Enterprise Applications: Business Communications Chapter 8 McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter CHAPTER OVERVIEW SECTION 8.1 – Enterprise Systems and Supply Chain Management  Building a Connected Corporation Through Integrations  Supply Chain Management  The Benefits of SCM  The Challenges of SCM  The Future of SCM

Chapter CHAPTER OVERVIEW SECTION 8.2 – Customer Relationship Management and Enterprise Resource Planning  Customer Relationship Management  The Benefits of CRM  The Challenges of CRM  The Future of CRM  Enterprise Resource Planning  The Benefits of ERP  The Challenges of ERP  The Future of Enterprise Systems, Integrating SCM, CRM, and ERP

Chapter SECTION 8.1 Enterprise Systems and Supply Chain Management

Chapter LEARNING OUTCOMES 1. Explain integrations and the role they play in connecting a corporation 2. Describe supply chain management and its role in supporting business operations 3. Identify the benefits and challenges of SCM along with its future

Chapter BUILDING A CONNECTED CORPORATION THROUGH INTEGRATIONS Integration – Allows separate systems to communicate directly with each other, eliminating the need for manual entry into multiple systems  Forward integration  Backward integration

Chapter BUILDING A CONNECTED CORPORATION THROUGH INTEGRATIONS Integration Example

Chapter A Central Information Repository Example BUILDING A CONNECTED CORPORATION THROUGH INTEGRATIONS

Chapter Integration Tools Enterprise system – Provide enterprisewide support and data access for a firm’s operations and business processes Enterprise application integration (EAI) – Connects the plans, methods, and tools aimed at integrating separate enterprise systems

Chapter Integration Tools Middleware – Several different types of software that sit between and provide connectivity for two or more software applications Enterprise application integration middleware – Takes a new approach to middleware by packaging commonly used applications together, reducing the time needed to integrate applications from multiple vendors

Chapter Integration Tools Three Primary Enterprise Systems

Chapter SUPPLY CHAIN MANAGEMENT Five basic supply chain activities

Chapter SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) – The management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and profitability

Chapter SUPPLY CHAIN MANAGEMENT The supply chain has three main links 1. Materials flow from suppliers and their “upstream” suppliers at all levels 2. Transformation of materials into semifinished and finished products through the organization’s own production process 3. Distribution of products to customers and their “downstream” customers at all levels

Chapter SUPPLY CHAIN MANAGEMENT Supply Chain Example

Chapter SUPPLY CHAIN MANAGEMENT Walmart and Procter & Gamble SCM Example

Chapter SUPPLY CHAIN MANAGEMENT Effective and efficient SCM systems can enable an organization to  Decrease the power of its buyers  Increase its own supplier power  Increase switching costs to reduce the threat of substitute products or services  Create entry barriers thereby reducing the threat of new entrants  Increase efficiencies while seeking a competitive advantage through cost leadership

Chapter SUPPLY CHAIN MANAGEMENT Effective and Efficient SCM Systems Effect on Porter’s Five Forces

Chapter THE BENEFITS OF SCM: Improved Visibility Supply chain visibility – The ability to view all areas up and down the supply chain in real time Supply chain planning system – Uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory Supply chain execution system – Automates the different activities of the supply chain Bullwhip effect – Occurs when distorted product demand information ripples from one partner to the next throughout the supply chain

Chapter THE BENEFITS OF SCM: Improved Visibility Supply Chain Planning and Execution

Chapter THE BENEFITS OF SCM: Improved Profitability Companies can respond faster and more effectively to consumer demands through supply chain enhances Demand planning system – Generates demand forecasts using statistical tools and forecasting techniques, so companies can respond faster and more effectively to consumer demands through supply chain enhancements

Chapter THE BENEFITS OF SCM: Improved Profitability Common supply chain metrics include:  Back order  Inventory cycle time  Customer order cycle time  Inventory turnover

Chapter THE CHALLENGES OF SCM Primary challenges include  Cost – An SCM system can cost millions of dollars for the software and millions more for help implementing the system  Complexity – The move towards globalization is increasing complexity in the supply chain

Chapter THE FUTURE OF SCM Fastest growing SCM components  Collaborative demand planning  Collaborative engineering  Selling chain management  Supply chain event management (SCEM)

Chapter SECTION 8.2 Customer Relationship Management and Enterprise Resource Planning

Chapter LEARNING OUTCOMES 4. Describe customer relationship management and its role in supporting business operations 5. Identify the benefits and challenges of CRM along with its future 6. Describe enterprise resource management and its role in supporting business operations 7. Identify the benefits and challenges of ERP along with the future of the connected corporation

Chapter CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management (CRM) – Involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitability Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems

Chapter CUSTOMER RELATIONSHIP MANAGEMENT

Chapter THE BENEFITS OF CRM Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value  How recently a customer purchased items  How frequently a customer purchased items  The monetary value of each customer purchase

