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Enterprise Business Systems

Chapter

8

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1. Identify and give examples to illustratethe following aspects of customerrelationship management, enterprise

resource management, and supply chainmanagement systems:

Business processes supported Customer and business value provided

Potential challenges and trends

Learning Objectives

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Why Study CustomerRelationship Management?

It is easier than ever for customers tocomparison shop and, with a click of themouse, to switch companies. As a result,

customer relationships have become acompanys most valued asset.

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Customer Relationship Management (CRM)

Definition: The use of information technology to

create a cross-functional enterprise

system that integrates and automatesmany of the customer-serving processesin sales, marketing, and customerservices that interact with a companys

customers

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CRM Application Clusters

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CRM Application Components

Contact and Account Management helpssales, marketing, and service professionalscapture and track relevant data about everypast and planned contact with prospects and

customers, as well as other business and lifecycle events of customers

Sales provides sales reps with tools andcompany data sources needed to support andmanage sales activities, and optimize cross-selling and up-selling

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CRM Application Components

Marketing Fulfillment help marketingprofessionals accomplish direct marketingcampaigns by automating such tasks asqualifying leads for targeted marketing, and

scheduling and tracking direct marketingmailings

Customer Service and Support providesservice reps with software tools and real-timeaccess to the common customer databaseshared by sales and marketing professionals

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CRM Application Components

Retention and Loyalty Programs help acompany identify, reward, and market totheir most loyal and profitable customers

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Three Phases of CRM

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Three Phases of CRM

Acquire new customers by doing a superior jobof contact management, sales prospecting,selling, direct marketing, and fulfillment

Enhance relationship with customer bysupporting superior service from a responsivenetworked team of sales and service specialistsand business partners

Retain and expand business with customers byproactively identifying and rewarding the mostloyal and profitable customers

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Benefits of CRM

CRM allows a business to identify andtarget their best customers so they can beretained as lifelong customers for greater

and more profitable services.

CRM makes possible real-time

customization and personalization ofproducts and services based on customerwants, needs, buying habits, and lifecycles.

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Benefits of CRM

CRM can keep track of when a customercontacts the company, regardless of thecontact point.

CRM systems can enable a company toprovide a consistent customer experience

and superior service and support acrossall the contact points a customer chooses.

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CRM Failures

Lack of understanding and preparation

Rely on CRM to solve business problem

without first developing the businessprocess changes and changemanagement programs that are required

CRM projects implemented without theparticipation of the business stakeholdersinvolved

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Trends in CRM

Operational

Analytical

Collaborative

Portal-based

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Operational CRM

Supports customer interaction with greaterconvenience through a variety ofchannels.

Synchronizes customer interactionsconsistently across all channels

Makes your company easier to dobusiness with

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Analytical CRM

Extracts in-depth customer history, preferences,and profitability information from your datawarehouse and other databases

Allows you to analyze, predict, and derivecustomer value and behavior and forecastdemand

Lets you approach your customers with relevantinformation and offers that are tailored to theirneeds

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Collaborative CRM

Enables easy collaboration withcustomers, suppliers, and partners

Improves efficiency and integrationthroughout the supply chain

Allows greater responsiveness tocustomer needs through sourcing ofproducts and services outside of yourenterprise

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Portal-based CRM

Provides all users with the tools and informationthat fit their individual roles and preferences

Empowers all employees to respond tocustomer demands more quickly and becometruly customer-focused

Provides the capability to instantly access, link,and use all internal and external customerinformation

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Partner Relationship Management (PRM)

Definition: Applications that apply many of the same

tools used in CRM systems to enhance

collaboration between a company and itsbusiness partners, such as distributorsand dealers, to better coordinate andoptimize sales and service to customersacross all marketing channels

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Case #2: Challenges of Implementing ERP

Enterprise resource planning (ERP)implementations are a lot more thansoftware packages. They are afundamental transformation of acompanys business processes. People,

processes, policies, the companys culture

are all factors that should be taken into

consideration when implementing a majorenterprise system.

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Case #2: Challenges of Implementing ERP

Reasons for ERP Failures: Managements inability to spec out their

own requirements

Implementers inability to implement specs

Undertake too much too quickly

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Case #2: Challenges of Implementing ERP

1. What are the main reasons companiesexperience failures in implementing ERPsystems?

2. What are several key things companiesshould do to avoid ERP systems

failures? Explain the reasons for yourproposals.

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Case #2: Challenges of Implementing ERP

3. Why do you think ERP systems inparticular are often cited as examples offailures in IT systems development,implementation, or management?

