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 revenue-
boosting 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 how 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.


Strategic impact occurs when a policy, strategy or product
uniquely requires IT for its implementation. It is related to the
organization's EFFECTIVENESS.
Porter’s Five Forces of New Market Entrants, eg:
entry ease/barriers
Competitive Position geographical factors
incumbents resistance
new entrant strategy
routes to market

Supplier Power, eg: Competitive Rivalry, eg: Buyer Power, eg:

brand reputation number and size of firms buyer choice
geographical coverage industry size and trends buyers size/number
product/service level quality fixed v variable cost bases change cost/frequency
relationships with customers product/service ranges product/service importance
bidding processes/capabilities differentiation, strategy 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.
                                                      

                                                                    
                                                                    
   
 Strategic Advantage
Competitive Strategies Cost
Leadership
Differentia-
tion
Innovation

Growth

Alliance
Other
Strategies
Rivalry of Threat of Threat ofBargainingBargaining
Competitors New Substitutes Power of 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
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%20Value%20Chain%20White%20Paper%20v2.1.doc
 Business process
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 Business
Improvement Reengineering
Level of Change Incremental Radical
Process Improved New Brand New
Change Version of Process Process
Starting Point Existing Processes Clean Slate

Frequency of One-time or Periodic One-time

Change Continuous Change
Time Required Short Long

Narrow, Within Broad, Cross-

Typical Scope
Functions Functional
Horizon Past and Present Future
Participation Bottom-up Top-down

Path to
Cultural Cultural Structural
Execution
Primary Enabler Statistical Control Information Technology

Risk Moderate High

 The Virtual Company
Interenterprise IS
Alliance -
Subcontractors
Boundary of a Firm
Alliance -
Major
Supplier

Customer
Response
and Order-
Fulfillment
Teams
Extranets

Intranets
Alliance -
Major
Customer

Manufacturing
Teams

Alliance -
Small Alliance -
Suppliers Cross-Functional Engineering Complementary
Teams Teams 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