Enterprise Applications

1. Enterprise Applications Achieving Operational Excellence & Customer Intimacy

2. Whirlpool fixes its supply chain • Number one US home appliance maker • Washers, dryers, refrigerators, … • Brands • Whirlpool, Kitchen Aid, Roper, Speed Queen • Facility • 50 manufacturing and research centers • 80 distribution centers • Major sales partners • Sears, Lowe’s & Best Buy

3. Challenges, 2000 • Inventory of finished goods was very high • Product availability was low • Supply chain systems • Sales disablers • 4 US major appliance makers • Whirlpool ranked 5th in delivery performance

4. The old supply chain systems • Demand forecast systems • i2, installed in 1997 • ERP • SAP, accounting & order processing • Supply chain system • Home grown • Not well integrate with • ERP • Suppliers • Wholesalers • Slow & cumbersome manual procedures

5. Solution tried • Overstock its warehouse • Ensure items were in plenty supply • More than enough for customer orders • Raise inventory carrying cost • Eroding profit • Continue to lose sales • Wrong decision about specific items to stock • Did not have the appliance customers wanted

6. Global overhaul, 2001 Supply chain management systems Focus on serving customers • Advance planning & scheduling systems, APS • i2, • Supply chain integration & optimization software • Collaborative planning, forecasting, & replenishment (CPFR) • i2 • Share & combine sales forecast

7. Achievement • Improvement in customer service • 97% availability • Was 87% • Reduce supply chain cost • Reduce finished goods • More than 20% • Reduce freight & warehouse cost • 5%

8. Meet customer’s needs with • The right products • In the right stores & warehouses • At the right time

9. 9.1 Enterprise systems 9.2 Supply chain management systems 9.3 Customer relationship management systems 9.4 Enterprise applications • New opportunities & challenges

10. 9.1 Enterprise systems • Enterprise resources planning, ERP Chapter 2 • A suite of integrated software modules • A common central database • Data are collected from all • Divisions and departments in a firm • Key business process • Made data immediately available to all • Divisions and departments in a firm • Key business process

12. 鼎新 Workflow ERP

13. Sales rep • Place an order for tire rims • The system verify • Customer’s credit limit • Schedule the shipment • Identify the best shipping route If inventory is insufficient • The system schedules the manufacturing

14. Enterprise software • Built around thousands of predefined business processes • Best practice 典範作業 • Most successful solutions or problem solving method • Sources of best practices • Consulting firms • Enterprise software firms Hire a consulting firm or enterprise software firm Hire the knowledge base of best practice =

15. Implementation • Select the functions • Finance & account, … • Map • Their business processes • Predefined business processes of software supported • Configuration tables • Tailor software to business processes • ABC accounting, standard cost accounting

16. If software does not support the way the organization does business • Rewrite software • Software is complex • Expensive customization • Degrade system performance • Company changes the way they work • Major ERP vendors • SAP • Oracle 鼎新電腦

17. Business value of enterprise systems • Increase operation efficiency • Provide firm-wide information • Make better decision • Enforce standard practices and data • Everyone does business the same way • Ex: Coca-cola (SAP) • Standardize business process in 200 countries • Leverage its world-wide buying power

18. Respond rapidly to customer requests • Integrate data • orders, manufacturing, … • Analytical tools • Evaluate overall organizational performance

19. 9.1 Enterprise systems 9.2 Supply chain management systems 9.3 Customer relationship management systems 9.4 Enterprise applications • New opportunities & challenges

20. Supply chain • Network of organizations and business processes • Procuring raw material • Transforming material into • Components • Finish products • Distribute to customers

21. Design, market, & sell Internal supply chain

22. Information & supply chain management • Inefficiencies in the supply chain • Part shortage • Underutilized plant capacity • Excessive finished goods inventory • High transportation cost Caused by inaccurate or untimely information

23. Manufacturer has perfect information • Exactly how many units • When customers wanted • Make Just-in-time strategy possible

24. Uncertainty arise in supply chains • Uncertain product demand • Late shipments from suppliers • Defective parts or raw materials • Production process breakdown • Solutions • Build more inventory • On product that manufacturer thinks customer need • Safety stock • Inventory cost vs. low fill rate cost

