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CHAPTER EIGHT

CHAPTER EIGHT. Enterprise applications. Introduction. Supply Chain Management (SCM) Customer Relationship Management (CRM) Enterprise Resource Planning (ERP). SCM / OM. The two disciplines are hopelessly interconnected Your book talks about them separately but I’ll talk about them together

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CHAPTER EIGHT

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  1. CHAPTER EIGHT Enterprise applications

  2. Introduction • Supply Chain Management (SCM) • Customer Relationship Management (CRM) • Enterprise Resource Planning (ERP)

  3. SCM / OM • The two disciplines are hopelessly interconnected • Your book talks about them separately but I’ll talk about them together • Operations Management (transformation – making things) • Supply Chain Management • (movement of things)

  4. Operations Management (Terms 1) • Operations management (OM) - the management of systems or processes that convert or transform resources (inputs) into goods and services (outputs) • Production is a subset of OM • Production - is the creation of goods using the factors of production (making things from raw materials with machines) • Production management - describes all the activities managers do to help companies create goods

  5. Operations Management (Terms 2) • Value-added - the term used to describe the difference between the cost of inputs and the value of outputs • Materials requirement planning (MRP) systems • Make sure raw materials are available for the manufacturing process • Supply chain – All parties and processes involved in procurement of raw materials and the distribution of finished goods

  6. Operations Management (Terms 3) • Transportation planning systems track and analyze the movement of goods (raw materials, work in progress, finished goods) • JC Penney • Distribution management systems manage goods to distribution centers and to retail outlets • These systems are tightly coupled

  7. The IT Role in SCM / OM • IT provides the systems (transactional, MIS, DSS, GIS, GPS, wireless) to make all of this work in real time or near real time)

  8. OM Business Tasks • Forecasting • Capacity planning • Locating facilities • Scheduling (and synchronizing) • Raw materials, production, distribution • Managing inventory • Quality assurance

  9. SCM / OM Components (Steps) • Plan • Source (we buy goods used in the means of production) • Make (we transform raw materials into finished goods) • And the time it takes to transform resources (production) or move resources (distribution) • Deliver (We get them where they are going) • Return (Defective / unwanted goods come back to us)

  10. Supply Chain (Illustration)

  11. SCM Strategic Goals (Plan) • The strategic portion of SCM • Set up a system for managing the entire supply chain • Partners • SCM monitoring • Wal-Mart and others • Location of distribution centers • UPS package flow systems • Minimize trucks and transportation distances

  12. OM Strategic Goals (Plan) • Lower costs for commoditized items • Improve product or process quality • MINI, Lays Example • Optimize delivery speed • Flexibility in process conversion • MINI example

  13. SCM Components (Source) • Find suppliers • Boeing and the 787 • Wal-Mart • Establish trading protocols • EDI • Establish pricing metrics • Determine what resources will be needed • When resources will be needed • Where resources will be needed

  14. SCM Components (Make) • Schedule production • Just-in-time inventory management • We produce assemblies and finished goods • Account for production downtime • Measure production output • Account for production variances against expected values

  15. SCM Components(Make)

  16. SCM Components (Make) • Review the Mini video • Discuss assembly processes

  17. SCM Components (Deliver) • The logistics component • Implementation of effective transportation and distribution systems • Outsource warehousing • Location of distribution centers • Selection of transportation companies • Discuss Wal-Mart video

  18. SCM Components (Return) • We use the term reverse logistics • The system whereby customer can return good they don’t want • Particularly important in the e-commerce world

  19. Technology and SCM • EDI allows automated transaction processing • Purchasing / fulfillment / payment systems • Decision-support systems to optimize routing and transportation • Cross-functional systems to integrate finance / sales / accounting / etc…

  20. SCM Success Metrics

  21. Quality Systems • Six sigma – reduce defects to 3.4 per million opportunities • ISO 9000 – Quality assurance standards • IS 14000 – Environmental best practices • CMMI – develop best practices

