIntegratedSolution

Order

Product Catalog

Configurator

ATP

Contract Pricing

Proposal/Quote

Order Entry

CommissionAvailable-To-Promise


Session 11

Business Process Reengineering

(BPR)


Business ProcessesWhat are Business Processes?

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

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Business Process Improvement Why?

Customer Demand and SatisfactionCompetitionCost ReductionProductivity improvement

Basic Steps in Process Improvement

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Limitations of Continuous Process Improvement Model

Incremental improvementTechnology growth demands vast improvementInternet, Open Trade, Ecommerce

Tough Competition, Require Breakthrough performance

Higher rate of change – slow improvement not affordableBPR – Approach for rapid change

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What is BPR

"Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical, contemporary measures of performance, such as cost, quality, service and speed"

BPR promises dramatic results

BPR is strong medicine and will result in big gains

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Process Flow – before and after BPR

Before BPR1. The purchase department places an order on a vendor. A

copy of the purchase order is sent to the accounts department.

2. The vendor supplies the goods directly to the purchase department enclosing a 'goods shipped' voucher and an invoice marked to the accounts department.

3. The purchase department prepares a 'Goods Received Note' and sends the material for inspection.

4. The quality department prepares an inspection note, sends a copy to the accounts department. In the meantime, the materials department takes the goods into store.

5. The accounts office compares the invoice with the purchase order and the inspection note, prepares a cheque for the delivered and accepted goods, and mails it to the vendor

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After BPRPurchase orders are placed in a common database.

When a new purchase order is raised, a new record is created in the database that is accessible to the accounts department.

Once the material is received, the person receiving the material opens the purchase order in the database and checks the items received on his computer screen. With a click of a key, he can then clear it for the accounts processing.

The person in the accounts department checks whether the item supplied matches against the invoice received by him directly from the vendor (a task now done automatically by the computer). For all the items received correctly, the computer calculates and prints out a cheque for the amount due against materials received.

Inspection is to be done by vendor himself and any anomaly encountered will be adjusted for in the next consignment.

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Benefits of Process Engineering in Purchase

Cycle Time Cut DownA/P Becomes CentralIncreased Supplier SatisfactionCost cutA/P process reengineered

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Case Study – Hindustan Motors

Problem: The earth moving machinery division of Hindustan Motors manufactured 10 products, each with a different methodology. Management wanted a scheme to prioritize any product depending on customer needs and yet, no delivery schedule was to be upset. Additionally, the flow of materials and machinery on the shop floor had to be streamlined.

The old process: The same assembly line was used for all products. Problem was, it was designed for only one type of machinery. Adjustments of schedules were impossible since the workflow allowed no clear transit from one stage of production to another.

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Case Study – Hindustan Motors

Solution: Three mini plants were setup - one each for dumper, loader and tract vehicles. Now separate product groups had separate processes. The plant was divided into cells, each staffed with multi-skill workers. Each cell is responsible for the entire product - so, no delays due to hand-offs. Cells are categorized as repeater cells - handling several low priority products - or runner cells - handling high priority products.

Results: Work in progress has reduced by 25 per cent.

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BPR Vs Industrial Engineering

Industrial Engineering or Organization & Method

Functional BoundariesGoverned by concept of division of labourQuestion : How to speed up Activity/functionNo thought for process reorganization

BPRNo Functional BoundariesCustomer driven Question: How to organize new process flow

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Steps in BPR1. Develop a vision -Process vision and process

objectives 2. Define process - Defining processes to be

reengineered 3. Measure process - Understanding and measuring

existing processes 4. Identify IT lever -IT as enabler 5. Prototype 6. The Role of IT in BPR

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Case Study – Bestfit ValvesObjectiveThe CEO of the company realized that there was a high potential in the export market and decided that Fit Valve should target the export market. Thus, the CEO began with a business vision that led to a process vision: if the company had to go in for export orders, it must able to win the orders against competition. That in turn meant that the company must be able to quote against the maximum number of tenders and also be able to deliver high quality products at the shortest time.

Process to addressQuoting against tenders

Speedy delivery of quality products

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Case Study – Bestfit Valves

Step 1 – Developing process visionCEO set a target of being able to quote within twenty-four hours of receiving an inquiry

Step 2 - Identification of the processesResponding to tenders

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Case Study – Bestfit ValvesStep 3 - Detailed study of the process 1. Inquiry received by marketing.

2. Marketing passes drawing/sample to drawing section

3. Drawing section makes detailed drawings (2-3 weeks)

4. Production team details manufacturing process

(2 weeks) and sends to costing.

5. Costing does detailed estimates for raw material and each activity and forwards quote to marketing

6. Marketing sends the quotations (1-2 weeks). Whole Process duration 6 – 8 weeks)

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Case Study – Bestfit ValvesProcess Analysis findings

Very small percentage of inquiries resulted in actual orders

Drawing section ended up spending a lot of time and effort unproductively

Few designs were finally converted to actual production orders

Engineering design was being carried out in a casual manner

Each design needed to be costed. Therefore, costing process became a very mechanized procedure often using obsolete figures.

