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Chapter 3b: Business Functions and Supply Chains(p101-115)
Business Functions:CRM,HR, Supply Chain ERP
Revision:
Page 15: Each business function is like a puzzle piece.
Each piece is important and should fit well with adjacent pieces, but the entire picture should always be kept in view.
OR: One of an IS’s most important contributions to the sound workings of an organization is the automation of information exchange among subsystems ERP
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Revision (continued):
Example: Customer’s orders taken via the web site by the Sales Department, should be AUTOMATICALLY routed to the – Manufacturing and– Shipping units
And processed by their OWN IS for their specific purpose.
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Introduction to CRM:
No company can survive without selling its products or services:– Providing products that customers want– Marketing efforts to pinpoint demographic groups,
features that consumers desire– Providing efficient/effective ways to execute a sale to
a customer IS support the sale effort IS support
customer services
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CRM:
Customer Relationship Management: supporting relationships with customers– Supports three areas
Marketing Sales Customer service
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Market Research:
To promote products successfully, organizations must perform market research
Market research: discover populations and regions that are most likely to purchase product– Conduct interviews with consumers and
retailers– Statistical models predict sales volumes of
different products
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Targeted Marketing
Targeted Marketing: promote to people most likely to purchase products
Principle: to define the prospective customer as accurately as possible– Can direct promotional spending to customers most
likely to buy your products Internet: Mass communication of unsolicited
promotional email SPAM
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Marketing (continued):
To define target markets companies collect data– Sales transactions– Loyalty cards– Buy databases with info about organizations/individual
Database technology manipulate data pools– Sort and categorize consumers by– Age, gender, income, previous purchases of related products, or
other combinations
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Marketing (continued):
With this vast information, corporations can prepare electronic dossiers on the– Interest– Tastes– Buying habits of customers
‘Market of one’
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Marketing (continued):p104
Telemarketing: marketing over the telephone– PC connected to large database
Computer telephony integration: allows computer to use telephone line as input
Data mining: using large data warehouses to find trends on consumer habits
Set-top box….’personalize marketing’
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Customer Service
Web-based customer service provides automated customer service 24/7– Saves labor costs– Saves paper costs– Let customers pay their bills electronically: invoice
to payment cycle is 41days, now it is 6 days
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Customer Service (continued)
Artificial intelligence used to emulate a real-life customer service representative for FAQ
Sales force automation:– Equips traveling salespeople with information
technology (example PDA)– Makes sales presentations more efficient– Let salespeople present different options for
products and services on net
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Human Resource Management
Employee record management Promotion and recruitment Training Evaluation Compensation and benefits management
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Employee Record Management
Keep personnel records to satisfy laws Payroll and tax calculation Human Resource information systems are now
digitized– Saves space, time and costs
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Promotion and Recruitment
Select best-qualified person for position Selection process automated with IS Intranet: inter-organizational network that
supports Web applications– Helps HR manager post position vacancy
announcements Automated recruiting and selection software
saves costs of publishing ads
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Training
Improving employee skills Multimedia software training replacing
classrooms and teachers Training software emulates situations where
employee must act Information technology reduces training
costs dramatically
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Evaluation
Employee ability must be periodically evaluated by supervisors
Often is a subjective process, which is a problem Evaluation software tries to solve this problem by
standardizing evaluation process– Provide tools to aid in fairly evaluating every
employee
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Compensation and Benefits Management
Compensation includes salary, hourly pay, and bonus
Programs calculate pay and taxes– Automatically generates pay slips and performs
direct deposits Programs help manage benefits
– Benefits database accessible through intranet
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Inter-organizational Supply Chain Management Systems:p111-115
Inventory is decreasing while gross domestic product is increasing
Money saved from inventory can be spent elsewhere Reduction in inventory attributed to supply chain
management systems– Streamline operations throughout chain
Newer SCM systems connect multiple organizations
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The Importance of Trust
Supply chain systems work best when all businesses are sharing information
Trust between allied companies facilitates collaboration
Nissan UK: parts come from UK and Europe, and the systems are linked to Nissan’s Production Control System– 97% of parts are delivered on time– 98% of cars are completed well within time
Distrust:
Risk of disclosing important figures is present, like taking advantage of demand figures:– If Comp A buys from Comp B and has access to
Comp B’s demand figures, it might disclose the information to competitors, stirring competition forcing prices down!
GM and Goodyear– Goodyear can have lower inventory if it knows the
demand schedule for tyres.25
Goodyear:
It could then calibrate its own order for raw materials
Manufacturing capacity to suit GM– Save money and pass some of the savings to its
client in the form of cheaper products It could replenish the client’s inventory of
tyres before GM run out of them OR– It could deliver it straight to the assembly line, just
as needed and save warehouse costs!26
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The Musical Chairs of Inventory
Small enterprises do not use SCM systems– Affects more powerful organization that small
enterprise is linked to Inventory turns: the number of times the business
sells its inventory per year:– Sales revenue/average value of inventory
Example: – GM has an increase of 55%– Goodyear decreased in the same period by 21%
Why?
GM avoided buying tyres from Goodyear until they needed them on the assembly line
Goodyear did not have that information when the tyres will be needed and kept overstock!– When SCM of companies are not linked, supplier
requirements unknown so companies must overstock inventory
– One company sits with lean inventory while other stands, hence musical chairs
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Collaborative Logistics
Web allows organizations from different industries to collaborate
Businesses combine freight, sharing trucks– Optimize logistics by connecting SCM systems
SCM systems help collaborative warehousing– Share warehouse space
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Enterprise Resource PlanningStudy p115
Replace old, disparate information systems with enterprise applications, supporting all or most of the business activities.
Enterprise resource planning: manages daily operations– Complex– Require special tailoring for specific organizations– Relatively expensive
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Summary
Effectiveness is the degree to which a task is accomplished
Efficiency is the ratio of output to input Productivity is the measure of people’s efficiency Information systems have been integrated into
accounting services Financial information systems help managers track
cash
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Summary (continued)
Computer-aided design systems help engineers design new projects
Computer-aided manufacturing systems direct machines that assemble parts
Supply chain management systems optimize workload, speed, and cost in supply chains
Customer relationship management includes the entire cycle of relationships with customers
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Summary (continued)
Human resource management systems facilitate staff selection and record keeping
Multiple companies’ SCM systems can be linked, facilitating cooperation, which requires trust
Installing an enterprise resource planning system can encompass all business processes