Enterprise e-Business Systems

Learning Objectives Identify the following aspects of customer relationship management (CRM), enterprise resource management (ERP), and supply chain (SCM) mgt systems: Business processes supported Customer and business value provided Potential challenges and trends

Customer Relationship Management (CRM): The Business Focus

A customer focused business was one of the top business strategies that can be supported by IT. Thus many Companies are implementing CRM business initiatives and information systems as part of a customer-focused or customer centric strategy to improve their chance for success in today’s competitive environment.

Mitsubishi Motor Sales They realized their business lacked a customer focus and decided to change through a CRM initiative. CRM project involved acquiring and installing the hardware, software, network and data resources from 18 vendors needed to create and support one central call center system that would provide superior service to all customers, prospects, and other callers.

The team of sales, marketing, finance, and IT professionals who directed the project decided to install individual CRM software components using a slow, phased development approach so employees could be properly trained in each new application.

The new system has produced increased customer satisfaction, major cost savings, improved employee morals, etc for Mitsubishi management.

Customer Relationship Management Provides customer-facing employees with a single, complete view of every customer at every touch point and across all channels Provides the customer with a single, complete view of the company and its extended channels

Customer Relationship Management (continued) CRM.. Integrates and automates many of the customer serving processes Creates an IT framework of Web-enabled software & databases that integrates these processes with the rest of the company’s business operations

CRM include a family of software modules that provides the tools that enable a business and its employees to provide fast, convenient, dependable, and consistent service to its customers. Siebel systems, Oracle, PeoppleSoft, SAP are some leaders of CRM.

Customer Relationship Management (continued)

Contact and Accountant Mgt Information is captured from all customer touchpoints such as telephone, fax, email, etc. CRM systems store the data in a common customer database that integrate all customer account information and makes it available throughout the company via internet, intranet, etc for sales, marketing, service, and other CRM applications.

Sales It provides sales representative with the software tools and company data sources they need to support and manage their sales activities and optimize cross selling and up selling.

Marketing and Fulfillment CRM helps marketing professionals accomplish direct marketing campaigns by automating tasks like qualifying leads for targeted marketing, scheduling and tracking direct marketing mailings. Then CRM software helps marketing professionals capture and manage prospects and customer response data in CRM database and analyze the customer and business value of a company’s direct marketing campaigns.

Customer service and support It provides service representative with software tools and real time access to the common customer database shared by sales and marketing professionals. It helps customer service managers create, assign and manage requests for service by customers.

Call center software routes calls to customer support agents based on their skills and authority to handle specific kinds of service requests. Help desk software assists customer service reps in helping customers who are having problems with a product or service by providing relevant service data and suggestions for resolving problems.

Retention and Loyalty Programs It costs 6 times more to sell a new customer than to sell to an existing one. A typical dissatisfied customer will tell 8 to 10 people about his or her experience. A company can boost its profits 85% by increasing its annual customer retention by only 5%. 70% of complaining customers will do business with the company again if it quickly takes care of a service.

CRM try to help a company identify, reward, and market to their most loyal and profitable customers. CRM analytical software includes data mining tools and other analytical marketing software while CRM databases may consist of a customer data warehouse and CRM data marts.

3 Phases of relationship between a business and customers

Customer Relationship Management (continued) Benefits and Challenges Allows a business to identify its best customers Makes possible real-time customization & personalization of products & services based on customer wants, needs, buying habits, & life cycles

Customer Relationship Management (continued) Benefits and Challenges (continued) Enables a company to provide a consistent customer service experience Failures Due to lack of understanding & preparation. CRM is not a silver bullet

Monster. com rolled out a CRM in 1998 Monster.com rolled out a CRM in 1998. The company had invested over $1 million in customized software and integrated all its computer systems in an attempt to boost the efficiency of its sales force. However the new system proved to be so slow that sales people in the field found themselves unable to download customer information from the company database on to their laptops. Every time they tried, their machine froze. Eventually the company was forced to rebuild the entire system and lost millions of dollars and goodwill of customers and employees.

Customer Relationship Management (continued) Trends Operational CRM Analytical CRM Collaborative CRM Portal-based CRM

Operational CRM Supports customer interaction with greater convenience through a variety of channels including phone, fax, email, chat and mobile. Synchronize customer interactions consistently across all channels. Makes your company easier to do business with

Analytical CRM Extracts in-depth customer history, preferences and profitability information from your data warehouse and other database. Allows to analyze, predict and derive customer value and behavior and forecast demand.

Collaborative CRM Enables easy collaboration with customers, suppliers, and partners. Improves efficiency and integration throughout the supply chain Allows greater responsiveness to customer needs through sourcing of products and services outside of your enterprise.

