Porter's 5 Forces

1
Porter's 5 Forces

• Buyers bargaining Power
• Buyers were demanding reduced delivery times so
  that they could hold lower inventory levels.
• Substitute Products
• Alternative alcoholic products such as ice
  beers, premium beers as well as product shifts as
  the result of changing social habits
• New Entrants
• The globalisation of the brewing industry meant
  that there was increasing competition from
  foreign brewers.

2
Competitive Forces Model

• Product differentiation
• Superior delivery service.
• Focused differentiation
• It tailored its supply chain to particular
  customers requirements.
• Tight linkages with customer and suppliers
• Used IT/IS to tie in with customers IT systems.
• Cost leadership
• Used BPR of the supply chain to lower cost.

3
Value Chain Model

• Added value through supply chain management by
  compressing the times when no value was being
  added to the process and
• Reducing sources of uncertainty through the
  active cooperation of key players in each value
  chain.
• By reducing uncertainty, total service is
  improved and overall cost is reduced.

4
Demand Flow Leadership

• From push to pull.
• A pull philosophy results in high inventory
  levels, high operating costs, and poor customer
  service
• Demand flow leadership involves
• A response to customer demand which encourages
  reduced inventories and costs, and enhanced
  customer service.
• A "flow" though the process. This leads to a
  top-down, totally integrated approach to achieve
  customer satisfaction.
• Leadership to harness the energy of change, to
  pursue continuous improvement, and to achieve
  peak-to-peak performance

5
3 Factors

• 3 Factors
• The changes were predominantly driven by the IS
  department and not the people involved in the
  actual business processes
• At the same time, the IS department divested
  itself of responsibility for the management of
  technology
• There was a failure to have an overall long-term
  plan for the development and implementation of
  the IS systems.

6
IS Led the way

• Relationship of IS with business units
• Expertise
• Need to align IS and Business strategy
• IS success could not be measured because it was
  entwined with other business untis

7
Implementation

• Initial catalyst (hardware upgrade)
• Standard software quick development
• Decentralisation - Users became process owners
• Freeing up of resources (freeze on development,
  outsourcing)
• IS Dept. became business focused not technology
  focused
• IS Dept became team oriented not functional based

8
Criticisms

• No change management strategy
• No impact analysis
• No strategic analysis

9
Further IS Developments

• Extended into production, inventory, property and
  equipment management as a whole.
• Incorporate GPS and handheld PC
• dynamic management of the inventory, conveyance
  resources and personnel
• efficiencies in management, communication and
  service in responding to delays, changing
  priorities, traffic situations etc.
• Extended the system into markets outside the
  beverage sector and to other product categories
  in the existing market

10
Further IS Developments

• Datamining
• Intellectual property and information that gives
  a competitive advantage must be protected with
  adequate confidentially clauses and remedies.
• Use of Internet technology

11
Outsourcing

• Performance measures assessed against critical
  goals including outcomes, costs and the time
  schedule.
• Intellectual property and information that gives
  a competitive advantage protected
• Outsource the delivery system to a contractor who
  can reduce costs by spreading the process out
  over many industries and developing specialist
  expertise.
• However, Heineken may
• Lose control over the information compiled in
  their delivery process and
• Expose their system to competitors.