Sales strategic level

In analogy to the demand side, procurement contracts are fixed by quantity and price with the objective to ensure a basis volume of raw materials. Spot procurement supports company s flexibility requirements and the company can decide the spot procurement quantity with certain flexibility around the offered quantity. Price levels for contracts and spot business differ and are volatile in each period. Typically, companies operate with few key strategic suppliers for a respective product or raw material. Therefore, price-quantity models like in sales planning are less applicable. More often is the case that specifically commodity-type raw materials are procured on many-to-many exchanges, which is out of the scope in our case as described in section 3.2.6. If products are supplied by internal business units, transfer prices are applied following the contract procurement principles. 

Depending on the business model(s) chosen, companies need to define their specific innovation headroom . This includes answering questions such as how important are innovations in the segment What do strategic customers need Should companies go for innovation in technology, service offerings, or in the value chain What does that imply for R D capacities and skills How can R D best collaborate with marketing and sales, (potential) customers, and external research institutes What level of external versus internal R D is required ... 

In addition, because of improved service levels, SCM can make a significant contribution towards preventing lost sales and become a strategic factor for differentiation, enhanced customer value propositions, and market share gains. 

Distribution is the management of inventory to achieve customer satisfaction. Today, many companies have realized that distribution is a major frontier for both customer satisfaction enhancement emd cost reduction. It is important to remember that a good strategic distribution network plan is a requirement of success and that it should not be composed simply of ideas, thoughts, or possibilities whose validity has not been researched. The distribution network plan is based upon a set of premises concerning future sales volumes, inventory levels, transportation cost, and warehouse cost. Requirements should be defined, analyzed, and evaluated and should result in the development of a specific set of strategic requirements. A good distribution network plan is action oriented and time phased and keeps the ultimate customer s requirements at the forefront at aU times. 

In their article, Hamel and Prahalad point to the important role of partnerships in nurturing core competencies. They believe partnerships are a relatively inexpensive way to advance a competency. They also decry the tendency of many companies to organize around SBUs (strategic business units) at the business level. SBU measures are immediate, the profits generated from the sale of end products. SBU attention is directed at these end products, or the leaves of the tree. Unfortunately, no single SBU is the custodian of core competencies or core products. The roots or competencies, which should be nurtured across SBU boundaries, can wither for lack of attention. 

In Level 4, the transformation continues. The strategic account sales representative is an integral part of the network, actively processing collaboratively developed new solution sets for customers. The sales representative becomes the initiator of critical responses that cut cycle time, provide the necessary information to solve problems, and offer consultative advice on potential supply chain improvements. This representative also becomes instrumental in providing the resources for the inevitable team processing that comes from pilot projects designed to enhance the relationship and build new revenues. 

Electronic collaboration can be undertaken in three ways transactional (the transmission of fixed-format documents with predefined data and information fields) information sharing (a one-way process of providing access to information such as product description and pricing, sales information, inventory and promotional calendars) and collaborative planning (electronic collaboration at strategic, operational and tactical levels). 

Using marketing models can be valuable in order to achieve improvement in the business bottom line. For instance, the 2006 R D expenditures by North American pharmaceutical companies were 55.2 billion or 19.4% of sales (PhRMA 2007). By comparison, the marketing expenditures in 2006 by these companies were 27.3 billion or about 10% of sales (IMS-Health 2006). Given this substantial level of expenses, there is a growing use of and need for analytic and data driven models to support strategic marketing decisions in this particular industry. However, this is a necessity that spans over other type of industries as well. 

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