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Case Study – Bestfit ValvesSolutions

It was decided that drawing and engineering would not consider all the inquiries. Since most of the valves belonged to standard categories, orders differing from another only in the size (diameter, length and so on) and material could be handled by the marketing section using standard figures for a group of designs.

Marketing would assign an inquiry to a particular standard category and pass it on to costing. It referred only special cases (of which there was very little in number) to drawing and engineering

After receiving the cost figures from the costing section, marketing sent quotes to the potential customer. This reduced the cycle time to about a week

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Case Study – Bestfit ValvesSolutions with IT leverage

1. Marketing receives inquiry

2. Marketing notes type of valve in terms of dimensions raw materials, finish and special processes.

3. Marketing keys in data into spreadsheet to make cost estimate.

4. Marketing sends quotes.

(Cycle time reduced to 24 Hours)

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Case Study – Bestfit ValvesAdditional benefits of BPR exercise

1. The export turnover increased by 400 percent.

2. Given that there was no pressure any more on the drawing section to churn out drawings, most of which were actually not required at the end, the morale of the people in this section went up and the quality of drawings for confirmed orders improved sharply.

3. Costing became a more proactive function. Now, costing personnel became responsible for developing standards to be plugged into the spreadsheet. It was no longer a mechanical job. They began updating the standards constantly thus making them more realistic.

4. A very significant change was that marketing, which had hitherto acted only as a post office, became the owner of the process. The change from post man to a driving force not only boosted the morale of the marketing people, it also gave them the initiative to push towards converting most of the inquiries into firm orders by making them customer oriented

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BPR Framework(Zachman Framework )

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Process Step AnalysisUltimate objective – Customer pleasure

Each process step analyzed in terms of Real Value (RVA),

Business Value (BVA)

No Value (NVA)

Objective of reengineering is to eliminate all the NVAs', retain only those BVAs that are essential and retain and add the RVAs.

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BPR Guidelines

Don't Automate, Obliterate Think Process!

Tasks fall in functional boundariesA process is across functional/departmental boundaries

Think SystemsSystem is a collection of men materials, ideas and their interactions organized to achieve a common purpose. Each core process, a sub-systemprovides an easy approach to analyze the existing process and design new processes

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BPR GuidelinesChange Management

Structural

Job re-definitions

Re-deployment of workforce

Communication is the key

Prior consultation with staff/employees

Proper training

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Role of IT in BPR

Objective of IT roleIncrease their level of participation in all areas of a BPR initiative;Provide key information regarding automated processes to business analysts;Build a transition strategy that meets short and long-term retooling requirements;Enforce the integrity of redesigned business processes in the target system;Reuse business rules and related components that remain constant in a target application.

Apr 19, 2023


Role of IT in BPRIT Role required in

Assessing Changing Business Requirements

mapping the existing information architecture to the business model to accurately depict current processesperforms multi-system integration on all relevant systems mapping all business rules extracted from multiple standalone systems to a target design model

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Role of IT in BPR

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Possible Role of IT in BPRAs a constraint

limited infrastructure = limited possibilities

As a Driver

“technology push/ effective re-design

The neutral role of IT

analysis/ understand/ enable

As catalyst

opportunities planned to take full advantage

As an enabler

utilised to support/ influence and find new ways of working

ProactiveIT

“organic”/ learning company


Role of IT in BPRIT Enables New Processes Example1: In an early Business Reengineering project the IBM credit corporation

reorganized the crediting function. Just one person (a so called case manager) performs all tasks of a former whole credit department by using a new computer application system (Hammer/Champy, 1993)

Example 2WWW.Amazon.com is the Internet web page address of the currently largest virtual bookstore in the world. More than one million titles are available. None of these is on store, but can be searched for and ordered interactively by remote Internet users located as far away as Herrenberg, Germany. The Amazon company made sure though to locate near Seattle, Washington, to have easy access to the largest physical book warehouses in the U.S. Their web site even offers an alert function, which automatically sends an electronic mail (e-mail), whenever a new book has been published, whose profile (author, title, subject, etc.) the customer is interested in. This Amazon selection and ordering process would not be possible without the Internet technology.

