Enhancing Supply Chain Management with Digital Technology

1. 9 Chapter Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise and Business Process Integration

2. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications LEARNING OBJECTIVES • Demonstrate how enterprise systems achieve operational excellence by integrating and coordinating diverse functions and business processes in the firm. • Demonstrate how supply chain management systems coordinate planning, production, and logistics with suppliers. • Demonstrate how customer relationship management systems achieve customer intimacy by integrating all customer information and making it available throughout the firm.

3. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications LEARNING OBJECTIVES (cont’d) • Assess the challenges posed by enterprise applications. • Describe how enterprise applications can be used in platforms for new cross-functional services.

4. Problem:Uncontrollable supply chain, outdated systems. Solutions: Eliminate manual procedures and implement supply chain software suite to allocate inventory more accurately and forecast demand. i2 Technologies forecasting software and SAP ERP software reduce inventory and increase sales. Demonstrates IT’s role in coordinating supply chains. Illustrates digital technology as part of a solution that can benefit both a firm and its customers. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Whirlpool Fixes Its Supply Chain

5. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Systems • What are enterprise systems? • Consulting Firms • Enterprise software – Builds industry expertise working with many clients • Best practices • SAP-R3, Oracle (Peoplesoft), Microsoft (Dynamics Software Systems • Business value of enterprise systems – increased operational efficiency and firm-wide information to help managers make better decisions.

6. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Systems How Enterprise Systems Work Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise. Figure 9-1

7. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems • The supply chain – network of organizations and business processes for: • - Procuring raw materials, • - Transforming them into intermediate & finished product, and • - Distributing to customers • Information and Supply Chain (Flow of Information) • Upstream – portion of supply chain that includes company’s suppliers, the suppliers’ suppliers, and the processes for managing relationships. • Downstream – organizations and processes for distributing and delivering products to the final customer.

8. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems Nike’s Supply Chain This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles. Figure 9-2

9. Informationand Supply Chain Inefficiencies – caused by inaccurate or untimely information (25% Operating costs) Parts shortage Underutilized plant capacity Excessive inventory Transportation Costs Just-in-time strategy – components would arrive when needed, finished goods would be shipped as they left assembly line (excess inventory is expensive, low fill rates are also costly – order cancellation) Uncertainties – events cannot be foreseen Product demand Late shipments from suppliers Defective parts or raw materials Production Process Breakdown Bullwhip Effect – information about demand gets distorted along the supply chain (stockpile inventory) Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

10. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems Nike’s Supply Chain This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles. Figure 9-2

11. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems Supply Chain Management Applications – enable firms to generate demand forecasts for a product and develop sourcing and manufacturing plans for the product. Companies can make better operating decisions (e.g How much of a specific product to manufacture in a given time, determine inventory levels of raw and intermediate as well as finished products, transportation mode for delivery). Impact of last minute order (cancellation, modification, upscaling), Job Scheduling, delivery reschedule (adjustments to production and distribution) Demand Planning – determines how much product a business needs to make to satisfy all of its customers’ demands Supply Chain Execution Systems – manage flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner. They track the physical status of goods, the management of materials, warehouse and transportation operations, and financial information involving all parties

12. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems • Supply chain management and the Internet • Demand-driven supply chains: From push to pull manufacturing and efficient customer response • Intranet and extranet • Supply Chain Models • - Push-based Model – (build to stock) – • - Pull-based Model – (demand driven or build to order) Customer triggers supply chain, E-Business.

13. Push Vs Pull Model

14. Internet Driven Supply ChainDigital Logic Nervous System

15. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems • Business value of supply chain management systems • - Streamline Internal and External Supply Chain Processes • - Provide Management with more accurate information about what to produce, store and move. • - Companies match supply to demand • - Reduce Inventory Levels • - Improve delivery • - Speed product time to market • - Uses assets more effectively • - Helps increase sales

16. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems • What is customer relationship management • Knowing who your customers are?, how to contact them?, what kind of products and services they like?, how much money they spend on your company? • TOUCH POINTS-also known as contact points • Well designed CRM provide a single enterprise view of customers that is useful for improving both sales and customer service.

17. Customer relationship management software • Sales force automation (SFA) • Customer service • Marketing • Operational and analytical CRM • Business value of customer relationship management

18. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management (CRM) CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing. Figure 9-7

19. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems IHOP Cooks Customer Data to Order • Read the Interactive Session: Technology, and then discuss the following questions: • How does knowledge of customers impact IHOP’s business performance? • Why did IHOP have trouble getting to know its customers? • How has the company chosen to improve its knowledge of customers? Analyze the management, organization, and technology dimensions of the solution. • Did IHOP choose the best solution? Explain your answer.

20. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Applications: New Opportunities and Challenges • Enterprise application challenges • Extending enterprise software • Service platforms • Security outsourcing

21. 72 Chapter ELECTRONIC BUSINESS SYSTEM

22. Enterprise Business Systems E-business means using the Internet, other networks, and IT to support Electronic commerce Enterprise communications and collaboration Web-enabled business processes E-commerce is the buying, selling, and marketing of products, services, and information over the Internet and other networks Chapter 7 Electronic Business Systems 22

23. Cross-Functional Systems Cross the boundaries of traditional business functions Used to reengineer and improve vital business processes all across the enterprise Chapter 7 Electronic Business Systems

24. Enterprise Application Architecture Chapter 7 Electronic Business Systems

25. Enterprise Application Architecture Provides a conceptual framework Helps visualize the basic components, processes, and interfaces of major e-business applications Focuses on accomplishing fundamental business processes in concert with Customers Suppliers Partners Employees • Provides a conceptual framework • Helps visualize the basic components, processes, and interfaces of major e-business applications • Focuses on accomplishing fundamental business processes in concert with • Customers • Suppliers • Partners • Employees Chapter 7 Electronic Business Systems

26. Enterprise Application Architecture Enterprise Resource Planning (ERP) Concentrates on the efficiency of internal production, distribution, and financial processes. ERP is the backbone of the e-business just like the Windows operating system Customer Relationship Management (CRM) Focuses on acquiring and retaining profitable customers via marketing, sales, and services Partner Relationship Management (PRM) Aims at acquiring and retaining partners who can enhance the selling and distribution of products and services Chapter 7 Electronic Business Systems 26

27. Enterprise Application Architecture Supply Chain Management (SCM) Focuses on developing the most efficient and effective sourcing and procurement processes Chapter 7 Electronic Business Systems 27

28. Enterprise Application Integration EAI software connects cross-functional systems Serves as middleware to provide Data conversion Communication between systems Access to system interfaces Chapter 7 Electronic Business Systems

29. How EAI Works Chapter 7 Electronic Business Systems 29

30. Transaction Processing Systems Cross-functional information systems that process data resulting from the occurrence of business transactions Transactions include sales, purchases, deposits, withdrawals, refunds, and payments Online transaction processing (OLTP) is a real-time system that captures transactions immediately Chapter 7 Electronic Business Systems

31. Transaction Processing Systems Chapter 7 Electronic Business Systems

32. The Transaction Processing Cycle Chapter 7 Electronic Business Systems

33. Enterprise Collaboration Systems (ECS) EC systems are cross-functional information systems that enhance team and workgroup Communication Coordination Collaboration Systems may include Networked PC workstations Servers Databases Groupware and application packages Chapter 7 Electronic Business Systems 33

34. ECS Tools Chapter 7 Electronic Business Systems

35. Functional Business Systems A variety of types of information systems that support the business functions of Marketing Accounting Finance Operations management Human resource management Chapter 7 Electronic Business Systems

36. IT in Business Chapter 7 Electronic Business Systems

37. Marketing Systems Marketing systems are concerned with Planning, promotion, and sale of existing products in existing markets Development of new products and new markets Better attracting and serving present and potential customers Chapter 7 Electronic Business Systems

38. Marketing Information Systems provide information technologies that support major components of the marketing functions: Internet/intranet websites make an interactive marketing process possible. Targeted marketing is a tool in developing advertising and promotion strategies for company’s E-commerce websites. Sales force automation systems use mobile computing and Internet technologies to automate many processes.

39. Marketing Information Systems Chapter 7 Electronic Business Systems 39

40. Interactive Marketing Interactive Marketing A customer-focused marketing process Uses the Internet, intranets, and extranets Establishes two-way transactions between a business and its customers or potential customers Goal Profitably use networks to attract and keep customers Get customers to help create, purchase, and improve products and services Chapter 7 Electronic Business Systems 40

41. Targeted Marketing An advertising and promotion management concept with five targeting components Chapter 7 Electronic Business Systems 41

42. Targeted Marketing Components Community: customized ads to appeal to specific virtual communities Content: ads placed on a variety of selected websites, aimed at a specific audience Context: ads placed on web pages that are relevant to a product or service Demographic/Psychographic: web marketing aimed at specific types or classes of people Online behavior: promotions tailored to each visit to a site by an individual Chapter 7 Electronic Business Systems

43. Sales Force Automation Outfit sales force with notebook computers, web browsers, and sales contact software Connect them to marketing websites and the company intranet Goals Increase personal productivity Speed up capture and analysis of sales data Gain strategic advantage Chapter 7 Electronic Business Systems 43

44. Manufacturing Information Systems Supports the production/operations functions Includes all activities concerned with planning and control of the processes producing goods or services Chapter 7 Electronic Business Systems 44

45. Computer-Integrated Manufacturing Chapter 7 Electronic Business Systems 45

46. CIM(Computer Integrated Manufacturing ) Objectives Simplify production processes, product designs, and factory organization Automate production processes and the business functions that support them Integrate all production and support processes using Networks Cross-functional business software Other information technologies Chapter 7 Electronic Business Systems 46

47. CIM Systems Computer-aided manufacturing (CAM) Automate the production process Manufacturing execution systems (MES) Performance monitoring information systems for factory floor operations Process control Control ongoing physical processes Machine control Controls the actions of machines Chapter 7 Electronic Business Systems 47

48. Robotics- technology of building and using machines (robots) with computer intelligence and computer controlled human like capabilities

49. Human Resource Management (HRM) Information systems designed to support Planning to meet personnel needs Development of employees to their full potential Control of all personnel policies and programs Chapter 7 Electronic Business Systems 49

50. HRM Systems Chapter 7 Electronic Business Systems 50