25. Bullwhip effect • 長鞭效應、啤酒遊戲 (beer game) • Information about the demand for a product • Get distorted • As it pass from one entity to the next • Across the supply chain • These changes ripple throughout the supply chain • Magnifying • Creating excess inventory

27. P&G • Pampers disposal diapers • Offer aggressive price promotion • Customer purchases are fairly stable • Order from distributors will spike • The bullwhip is tamed • By reduce uncertainty • Accurate & up-to-date info

28. Supply chain management applications • Supply chain planning • Generate demand forecasts • Demand planning • How much product a business needs to make to satisfy all its customers’ demand • Develop sourcing and manufacturing plans • How much to manufacture in a given period • Establish inventory level • Determine where to store finished goods

29. Example • A large customer • place a large order than usual or • change the order on short notice • Create a widespread impact • additional material • different mix of raw materials Supply chain planning software • makes the necessary adjustments • shares the info about all changes

30. Supply chain execution • Manage the flow of products • Thru distribution centers and warehouse • Ensure that products are delivered • to the right locations • In the most efficient manner • Functions • Track goods • Manage material, warehouse, transportation • Financial information

31. Major vendors • Manugistics • i2 • SAP • Oracle

32. SCM & the Internet Before Internet • Difficulties to make info flow • Internal supply chain • ERP • External supply chain • Incompatible technology platform

33. Internet Technology • Intranet • Extranet • Improve coordination among supply chain • Benefits • Instantly communication • Up-to-date info • Example • Customer can tap into supplier’s system • 台積電 虛擬工廠

35. Demand-driven supply chains • From push to pull manufacturing • Efficient customer response • Push-based model • Build-to-stock • Based on forecast • Products are pushed to customers

36. Pull-based model • Demand-driven model • Build-to-order • Orders or purchases trigger events • Transactions to produce and deliver only what customers have ordered • Walmart • Continuous replenishment system • Dell computer • Build-to-order

38. Internet technology • Change supply chain information movement • From sequential • To concurrent • Information flow in many directions simultaneously Members of supply chain can adjust to changes immediately

40. Business value of SCM systems • Streamline processes • More accurate information • Match supply to demand • Reduce inventory levels • Improve delivery service • Reduce cost 優化、暢流

41. 9.1 Enterprise systems 9.2 Supply chain management systems 9.3 Customer relationship management systems 9.4 Enterprise applications • New opportunities & challenges

42. Innovation-based competitiveness is short-lived Enduring competitive strength may be their relationship with customers • Info nurture strong, long-lasting relationship • Exactly who your customers are • How to contact them • Whether they are costly to service and sell to • What kind of products or services they are interested in • How much they spend on your products • Small-town store

43. Small business owners • Know their customers • Personal • Face-to-face • Large business • Impossible to “know your customers” • Too many customers • Too many ways to interact with customers over the web, phone, fax, face-to-face difficult to integrate info from all sources

44. Customer relationship management • Capture and integrate customer data • from all over the organization • Consolidate data • Analyze the data • Distribute the results • to various systems and customer touch points

45. Touch points • Contact points • Methods of interaction with the customer • Phone • Email • Customer service desk • Conventional mail • Web site • Wireless device • Retail store

46. Well-designed CRM software • A single enterprise view of customers • Regardless of touch point • Analytical tools • Customers’ lifetime value • Loyal customers • Most profitable customers • Most frequently ask questions • Customer’s preferences

47. CRM software • Niche tools • Personalizing web sites for specific customers • Large-scale enterprise applications • Capture many interactions with customers • Link to other enterprise systems • SCM • More comprehensive CRM • Partner relationship management • Employee relationship management

48. Partner relationship management • Enhance collaboration between a company and its selling partners • Company does not sell directly to customers • Via distributors and retailers • Distribute • Leads • Data about customers • Integrate • Lead generation, pricing, promotions, availability

49. Employee relationship management • Setting objectives • Employee performance management • Performance-based compensation • Employee training • Major CRM vendors • Siebel systems • Clarify • Salesforce.com

50. Sales force automation • Focus sales efforts on the most profitable customers • Sales prospect • Product info • Product configuration • Quote generation • Forecast • Territory management