Portal-based CRM Provides all users with the tools and information that fit their individual roles and preferences. Empowers all employees to respond to customer demands more quickly and become truly customer focused Provides the capability to instantly access, link and use all internal and external customer information

Enterprise Resource Planning (ERP): The Business Backbone

Enterprise Resource Planning Serves as a cross-functional enterprise backbone that integrates & automates many internal business processes and information systems Helps companies gain the efficiency, agility, & responsiveness needed to succeed today

Enterprise Resource Planning (continued) Gives a company an integrated real-time view of its core business processes ERP software suites typically consist of integrated modules of… Manufacturing Distribution Sales Accounting Human Resource Management

Enterprise Resource Planning (continued) Benefits Quality and efficiency Helps improve the quality and efficiency of customer service, production, & distribution by creating a framework for integrating and improving internal business processes Decreased Costs Reductions in transaction processing costs and hardware, software, and IT support staff

Enterprise Resource Planning (continued) Benefits Decision support Provides cross-functional information on business performance to assist managers in making better decisions Enterprise agility Results in more flexible organizational structures, managerial responsibilities, and work roles

Enterprise Resource Planning (continued) Challenges Costs of ERP The costs and risks of failure in implementing a new ERP system are substantial.

Enterprise Resource Planning (continued)

Enterprise Resource Planning (continued) Causes of ERP failures Underestimating the complexity of the planning, development, and training required Failure to involve affected employees in the planning & development phases and change management programs Trying to do too much, too fast Insufficient training Believing everything the software vendors and/or consultants say

Enterprise Resource Planning (continued) Trends Flexible ERP SAP AG, Oracle, PeopleSoft, etc Web-enabled ERP Interenterprise ERP ERP with web enabled links between company, its customers, suppliers, distributors and others. E-Business Suites Integrate ERP, CRM, SCM, procurement, decision support and other business functions. Oracle’s e-Business Suit and SAP’s mySAP

Supply Chain Management: The Business Network

Supply Chain Management A cross-functional interenterprise system that uses IT to help support & manage the links between some of a company’s key business processes and those of its suppliers, customers, & business partners. Goal is to create a fast, efficient, & low-cost network of business relationships.

The inter relationships with suppliers, customers, distributers and other businesses that are needed to design, build and sell a product make up the network of business entities, relationships and processes that is called a supply chain. And since each supply chain process should add value to the products or services a company produces, a supply chain is frequently called a value chain.

Supply Chain Management (continued)

What do supply chain management (SCM) tools do? SCM - x What do supply chain management (SCM) tools do? Supply chain management tools enable managers to make informed business decisions about the operation of their supply chain Supply Chain Management Definition Supply chain management tools facilitate planning and production scheduling based on known business constraints Supply Chain Management Overview

SCM capacity constraints SCM - x SCM capacity constraints Managing a supply chain would be easy if we had unlimited resources “How do I decide what to do on which piece of equipment, and when?” Can only drill one piece of metal at a time -- OR -- Computer processing and storage capacity not infinite Supply Chain Manager

Transportation Management SCM - x SCM Tools levels Supply Chain Elements Supply Chain Planning services configure operations to best meet projected demand levels The planning horizon ranges from developing a long term strategic outlook to developing a short term tactical production schedule SCM Service Offering Strategic Planning Network Design Demand Planning Supply Planning Production Planning Tactical Planning Warehouse Management Transportation Management Order Management Operational Planning Inventory Management Supply Chain Execution services monitor and control production operations They provide real time tracking and alert notification Event Management Real time / Minutes Hours / Days Weeks / Months Quarters Years Supply Chain Planning Tools Supply Chain Execution Tools Source: BAH

Supply Chain Planning Process SCM - x Supply Chain Planning Process Demand Planning Anticipate demand based on historical trends and current conditions Perform what if analysis - highlight the impact of changing demand drivers Network Design Design where to place production facilities and optimize the end to end chain Construct alternate flow scenarios that incorporate associated constraints Production Planning Production Scheduling Decompose the supply plan into sub assembly / production needs by site Balance production capacity across sites Optimize processing flows, sequence, and timing Produce a finite capacity production schedule Supply Planning Balances unconstrained demand against high level supply chain constraints Reflect order priority and due dates Planning Horizon Weeks / Months Hours / Days Years Quarters

Supply Chain Execution Process SCM - x Supply Chain Execution Process Order Management Inventory Management Warehouse Management Transportation Management Record customer orders and track status from receipt to final delivery Direct efficient response to orders with dynamic cost / benefit analysis of options Streamline information movement and provide tight inventory control Inventories replenished using kanban, min-max, or reorder point Optimization and management of warehouse processes Optimize and track outbound and inbound shipping Event Management Monitor and manage critical planning and event information Broadcast alert notification and present response alternatives based on pre determined business rules

I2 >master production schedule SCM - x I2 >master production schedule Source: i2 Technologies

SCM vendors Leading SCM Vendors SCM - x SCM vendors Leading SCM Vendors ERP Focused Oracle SAP JD Edwards Peoplesoft Invensys / Baan SCM Focused i2 Manugistics Aspentech Logility Although each of the vendors claim to provide an end to end solution, they actually fall into two distinct camps First are the ERP vendors who provide a strong solution for integrating the data environment and providing visibility Second are the SCM vendors who provide robust optimization solutions In combination, with an ERP vendor providing the data environment and a SCM vendor providing the optimization solution, you can achieve a very elegant solution Source: Gartner

Supply Chain Management (continued) Benefits and Challenges Can provide faster, more accurate order processing, reductions in inventory levels, quicker time to market, lower transaction and materials costs, & strategic relationships with suppliers

Supply Chain Management (continued) Problem causes Lack of proper demand planning knowledge, tools, and guidelines Inaccurate or overoptimistic demand forecasts Inaccurate production, inventory, and other business data Lack of adequate collaboration

Supply Chain Management (continued) Trends