OMSAN LOJİSTİK

CRM: Customer Relationship Management

Objectives CRM is a strategy… CRM & SCM are the company’s DNA Collaboration is the key to a leadership management based in customer satisfaction and loyalty

Getting Ready… Strategy CRM Logistics Collaboration

Strategy 70’s & 80’s: strategy hot but difficult –Focus on Japanese implementation success Exercise in best practices, not strategy 90’s: Change, speed, being dynamic, reinventing business as e-business Strategy is considered rigid and inflexible Wal-Mart, Dell and Intel prove that strategies work - even in times of rapid business and technological change “…a plan or method to achieve a specific objective”

CRM …is a comprehensive strategic approach to providing seamless coordination between sales, customer service, marketing, field support and other customer-touching functions for the purpose of creating competitive advantage through relationships with the customers you choose to serve.

CRM Is A Strategy Began as Sales Force Automation in early 90’s Is an organic process by which organizations become customer-centric –New strategies - > redesigned functions - > reengineered work processes - > supporting technology –Can’t change how we interact with customers without changing internally focused organizational values and structures

CRM Is Difficult CRM isn’t cheap, easy or optional Means the dissolution of departmental silos Requires long-term effort Attitudes / behaviors of CEOs / senior management are some of the reasons CRM is difficult

#1 CRM Decision Who are your key customers? What is their current value and strategic value? –Clearly defined customer profitability / value –Definition communicated to the customer –Gaps in the current relationship identified –Goals and timelines set with that customer –If can’t resolve, mutually agree to no longer work together “Hire” the right customers from the beginning Customers are not all equal. Treat different customers differently.

G2000 Enterprises: Y2000 CRM Stovepiped approach Little thought to CRM ecosystem or front- office process integration Single function / channel deployments Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2000/01 CRM Automation / integration of individual, intra- enterprise customer-facing processes with back-office / supply chain functions –Demonstrable ROI –Efficient customer-focused fulfillment required Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2002 CRM Proliferation of multi-process, cross- functional front- to back-office supply chain integration efforts across multiple channels –Growing use of CRM, SCM and ERM application suites / architectures –Maturing EAI frameworks and XML-based messaging standards Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2003/04 CRM Demand fulfillment ‘norm’ of downstream supply-driven push is replaced by upstream demand-driven pull –Vendor consolidation/solution expansion –Collaborative supply chain network evolution –CRM infusion within G2000 organizations Competitive advantage: Map existing CRM activities in marketing, sales and service to companion back-office/supply-chain functions Source: Steven Bonadio, Application Delivery Strategies, META Group

CRM + ERM + SCM “Organizations can no longer afford to view customer relationship management (CRM), enterprise resource management (ERM), and supply chain management (SCM) initiatives as separate. Synchronizing front-office, back- office, and supply chain activities is critical to attracting/retaining customers, fulfilling demand, and improving cycle times.” Source: Steven Bonadio, Application Delivery Strategies, META Group

Effective Fulfillment = Loyal Customers Make it easier to do business with you and more difficult to go elsewhere Create learning relationships –Identify the customer immediately –Act on information gathered previously –With each interaction, ask for feedback and ‘reward’ the customer –As move along the learning curve, the customer gets a product they can’t get anywhere else because they helped create it

Value of Customer Loyalty Tangible –5% increase in customer retention can boost profits 25% to 125% –Shorter customer relationships = lost profits 4 to 7 x more to replace a lost customer “Old” customers buy more Intangible –Image, references and additional work –Challenging projects increase internal skills and knowledge

Logistics Right Channel Right Customer Right Product Right Price Right Time Right Docs …management of the flow of materials from the point of origin to the point of consumption to meet customers’ needs

Collaboration Formal structure Exchange of proprietary information Direct access and processing ‘Real-time’ Visibility Impact of the Internet …the act of working together; to cooperate…

CRM + Logistics + Collaboration A comprehensive, cooperative strategy encompassing all links in a supply chain - - designed to provide the seamless flow of materials from the point of origin to the point of consumption - - the success of which creates competitive advantage for the suppliers.

CRM + Logistics + Collaboration Right Channel Right Customer Right Product Right Price Right Time Right Docs

New Ways to Collaborate Collaborative Business Communities –Old: Suppliers - > Manufacturers - > Distributors - > Customers - > Consumers –New: Value network - > End-User –Challenges: Support infrastructure, leadership roles, technology, trust, change…a new paradigm –Benefits: Better visibility Increased velocity Reduced impact of variability

New Ways to Collaborate Merge-in-transit –3rd party adds value to product between its origin and its ultimate destination –Objective: Reduce cost of getting products to customers Suppliers ship to consolidation or merge point where order is held; ships as single order when complete –Examples Cisco and Fed-Ex (in beta test) GroceryWorks.com

Return on Your Investment Financial Performance Measures Productivity Performance Measures Quality Performance Measures Response Time Performance Measures Return on Customer Loyalty

Future Considerations / Next Steps Evaluate / develop CRM / Logistics strategies Assess current state of business processes and do gap analysis Develop business case and metrics Evaluate CRM / Collaboration technology options Implement Web-based B2B or B2C scenarios –Personalization –One-to-one marketing

Service levels and logistics costs will differentiate trading communities ManufacturerDistribution