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Role of IT in BPRIT Tools Help to Facilitate Project Management

Project management tools help to analyze processes, and define new processes. They can also be used to define the introduction of process oriented application software packages

IT Lets People Work Together More Closely Helps to Integrate Businesses

Totally integrated and help to enforce the reengineering process, by concentrating on the software implementation process

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BPR Implementation Barriers

Hard barriersIT problems

Resource problems

Legal obstacle

Soft BarriersInternal individual resistance

Internal group resistance

Group resistance

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BPR Implementation Barriers

Causes for barriersProject related causes

People related causes

Organization related

Environment related

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Session 12 E-Business Strategy

Analysis and Objectives


What is E-Business Strategy?Strategy

Definition of the future direction and actions of a company defined as approaches to achieve specific objectives

Alternative definitions“Defines how we will meet our objectives”

Sets allocation of resources to meet goals”

“Selects preferred strategic options to compete within a market”

“Provides a long-term plan for the development of the organization”

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Why E-Business Strategy?Missed opportunities from lack of evaluation of opportunities

Inappropriate direction of e-business strategy

Limited integration of e-business at a technical level

Resource wastage

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What if no E-Business Strategy?Missed opportunities for additional sales on the sell-side and more efficient purchasing on the buy-side

Fall-behind competitors in delivering online services – may become difficult to catch-up

Poor customer experience from poorly integrated channels.

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Strategy Models

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Generic Strategy Model Dynamic E-Business Model


Elements of Strategic Analysis

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Techniques of Strategic AnalysisResource Analysis

Review of the technological, financial and human resources of an organization and how they are utilized in business processes

Decision on Marketing ServicesLevel 0: No web site or presence on the web

Level 1: Basic web presence

Level 2: Simple static informational web site

Level 3: Simple interactive site

Level 4: Interactive site supporting transaction with users

Level 5: Fully interactive site supporting the whole buying process

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Techniques of Strategic AnalysisProduct Sourcing Development

(Buy-side E-Commerce) Level I: No use of the web

Level II: Review and selection from competing suppliers using intermediary web

Level III: Orders placed electronically through EDI

Level IV: Orders placed electronically with integration of company’s procurement system

Level V: Orders placed electronically with full integration of company’s procurement, manufacturing requirements planning and stock control system

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Techniques of Strategic AnalysisApplication Portfolio Analysis

Used to assess current information systems capability and also to inform future strategies

Organizational and IS SWOT Analysis

Help organization analyze their resources in term of strengths and weaknesses and match them against threats and opportunities

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Techniques of Strategic AnalysisDemand Analysis

Assessment of the demand for e-commerce services amongst existing and potential customer segments

Competitive Threat AnalysisThreat of new e-commerce entrants

Threats of new digital products

Threat of new business models

Sell-side ThreatsCustomer power and knowledge• Use Internet to evaluat3e products and compare prices

Power of Intermediaries• Channel conflicts and result of disintermediation

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Techniques of Strategic AnalysisBuy-side Threats

Power of Suppliers• Opportunity for buyers

Power of intermediaries• Risk include cost integration

Competitive Threats acting on E-Business

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Strategic Objectives

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Defining Vision and MissionCompany vision will be based on the managers’ view of the future relevance of the Internet to their industry

Can the Internet primarily complement the company other channel or whether it will replace other channel?

Customer access to Internet is high

Offer a better value proposition

Product can be delivered over the Internet

Product can be standardized

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How can E-Business create business value

Adding valueProviding better-quality products and services

Reduce costsMaking business process more efficient

Manage risksCreate different functions and professions

Create new realityCan be used to innovate

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Evaluate business value from E-Business

An evaluation Tool

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An evaluation tool relating information to business value. An organization’s use of information on each axis can be assessed from 1 (low use of information) to 10 (high use of information)


E-Business Strategy DefinitionElements of Strategy Definition

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Decision 1:E-Business Channel priorities

Strategic e-commerce alternatives for companies should be selected according to the percentage of target market who can be persuaded to migrate use the e-channel

Bring benefits to the company by bringing higher sales volume and reduce costs for customer acquisition and retention

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Right ChannelingRight channelling can be summarized as:

Reaching the right customer– Using the right channel

With the right message or offering– At the right time

Examples:B2B serve SMEs through e-channels and larger clients through personal serviceEncourage consumers to buy and serve through lower cost electronic channelsEncourage offline fulfillment/conversion as appropriateDifferent levels of service/promotion for different customers.

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Right Channeling

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Strategic options for a company in relation to the importance of the Internet as a channel


Decision 2:Organizational Restructuring

How the company should restructure in order to achieve the priorities set for e-business

The choices are:In-house division

Joint venture

Strategic partnership

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Other DecisionsDecision 3: Business, Service and Revenue Models

Review of opportunities from new business and revenue models

Need to review new revenue opportunities and competitor innovations

Decision 4: Market place restructuringConsider options created through disintermediation and reintermediation

Decision 5: Market and product development strategiesDecide on which market to target

Positioning and Differentiation StrategyStrategies should review the extent to which increases in product and service quality can be matched by decreases in price and time

Apr 19, 2023


Using Internet to support different growth strategies

Apr 19, 2023

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CII Institute of Logistics Virtual Class 1 19-Sep-15 Session 10 Selling Chain Management.

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