Value Chain Analysis and Sales

Logistics

R/3 Text Chapters 4

&5

Strategic Significance (1)

Value Chain, the companys 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

The Value Chain

Firm Infrastructure
Human Resources Management
Technology Development

Procurement
Inbound Operations
Logistics

Outbound Sales &

Logistics Marketing

Service

Primary VC Activities

Inbound logistics

Outbound logistics

machining, packaging, assembly, etc.

Marketing & sales

collecting, order processing, delivery, etc.

Operations

inventory control, vehicle scheduling, returns to

supplier, etc.

advertising, promotion, quoting

Service

installation, repair, training

VC Support Activities

Procurement
Technology development
Human resource management
Firm infrastructure

Transforming the Value Chain (2)

Firm Infrastructure

Office Automation

Human Resources Management

Technology Development

Work Force Planning Systems

CAD

Procurement

EDI

Inbound Operations
Logistics

Outbound Sales &

Logistics Marketing

Service

Automated Warehousing

Computerized ordering
Equip. Maintenance
Computer-Controlled Machine

Automated Shipment Scheduling

Mapping R/3 Text to VC

External Accounting/Treasury Mgt

Chapter 8 and 12

Human Resources Management

Controlling

Chapter 9
Chapter 10

Procurement

Chapter 7

Inbound Operations
Logistics

Outbound Sales &

Logistics Marketing

Chapter 5

Service

Chapter 5
Chapter 6 and 7

Chap 11 and 13

Chapter 5

Strategic Significance (2)

Supplier VC

A companys 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
Firm VC

Channel VC

Buyer VC

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

Porters Five Forces Model

Threat of new
entrants

Bargaining Power
of Suppliers

Rivalry Among
Existing Competitors

Bargaining Power
of Buyers

Threat of Substitute
Products or Services

Interaction between opportunities and threats

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
firms competitive advantage
can compare company VC to industry VC

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

Standard Order Handling Scenario

Mailing campaign
Monitor sales activity
Possible customer
inquiry
Customer RFQ
processing
Order entry

Delivery processing
Goods issue processing
Billing
Possible rebate
processing

VC for Direct Sale to Industrial

Customer

Sales
Support

Sales inquiry/
Quotation proc

Customer
Outline
Agreement

Sales Order

Shipping

Credit
Management

Billing
Personnel
selection

Foreign
Trade

Customer
Rebate
Processing

Information
System

Quality
Managment

Transportation

Warehouse
Management

Standard Order Handling Scenario (1)

Cust mail
Campaign to
Be carried out

Mailing
Campaign
processing

^
Sales activity
Is to be
prepared

Sales activity
Is agreed
upon

Customer
Inquires about
products

Direct mail
Campaign
Is sent

Customer
RFQ processing
XOR
XOR
Sales Activity
processing

Quotation to
Be created
From contract

Inquiry
Items
rejectec

Quotation to
Be created
From inquiry
XOR

Quotation
Reason
occurred

Standard Order Handling Scenario (2)

Customer
Quotation
Processing

^
XOR

Stand Order
w/o Quote ref
received

Stand. Order
w/ref to quote
received

Quotation
Is sent

Quotation
Is Valid

Quotation
Items are
rejected

XOR
XOR

Standard
Order
Processing

Framework
Agreement
Processing
XOR

Framework
Agreement Is
Agreed w/ref

Framework
Agreement is
To be created

Standard Order Handling Scenario (3)

XOR
Rejection
Notice sent to
customer

Order is
released

Order
Confirmation
sent

Sales
Requirements
created

^
Cash
Management

^
Delivery
Processing

XOR

Delivery
Cannot be
created

Make-to
Order
Production

Repetitive
Manufacturing

Production
For Lot
Size

Process
Manufacturing

Standard Order Handling Scenario (4)

^
XOR

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

Shipment
Is
determined

Quality
Management

COGLAS GmbH - Logistics Solutions

Goods issue
Is posted

Transportation
Planning

Goods issue
Processing for
Stock material

XOR

Transportation
processing

Shipping
Notification
generated

Standard Order Handling Scenario (5)

Billing

^
Export papers
Are created/
sent

Billing doc
Is released
For billing

Billing doc
Is sent

Cash
Management

Profitability
Analysis w/
Overhead cost

Profitability
Analysis w/
Flex. Stand
costing

Profitability
Analysis w/
Allocation
costing

Profitability
Analysis w/
Static stand
costing

Customer
processing

More Complex Sales Scenarios

Contract handling &

agreements
Third party order
handling
Customer consignment
handling

Cash orders
Rush orders
Make-to-order
Returns handling

Buy/Sell Overview
Requisite
Catalog

Select catalog item

Send Purchase Order

Create Sales Order
XML

XML

R/3 Buy

IDoc

IDoc

BC
B/C
Goods Receipt
ERS
A/P

Create Purchase
Order

Marketplace

BC
Pick
Pack
Ship

Receive Order
Confirmation
Create Purchase
Order Confirmation
Access Marketplace via BBP

BBP

R/3 Sell

EFT Payment

Lets Try Some XML!