Business Across the Enterprise Chapter 8 Business Across the Enterprise

Learning Objectives Identify and give examples to illustrate the following aspects of customer relationship management, enterprise resource management, and supply chain management systems: Business processes supported Customer and business value provided Potential challenges and trends

Learning Objectives Understand the importance of managing at the enterprise level to achieve maximum efficiencies and benefits.

Getting All the Geese Lined Up: Managing at the Enterprise Business Level Customer Relationship Management, Enterprise Resource Planning, and Supply Chain Management all share the same Goal: to get the organization to line up and head in the same direction (like geese).

Section 1 Customer Relationship Management: The Business Focus

I. Introduction Businesses today must be Customer-centric/Customer-focused – Customer, Customer, Customer!

II. What Is CRM? Providing the organization with a single complete view of every customer, and providing the customer with a single complete view of the organization and its extended channels Contact and Account Management – capture and track relevant data about past and planned contacts

II. What Is CRM? Sales – providing software tools and data sources to manage sales activities, and optimize cross-selling and up-selling Cross-selling – selling related products to current customers Up-selling – selling better products than the one currently purchased

II. What Is CRM? Marketing and Fulfillment – automate direct marketing, scheduling, and tracking, and assist in scheduling responses and requests, while capturing relevant information for the marketing database

II. What Is CRM? Customer Service and Support – provide customer service software tools, and real-time access to the customer database Call Center Software – routes calls to customer support agents Help Desk Software – provides assistance for customer service agents having problems with a product/service

II. What Is CRM? Retention and Loyalty Programs – enhancing and optimizing customer retention and loyalty is a major business strategy because: It costs 6 times more to sell a new customer than an existing one Dissatisfied customers will tell 8–10 people about bad experiences A firm can boost sales 85% by increasing customer retention 5% Odds of selling a new customer – 15%; Odds of selling a current customer – 50% If a firm resolves a service problem quickly, 70% of complaining customers will do business with the firm again

III. The Three Phases of CRM Acquire – CRM helps a new customer perceive value of a superior product/service Enhance – CRM supports superior customer service, and cross-selling/up-selling Retain – CRM helps proactively identify and reward the most loyal and profitable customers

Section 2 Enterprise Resource Planning: The Business Backbone

I. Introduction II. What is ERP? ERP is a multifunctional enterprisewide backbone that integrates/automates business processes and information systems II. What is ERP? A cross-functional software suite supporting basic internal business processes of a firm

Colgate-Palmolive: The Business Value of ERP What were Colgate’s needs? What solutions did SAP provide? What results have occurred with this installation? What impact does this have on business?

III. Benefits and Challenges of ERP Major Business Value from ERP Quality and Efficiency – significant improvements in quality and efficiency of customer service, production, and distribution Decreased Costs – significant reductions in transaction costs, hardware and software, and IT support staff Decision Support – provides cross-functional information that enables better decision making across the enterprise Enterprise Agility – breaks down departmental/functional walls and enables more flexible, adaptive organizational structures

III. Benefits and Challenges of ERP Costs of ERP – if you do not do ERP properly you can kill the firm Causes of ERP Failures #1 cause – underestimating the complexity of planning, development, and training necessary for success Failure to involve affected employees Trying to do too much too fast Overreliance on claims of software vendors/consulting firms

ERP Implementations: When They Fail, They Fail Big How is an “ERP Failure” define? What was the original budget? What was the last cost? If the project was a failure, why did they go ahead with it? What part did the users have in the failure?

Capital One Financial: Success with ERP Systems In the old system, how many people had to sign off on an address change? Which ERP system did they choose? (NOTE: also see the Imperial Sugar case) What cultural change was effected? Why is that important? How are software applications accessed?

IV. Trends in ERP Improvements in Integration and Flexibility – ERP modules have become more flexible and easier to install Extensions to Business Applications – access to intranets/extranets Broader Reach to New Users – use of the Internet, intranets and extranets provides new links to customers, suppliers, and partners Adoption of Internet Technologies –enables all the above

VISA International: Implementing the e-Business Suite What were the problems with VISA’s internal systems? What did the solution do?

Section 3 Supply Chain Management: The Business Network

I. Introduction Successful SCM is based on accurate order processing, JIT inventory management, and timely order fulfillment; this was theoretical 10 years ago, but is now a competitive weapon

II. What is SCM? A cross-functional interenterprise system using IT to support/manage links between key business processes and suppliers, customers, and business partners Electronic Data Interchange (EDI) – an early SCM methodology for exchanging information between partners using standard document message formats, still very popular but being replaced by .xml-based Web services

PC Connection: Learning to Stop, Drop, and Ship What was the problem with PC Connection’s ERP system? What was their solution? How well has it worked? What does the system have to do with customer satisfaction?

Telefonica TSAI: Internet EDI How much of Spain’s EDI traffic does TSAI handle? What service does TSAI offer smaller customers? How does this help these smaller customers?

III. The Role of SCM To optimize the effective/efficient movement of materials between suppliers, customers, and other partners

Imperial Sugar: Supply Chain Management to the Rescue What was Imperial’s problem following the refinery explosion? What software did they use to help? What did this software offer them to help with the problem? Which ERP system failed them? Why did it not work?

IV. Benefits and Challenges of SCM SCM solutions are becoming more complex Benefits: Faster, More Accurate Order Processing Reductions in Inventory Levels Quicker Times to Market Lower Transaction and Materials Costs Strategic Relationships with Suppliers

IV. Benefits and Challenges of SCM Challenges – SCM Failures Caused By: Lack of Knowledge about Demand Planning Inaccurate/Overly Optimistic Demand Forecasts Inaccurate Production, Inventory, and Other Business Data Lack of Adequate Collaboration Among Marketing, Production, and Inventory Management Departments

Emerson Transaction Hub: A Bright Idea That’s Paying Off What problem did Emerson identify? What was the solution to this problem? How was the solution implemented? What percentage of costs was saved by shipping in the same container? How much did Emerson invest in the communications hub? Have they recovered their costs?

Nike Inc.: Failure (and Bouncing Back) with Supply Chain Management How much did Nike’s “speed bump” cost, and in what areas? How does Nike use historical models? What have the benefits of the ERP system been?

V. Trends in SCM 3 Stages to SCM Implementation Improve Internal Supply Chain Processes and Improve Relationships with Suppliers and Customers Use Supply Chain Software, Intranets, and Extranets with Trading Partners Develop and Implement Collaborative SCM Applications

CVS, McKesson, and MPT: Web-Based SCM Integration Why does CVS prefer push to pull promotions? What do both CVS and McKesson achieve through this relationship? What was MPT’s problem? What solutions does i-Supply offer?