ManufacturerDistributor

100% Fulfillment - Multiple Ordering/Shipping Points Manufacturer Distributor

Dynamic Pricing Driven By Dynamic Demand Price per Ton 0% Capacity % 100% Revenue 1 R2 R5 R6 R7 R3 R4 Dynamic Prices

Demand Management: Processes & Activities

Logistics System Planning /M/ apping /A/ ssessment /B/ alancing /O/ ptimization /R/ econfiguration

/B/alancing of Logistics Systems Trade-off management among logistics agents and processes

System Balancing: Two Types of Activities Execution (ALL logistics systems perform these activities intuitively or in a planned manner) Planning (Deliberate activities within the logistics system with the goal to change the system’s conditions and achieve a specific result!) Demand Management Fulfillment Management Sourcing Management

Logistics Planning System

Use the Past to Understand the Future MODELING Interacting Variables Direction of Interaction

What has changed… Today …. Real Data to Prove us right or wrong Mistakes are more expensive and riskier Execution strategies are so complex you can’t afford mistakes Computation power unknown to logistics management

Surprise or Control Inductive Thinking Plan the steps to achieve a desired result Sequential Uncertain results Surprise Linearity Deductive Thinking Determine the desired result Go backwards to understand the causes of the desired result Non-sequential Control Circularity

Demand Management

Factors Driving Logistics Change Shortening of product life cycles New product proliferation Power shift in the distribution channels Customer service as a competitive force Technology Global competition Cost reduction and profitability focus

Customer Service Decisions What Level of Service Should We Provide? –Levels constraint: A firm’s logistics system –Combine with logistics activities to provide time and place utility; the end-result of business logistics –Augmented product feature that adds value to the buyer

Customer Service Definition Three views –As an activity –As performance measurement –As a corporate philosophy Customer service – brand loyalty market share relationships

Measurements Time: Order Cycle Time (seller) Lead Times (Buyer) Dependability Communications Convenience

Trends in Customer Service The customer defines the standards Vendor can influence the customer Multidimensional Dynamics Information focus rather than inventory Measurable aspect

Features of a Customer Service Policy Unique Segmented Formal Proactive Extrapolated

Who’s the “A” Customer For…? … Sales & marketing? … Finance? … Purchasing? … Distribution center? … Transportation? … Inventory planning?

Customer Order Management What? Who? When? How? How Much? Where? …

Customer Service Policy Template

CRM = Customer Relationship Management. More than a fad Specialized teams Proactive service policy Information dispersion Performance-based rewards to sales teams

Intelligent Forecasting r Top-Down and Bottom-Up r Event Calendars r Incorporating Macro-economic and Industry Indicators r Individual Accountability for Forecast Accuracy r Seasonality Smoothing r Best-Fit Modeling r Capture and Measure True Demand r Measuring Forecast Accuracy by SKU and Channel

Forecasting Discouragement Repeated forecasting in the supply chain amplifies errors. The longer the replenishment lead time the bigger the forecast error. Price fluctuations and promotional events cause huge, unpredictable spikes in demand. Shortage Gaming: Customers order more than they really need and cancel orders when the shortage is over. Unfilled demand is not measured.

Forecasting Principles Measure and monitor forecasting accuracy. Establish individual accountability for forecasting accuracy. Measure true demand: –unsatisfied demand –overstated demand due to shortage gaming

Forecasting Principles Implement information sharing to let everyone know true demand. Establish and implement an event calendar to improve accuracy. Design organization and control policy to insure quick reaction to forecast errors.

Forecasting Principles Use bottom-up forecasting to predict category and overall business forecasts for country, region, and global sales. Use top-down forecasting to predict region and country sales for categories and SKUs. Incorporate leading/lagging economic and industry indicators in top-down forecasting.

Forecasting Principles Rationalize top-down and bottom-up forecasts with human intelligence. Stratify SKUs on the basis of demand and demand variability to determine: –forecastability –forecasting model Use best-fit model to predict future demand incorporating overall and seasonal trends.

Forecasting Principles Reduce replenishment lead times to reduce the overall forecast error. The enemy is forecast error and reaction to it - let’s do everything within our control to reduce the forecast error. The barriers to forecast accuracy include bias, ignorance, poor data, and denial.

Typical Demand Patterns

Selection of Statistical Tools to Match Demand Behavior

Revenue Management

What’s all about it? Solving the dichotomy of inventory and pricing Inventory decisions are made at the individual, unitary level Pricing decisions are made at the segment, global, multi-purchase level

Revenue Management System Capacity management –Fleet utilization Pricing –Corporate revenue (consumer’s sensitivity to price) Reservations control –Revenue maximization

Demand Management Principles Logistics strategy and customer service aligned with global logistics conditions Segmented Logistics Service Policy by Location & Conditions (Expectations) Consistent Use of INCOTERMS and Standard International Contracts Multilingual/Multicurrency/Multi-time Zone Order Entry Systems & Order Status Communication

Global Customer Service World- Class Principles Electronic Commerce / EDIFACT/EFT/ Internet/International Faxing Back order, partial orders, pricing and returns policy and procedures segmented by country/customer/SKU CS aligned with other GL processes (inventory management, procurement, manufacturing, transportation and warehousing) Pricing aligned with Service Policy

3. Global Customer Service World-Class Principles Consolidation of all global logistics functions under one umbrella Accurate sales forecasting Vendor partnerships Proper documentation Flexibility to deal with special market situations High knowledge about international finance options and work with an expert bank in GL