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Enterprise Resource Planning (ERP)

Definition: A cross-functional enterprise system

driven by an integrated suite of software

modules that supports the basic internalbusiness processes of a company

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ERP Application Components

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ERP Process & Information Flows

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ERP Benefits

Quality and Efficiency ERP creates aframework for integrating and improving acompanys internal business processes

that results in significant improvements inthe quality and efficiency of customerservice, production, and distribution

Decreased Costs Significant reductionsin transaction processing costs andhardware, software, and IT support staff

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ERP Benefits

Decision Support Provides vital cross-functional information on businessperformance quickly to managers tosignificantly improve their ability to makebetter decisions in a timely manner

Enterprise Agility ERP breaks downmany former departmental and functionalwalls of business processes, informationsystems, and information resources

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Costs of ERP

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Causes of ERP Failures

Business mangers and IT professionalsunderestimate the complexity of the planning,development, and training needed

Failure to involve affected employees in the

planning and development phases

Trying to do too much too fast in the conversionprocess

Failure to do enough data conversion andtesting

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Trends in ERP

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Case #3: Business Value of SCM

Benefits of SCM: Reduces production and distribution costs

Improves timeliness of shipments

Reduces manufacturer inventory levels

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Case #3: Business Value of SCM

Challenges of SCM: Acquisition of secure extranet

Change company structure

Resistance from employees wedded to

traditional processes

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Case #3: Business Value of SCM

1. How could moving business informationsystems with suppliers and distributorsto the Web result in such dramaticbusiness benefits as experienced byTaylorMade Golf?

2. How does HON Industries new SCMsystem improve the efficiency of theirsupply chain?

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Case #3: Business Value of SCM

3. What other SCM initiatives would yourecommend that TaylorMade Golf or HONIndustries implement to improve their supplychain performance and business value?

Explain the business value of your proposals.

4. What are several ways a small business coulduse supply chain management to improve theefficiency and business value of its supplychain? Give several examples to illustrateyour answer.

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Supply Chain Management (SCM)

Definition: A cross-functional interenterprise system

that uses information technology to help

support and manage the links betweensome of a companys key businessprocesses and those of its suppliers,customers, and business partners

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SCM Life Cycle

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Electronic Data Interchange (EDI)

Definition: Involves the electronic exchange of

business transaction documents over the

Internet and other networks betweensupply chain trading partners

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EDI Activities

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Role of SCM

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SCM Planning Functions

Supply Chain Design optimize networkof suppliers, plants, and distributioncenters

Collaborative Demand and SupplyPlanning develop an accurate forecast

of customer demand by sharing demandand supply forecasts instantaneouslyacross multiple tiers

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SCM Execution Functions

Materials Management share accurateinventory and procurement order information,ensure materials required for production areavailable in the right place at the right time, and

reduce raw material spending, procurementcosts, safety stocks, and raw material andfinished goods inventory

Collaborative Manufacturing optimize plansand schedules while considering resource,material, and dependency constraints

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SCM Execution Functions

Collaborative Fulfillment commit to deliverydates in real time, fulfill orders from all channelson time with order management, transportationplanning, and vehicle scheduling, and supportthe entire logistics process, including picking,

packing, shipping, and delivery in foreigncountries

Supply Chain Event Management monitorevery stage of the supply chain process, fromprice quotation to the moment the customerreceives the product, and receive alerts whenproblems arise

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SCM Execution Functions

Supply Chain Performance Management report key measurements in the supplychain, such as filling rates, order cycletimes, and capacity utilization

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SCM Objectives

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SCM Benefits

Faster, more accurate order processing

Reductions in inventory levels

Quicker times to market

Lower transaction and material costs

Strategic relationship with suppliers

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Causes of SCM Failures

Lack of proper demand planning knowledge, tools and

guidelines

Inaccurate or overoptimistic demand forecasts

Inaccurate production, inventory and other businessdata provided by a companys other informationsystems

Lack of adequate collaboration among marketing,

production, and inventory management departmentswithin a company

Immature, incomplete or hard to implement SCMsoftware tools

SC

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Trends in SCM

C B fi Ch ll f SCM

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Case #4: Benefits & Challenges of SCM

Benefits of SCM: Materials prices reduced

Fewer employees needed to manage supplychain

Order fulfillment time reduced

Increased sales by reducing inventoryshortages

Enables new business partnerships

C #4 B fi & Ch ll f SCM

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Case #4: Benefits & Challenges of SCM

Supplier reluctance: Cost of hardware and software

Software can be confusing, contradictoryand not sculpted to their needs

Impenetrable technical jargon

C #4 B fi & Ch ll f SCM

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Case #4: Benefits & Challenges of SCM

1. Why can both large and smallbusinesses cut costs and increaserevenues by moving their supply chainsonline? Use the companies in this caseas examples.

2. What is the business value to EastmanChemical and W. W. Grainger of theirinitiatives to help their suppliers andcustomers do business online?

C #4 B fit & Ch ll f SCM

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Case #4: Benefits & Challenges of SCM

3. Why are many small suppliers reluctantto do business online with their largecustomers? What can be done toencourage small suppliers online?

S

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Summary

Customer relationship management is across-functional enterprise system thatintegrates and automates many of thecustomer-serving processes in sales,marketing, and customer services thatinteract with a companys customers.

S

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Summary

Enterprise resource planning is a cross-functional enterprise system thatintegrates and automates many of theinternal business processes of acompany, particularly those within themanufacturing, logistics, distribution,accounting, finance, and human resource

functions of the business.

S

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Summary

Supply chain management is a cross-functional inter-enterprise system thatintegrates and automates the network ofbusiness processes and relationshipsbetween a company and its suppliers,customers, distributors, and otherbusiness partners.

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End of Chapter

Chapter

8