Other Enterprise Systems Customer Relationship Management & Supply Chain Management

2 A Supply Chain The flow of materials, information, money and services from raw material suppliers, through factories and warehouses, to the end customers. A network of facilities for procuring materials, transforming raw materials into finished products,' and distributing finished produce to customers.

3 Structure & Components of Supply Chains A supply chain involves three segments: Upstream, where sourcing or procurement from external suppliers occurs; Internal, where packaging, assembly or manufacturing takes place; Downstream, where distribution takes place, frequently by external distributors. Tiers of suppliers Suppliers may have one or more subsuppliers, and the subsupplier may have its own subsupplier(s) and so on.

4 Structure & Components of Supply Chains Material flows The physical products, raw materials, supplies and so forth that flow along the chain. Reverse flows – returned products, recycled products and disposal of materials or products. Information flows All data related to demand, shipments, orders, returns and schedules as well as changes in any of these data. Financial flows all transfers of money, payments and credit-related data. A supply chain involves a product life cycle approach, from raw material to shop shelf.

5 Supply Chain Management A strategic objective for many firms The right products The right place The right time In the proper quantity At an acceptable cost = more happy customers = more profit

6 Supply Chain Problems Types of problems Poor customer service – not delivering products or services when and where the customers need them. Poor quality product High inventory costs Loss of revenues Technology failure Problems stem mainly from two sources: Uncertainties due to demand forecast, delivery times, quality problems in materials and parts that can create production delays; The need to coordinate several activities, internal units and business partners. Supply chains are often chaotic systems: small changes amplify

7 Supply Chain Management Systems Supply chain management (SCM) The function of planning, organizing and optimizing the supply chain’s activities. A supply chain management system A cross-functional inter-enterprise system To help support and manage the links between a company’s key business processes And those of its suppliers, customers & business partners

8 Role of SCM Supply chain management (SCM) provides capabilities at all levels of enterprise systems pyramid.

9 SCM business benefits and blockers Visibility Enhanced visibility - trading partners have the info needed for planning (win/win) Collaboration with Suppliers When supplies run low, replenish message to supplier who sends goods directly to shelves bypassing warehousing costs Trust Between trading partners is NOT the norm Zero-sum game, like politics, Resistance Competition from traditional communication media, hunches, human to human interaction Planning was naïve Sales force inertia

SCM technology benefits and blockers Exercise

11 SCM Architecture

12 Large scale SCM systems Interorganisational information system (IOS) involves information flows among two or more organizations. Global information systems are interorganizational information systems that connect companies located in two or more countries. Typical problems Cultural differences Localization Economic and Political Differences Legal issues Cross-border data transfer which refers to the flow of corporate data across nations’ borders.

13 Customer Relationship Management Move from a ‘transactional’ model of marketing to a ‘relationship’ model An enterprise wide effort to acquire and retain customers. Includes a one-to-one relationship between a customer and a seller. One simple idea “Treat different customers differently”. Helps keep profitable customers and maximizes lifetime revenue from them. Identify/acquire/retain most profitable prospects 20/80 rule (20% customers generate 80% revenues) Acquisition is far more expensive that retention. Integrating information from sales, customer service, marketing and any other service points

14 Customer Relationship Management (CRM): Technology Create a cross-functional enterprise system That integrates and automates many of the processes in sales, marketing & customer service that interact with customers (Customer touchpoints) Customer touch point is any method of interaction with a customer, such as telephone, , a customer service or help desk, conventional mail, Web site and store. Create a framework of software & databases that integrate these processes with the rest of the company’s processes. Provides analytic capabilities to optimise the customer relationship across all touchpoints

15 CRM Functional Solutions Contract and Account Management Helps sales, marketing & service professionals Capture & track data about past/planned contacts with customers/prospects Sales Force Automation Provides sales reps with software tools & data they need to support & manage sales activities Cross-selling is trying to sell a customer of one product with a related product Up-selling is trying to sell customer a better product than they are currently seeking

16 CRM Functional Solutions Direct Marketing Help marketing professionals accomplish direct marketing campaigns by tasks such as Qualifying leads for targeted marketing & scheduling & tracking direct marketing mailings Retention and Loyalty Programs Try to help a company identify, reward, & market to their most loyal and profitable customers Data mining tools & analytical software Customer data warehouse

17 CRM Functional Solutions Customer Service and Support Provides sales reps with software tools & database access to customer database shared by sales & marketing professions Helps create, assign and manage requests for service Call center software routes calls to customer support agents based upon their skills and type of call Help desk software provides relevant service data & suggestions for resolving problems for customer service reps helping customers with problems

18 CRM cycle Identify customer Analyse and differentiate customer behaviour to identify propensity to buy specific products. Customise customer plan to optimise revenue Customise customer touchpoints to optimise revenue. © HP

19 Supports integrated & collaborative relationship between a business & it’s customers CRM: The Business Architecture Customer Life Cycle CRM Functional Solutions CRM Integrated Solution The Internet AcquireEnhanceRetain Direct MarketingAccount management Retention and Loyalty Programmes Sales Force AutomationCustomer Support Collaborative Service Shared Customer Data PartnerCompanyCustomer

20 An example of a CRM technical architecture N-tier architecture Database server hosting data warehouse Application logic servers with process models (multiple servers, distributed ) Integration server to integrate with external applications Web/Internet server Presentation level Browsers Mobile phones © Sage

21 CRM Benefits and risks Benefits Single view of customer data Immediate availability of real-time information Better knowledge of customers Better understanding of customer needs Knowledge retention improved Risks Difficult implementation Expense Scalability No guarantee on effectiveness– hard to prove that CRM works

22 Alternative CRM architecture: Software as a Service (SaaS) E.g. Salesforce.com Provides complete CRM capabilities with limited customisation and integration. Particularly suited to smaller organisations or organisations with simpler CRM capabilities Charge on a monthly all-in fee. © Salesforce.com

23 Trends in Enterprise Computing: SaaS Software as a Service (SaaS) is a model of Software Delivery where the software company provides maintenance, daily technical operation, and support for the software provided to their client Examples: Salesforce.com – widely used sales force automation + CRM system Oracle and SAP have web interfaces Office Productivity: Google Writely and spreadsheet – not used in the enterprise

24 Trends in Enterprise Computing: SaaS Benefits No large upfront costs No install costs – low one- time costs Anywhere, anytime, anyone - mobility Operating costs only; Usage can be easily scaled up or down as needed Weaknesses Core functionality out- sourced Broadband risk Limited personalisation/tailoring No competitive uniqueness advantage Not suited to high volume data entry. SaaS most likely to be used in SME market