Value Chain Analysis and Sales Logistics

1. Value Chain Analysis and Sales Logistics R/3 Text Chapters 4 & 5

2. Strategic Significance (1) • “Value Chain”, the company’s activities are divided into the technologically and economically distinct activities that the company performs in doing business • “Value Activities”, are nine generic activities (split in two categories: primary and support) which value is the amount that buyers are willing to pay for a product or service • “Primary activities” are those involved in the physical creation of the product or service • “Support activities” provide the inputs and infrastructure that allow the primary activity to take place

3. The Value Chain Firm Infrastructure Human Resources Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Sales & Marketing Service

4. Primary VC Activities • Inbound logistics • inventory control, vehicle scheduling, returns to supplier, etc. • Outbound logistics • collecting, order processing, delivery, etc. • Operations • machining, packaging, assembly, etc. • Marketing & sales • advertising, promotion, quoting • Service • installation, repair, training

5. VC Support Activities • Procurement • Technology development • Human resource management • Firm infrastructure

6. Transforming the Value Chain (2) Office Automation Firm Infrastructure Work Force Planning Systems Human Resources Management Technology Development CAD Procurement EDI Inbound Logistics Operations Outbound Logistics Sales & Marketing Service Automated Warehousing Computerized ordering Equip. Maintenance Computer-Controlled Machine Automated Shipment Scheduling

7. Mapping R/3 Text to VC Chapter 8 and 12 External Accounting/Treasury Mgt Chapter 9 Human Resources Management Controlling Chapter 10 Procurement Chapter 7 Inbound Logistics Operations Outbound Logistics Sales & Marketing Service Chapter 5 Chapter 5 Chap 11 and 13 Chapter 6 and 7 Chapter 5

8. Strategic Significance (2) • A company’s value chain is a system of interdependent activities • A value chain for a company in a particular industry is embedded in a larger stream of activities that it is called “Value System” • Linkage among activities not only connect value activities inside a company but also create interdependence between its value chain and those of its suppliers and channels Supplier VC Firm VC Channel VC Buyer VC

10. Threat of new entrants Rivalry Among Existing Competitors Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products or Services Interaction between opportunities and threats Porter’s Five Forces Model

11. Individual Company VC • Every company activity can be categorized into primary or support activity • start with generic VC and subdivide into discrete activities • categorize those activities that contribute best to a firm’s competitive advantage • can compare company VC to industry VC

12. R/3 and the VC • Allows company to restructure activities on VC • Business reference scenarios are structured around primary and support VC activities • Text is organized around VC activities • See VC examples • copier machine, AMCC, Dell computer

17. Mailing campaign Monitor sales activity Possible customer inquiry Customer RFQ processing Order entry Delivery processing Goods issue processing Billing Possible rebate processing Standard Order Handling Scenario

18. VC for Direct Sale to Industrial Customer Customer Outline Agreement Sales Support Sales inquiry/ Quotation proc Quality Managment Shipping Transportation Sales Order Warehouse Management Credit Management Customer Rebate Processing Billing Information System Personnel selection Foreign Trade

19. XOR XOR XOR Standard Order Handling Scenario (1) Cust mail Campaign to Be carried out Mailing Campaign processing ^ Customer Inquires about products Sales activity Is agreed upon Sales activity Is to be prepared Direct mail Campaign Is sent Customer RFQ processing Sales Activity processing Inquiry Items rejectec Quotation Reason occurred Quotation to Be created From inquiry Quotation to Be created From contract

20. ^ ^ ^ ^ XOR XOR XOR XOR Standard Order Handling Scenario (2) Customer Quotation Processing Quotation Items are rejected Stand Order w/o Quote ref received Stand. Order w/ref to quote received Quotation Is sent Quotation Is Valid Framework Agreement Is Agreed w/ref Framework Agreement is To be created Standard Order Processing Framework Agreement Processing

21. ^ ^ ^ XOR XOR Standard Order Handling Scenario (3) Rejection Notice sent to customer Order is released Order Confirmation sent Sales Requirements created Cash Management Make-to Order Production Repetitive Manufacturing Production For Lot Size Delivery Processing Process Manufacturing Delivery Cannot be created

22. ^ ^ XOR XOR Standard Order Handling Scenario (4) Delivery is Relevant For billing Delivery is Relevant for shipment Material For quality Check is available Shipping papers Are created/ transmitted Delivery is Not relevant For shipment Transportation Planning Shipment Is determined Quality Management Transportation processing COGLAS GmbH - Logistics Solutions Goods issue Processing for Stock material Goods issue Is posted Shipping Notification generated

23. ^ ^ Standard Order Handling Scenario (5) Billing Export papers Are created/ sent Billing doc Is released For billing Billing doc Is sent Profitability Analysis w/ Flex. Stand costing Cash Management Profitability Analysis w/ Overhead cost Profitability Analysis w/ Allocation costing Profitability Analysis w/ Static stand costing Customer processing

24. Contract handling & agreements Third party order handling Customer consignment handling Cash orders Rush orders Make-to-order Returns handling More Complex Sales Scenarios

25. R/3 Sell R/3 Buy Marketplace B/C BC B/C BC BC BC Buy/Sell Overview • Select catalog item • Send Purchase Order • Create Sales Order XML XML IDoc IDoc B/C • Pick • Pack • Ship • Goods Receipt • ERS • A/P • Receive Order Confirmation • Create Purchase Order Confirmation • EFT Payment • Create Purchase Order • Access Marketplace via BBP BBP

26. Let’s Try Some XML!