Chapter Evolution of CRM CRM reporting technology – Help organizations identify their customers across other applications CRM analysis technologies – Help organization segment their customers into categories such as best and worst customers CRM predicting technologies – Help organizations make predictions regarding customer behavior such as which customers are at risk of leaving

Chapter Evolution of CRM The Evolution of CRM

Chapter Operational and Analytical CRM Operational CRM – Supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers Analytical CRM – Supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers

Chapter Operational and Analytical CRM

Chapter Operational and Analytical CRM Marketing and operational CRM technology  List generator, campaign management, cross-selling and up- selling Sales and operational CRM technology  Sales management, contact management, opportunity management Customer service and operational CRM technology  Contact center, Web-based self-service, call scripting

Chapter Marketing and Operational CRM Three marketing operational CRM technologies 1. List generator 2. Campaign management system 3. Cross-selling and up-selling

Chapter Sales and Operational CRM The sales department was the first to begin developing CRM systems with sales force automation a system that automatically tracks all of the steps in the sales process

Chapter Sales and Operational CRM Sales and operational CRM technologies 1. Sales management CRM system 2. Contact management CRM system 3. Opportunity management CRM system

Chapter Customer Service and Operational CRM Three customer service operational CRM technologies 1. Contact center (call center) 2. Web-based self-service system 3. Call scripting system Common features included in contact centers  Automatic call distribution  Interactive voice response  Predictive dialing

Chapter Analytical CRM Website personalization – Occurs when a website has stored enough data about a person’s likes and dislikes to fashion offers more likely to appeal to that person  Analytical CRM relies heavily on data warehousing technologies and business intelligence to glean insights into customer behavior  These systems quickly aggregate, analyze, and disseminate customer information throughout an organization

Chapter THE CHALLENGES OF CRM The customer is always right and now has more power than ever thanks to the Internet

Chapter THE FUTURE OF CRM Current trends include  Supplier relationship management (SRM)  Partner relationship management (PRM)  Employee relationship management (ERM)

Chapter ENTERPRISE RESOURCE PLANNING Enterprise resource planning – Integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprisewide decisions by viewing enterprisewide information on all business operations

Chapter ENTERPRISE RESOURCE PLANNING Reasons ERP systems are powerful tools  ERP is a logical solution to incompatible applications  ERP addresses global information sharing and reporting  ERP avoids the pain and expense of fixing legacy systems

Chapter ENTERPRISE RESOURCE PLANNING ERP systems collect data from across an organization and correlates the data generating an enterprisewide view

Chapter ENTERPRISE RESOURCE PLANNING ERP Systems Automate Business Processes

Chapter ENTERPRISE RESOURCE PLANNING The Organization Before ERP

Chapter ENTERPRISE RESOURCE PLANNING ERP Bringing The Organization Together

Chapter THE BENEFITS OF ERP Core ERP component – Traditional components included in most ERP systems and they primarily focus on internal operations Extended ERP component – Extra components that meet the organizational needs not covered by the core components and primarily focus on external operations

Chapter THE BENEFITS OF ERP

Chapter THE BENEFITS OF ERP

Chapter Core ERP Components Three most common core ERP components 1. Accounting and finance 2. Production and materials management 3. Human resource

Chapter Accounting and Finance ERP Components Accounting and finance ERP component – Manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management

Chapter Production and Materials Management ERP Components Production and materials management ERP component – Handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control

Chapter Human Resource ERP Component Human resource ERP component – Tracks employee information including payroll, benefits, compensation, and performance assessment and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities

Chapter Extended ERP Components Extended ERP components include:  Business intelligence  Customer relationship management  Supply chain management  Ebusiness components include o Elogistics o Eprocurement

Chapter Measuring ERP Success Balanced scorecard – Enables organizations to clarify their vision and strategy and translate them into action Balanced scorecard views the organization from four perspectives  Learning and growth  Internal business process  Customer  Financial

Chapter Measuring ERP Success

Chapter THE CHALLENGE OF ERP ERP systems contain multiple complex components that are not only expensive to purchase, but also expensive to implement Costs include  Software  Consulting fees  Hardware expenses  Training fees

Chapter THE FUTURE OF ENTERPRISE SYSTEMS: INTEGRATING SCM, CRM, AND ERP SCM, CRM, and ERP are the backbone of ebusiness Integration of these applications is the key to success for many companies Integration allows the unlocking of information to make it available to any user, anywhere, any time

Chapter THE FUTURE OF ENTERPRISE SYSTEMS: INTEGRATING SCM, CRM, AND ERP

Chapter THE FUTURE OF ENTERPRISE SYSTEMS: INTEGRATING SCM, CRM, AND ERP SCM, CRM, and ERP Integration