  22. CRM (Introduction) • CRM goals • Customer has a complete view of the organization • Organization has a complete view of the customer

  23. CRM (Illustration)

  24. CRM Strategy • It’s more than a software application – it’s a business strategy • Harrah’s • Walgreens • Brokerages • The list is endless

  25. Business Value of CRM • You know your customer • Purchase activity • Recency • Frequency • Monetary value • Your customer knows you • American Express

  26. CRM Benefits / Goals • Provide better customer service • Make call centers more efficient • Cross sell products more effectively • Help sales staff close deals faster • Simplify marketing and sales processes • Discover new customers • Increase customer revenues

  27. Evolution of CRM • We began with basic reporting • Who bought what • We began to analyze the core data to identify customer habits • We now use predictive technologies to assess future customer behavior

  28. CRM Examples

  29. IT and CRM • Marketing • Sales and operations • Customer service

  30. CRM Marketing • List generation for existing and future customers • Managing and measuring the effectiveness of marketing campaigns • Cross-selling and up-selling • Amazon.com • Lands End

  31. CRM Sales and Operations • Sales force automation • Generate prospects (leads) and manage them • Sales Management and contact management systems • Salesforce.com • Siebel

  32. The Sales Process

  33. CRM and Customer Service • Call centers • Use CRM software to solve common questions • Increase single call solutions • The risks of outsourcing and off shoring • Keyword detection • Automatic call routing • Wait time calculations

  34. CRM and Customer Service • Web-based self service • Improve customer satisfaction and reduce costs through decreased call center use • Click to talk technology • Examples • Harrah’s TotalRewards online • FedEx and UPS package tracking

  35. CRM and Call Scripting • Benefits • Track and solve common problems • Presents uniform outputs to the customer • Risks • Does not always account for ‘savvy’ customers • Is it plugged in?

  36. CRM Metrics (Sales) • Number of prospective customers • Number of new customers • Number of retained customers • Number of open leads • Number of sales calls • Number of proposals • Amount of new revenue • Amount of recurring revenue

  37. CRM Metrics (Service) • Cases closed same day • Number of cases handled by agent • Number of service calls • Average number of service requests by type • Average time to resolution • Average number of service calls per day

  38. CRM Metrics (Marketing) • Customer retention rates • Churn rate • Number of responses by marketing campaign • Number of purchases by marketing campaign • Revenue generated by marketing campaign

  39. Analytical CRM Tools • These are decision support systems • Use for customer personalization • Identify profitable or unprofitable customers • Treat good customers well • Harrah’s / American Express • Identify customers that might be leaving and why

  40. CRM Trends • Manage supplier relationships • Manage partner relationships • Manage employees • This is really HR

  41. CRM Failures • Employees feel threatened and don’t adopt the tools • The customer becomes just a number • Web 2.0

  42. ERP (Your Book’s Definition) • Enterprise resource planning – integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations

  43. ERP (My Definition) • All of an organization’s business processes are integrated into a single system (SCM, CRM, accounting, finance, manufacturing, along with specialized function applicable to specific industries)

  44. ERP (Players) • SAP has 30+ percent of the market • Oracle / PeopleSoft • IBM • Microsoft Dynamics

  45. ERP (Functions)

  46. ERP (Business Processes)

  47. ERP (Benefits) • Breaks down or eliminates information silos • Business processes are performed more efficiently • All functional systems interact together

  48. ERP (Risks) • Failure can be catastrophic • Hershey • http://www.slideshare.net/ankitm2/erp-failure-in-hersheys-presentation • This list is endless • Failure is typically caused by • Poor planning • Not understanding and adapting business process to the ERP

  49. The Evolution of ERP

  50. Core ERP Components (1) • Accounting and Finance • Integrates traditional AR / AP / inventory / payroll / general ledger • Financial reporting systems • Operates with multiple currencies

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