Chapter 3b: Business Functions and Supply Chains(p101-115)

1. Chapter 3b: Business Functions and Supply Chains(p101-115) Business Functions: CRM, HR, Supply Chain  ERP

2. Revision: • Page 15: • Each business function is like a puzzle piece. Each piece is important and should fit well with adjacent pieces, but the entire picture should always be kept in view. • OR: One of an IS’s most important contributions to the sound workings of an organization is the automation of information exchange among subsystems  ERP

3. Revision (continued): • Example: Customer’s orders taken via the web site by the Sales Department, should be AUTOMATICALLY routed to the • Manufacturing and • Shipping units • And processed by their OWN IS for their specific purpose.

5. Introduction to CRM: • No company can survive without selling its products or services: • Providing products that customers want • Marketing efforts to pinpoint demographic groups, features that consumers desire • Providing efficient/effective ways to execute a sale to a customer • IS support the sale effort  IS support customer services

7. CRM: • Customer Relationship Management: supporting relationships with customers • Supports three areas • Marketing • Sales • Customer service

8. Market Research: • To promote products successfully, organizations must perform market research • Market research: discover populations and regions that are most likely to purchase product • Conduct interviews with consumers and retailers • Statistical models predict sales volumes of different products

9. Targeted Marketing • Targeted Marketing: promote to people most likely to purchase products • Principle: to define the prospective customer as accurately as possible • Can direct promotional spending to customers most likely to buy your products • Internet: Mass communication of unsolicited promotional email  SPAM

10. Marketing (continued): • To define target markets companies collect data • Sales transactions • Loyalty cards • Buy databases with info about organizations/individual • Database technology manipulate data pools • Sort and categorize consumers by • Age, gender, income, previous purchases of related products, or other combinations

11. Marketing (continued): • With this vast information, corporations can prepare electronic dossiers on the • Interest • Tastes • Buying habits of customers • ‘Market of one’

12. Marketing (continued):p104 • Telemarketing: marketing over the telephone • PC connected to large database • Computer telephony integration: allows computer to use telephone line as input • Data mining: using large data warehouses to find trends on consumer habits • Set-top box….’personalize marketing’

13. Customer Service • Web-based customer service provides automated customer service 24/7 • Saves labor costs • Saves paper costs • Let customers pay their bills electronically: invoice to payment cycle is 41days, now it is 6 days

14. Customer Service (continued) • Artificial intelligence used to emulate a real-life customer service representative for FAQ • Sales force automation: • Equips traveling salespeople with information technology (example PDA) • Makes sales presentations more efficient • Let salespeople present different options for products and services on net

15. Human Resource Management • Employee record management • Promotion and recruitment • Training • Evaluation • Compensation and benefits management

17. Employee Record Management • Keep personnel records to satisfy laws • Payroll and tax calculation • Human Resource information systems are now digitized • Saves space, time and costs

18. Promotion and Recruitment • Select best-qualified person for position • Selection process automated with IS • Intranet: inter-organizational network that supports Web applications • Helps HR manager post position vacancy announcements • Automated recruiting and selection software saves costs of publishing ads

19. Training • Improving employee skills • Multimedia software training replacing classrooms and teachers • Training software emulates situations where employee must act • Information technology reduces training costs dramatically

20. Evaluation • Employee ability must be periodically evaluated by supervisors • Often is a subjective process, which is a problem • Evaluation software tries to solve this problem by standardizing evaluation process • Provide tools to aid in fairly evaluating every employee

21. Compensation and Benefits Management • Compensation includes salary, hourly pay, and bonus • Programs calculate pay and taxes • Automatically generates pay slips and performs direct deposits • Programs help manage benefits • Benefits database accessible through intranet

22. Inter-organizational Supply Chain Management Systems:p111-115 • Inventory is decreasing while gross domestic product is increasing • Money saved from inventory can be spent elsewhere • Reduction in inventory attributed to supply chain management systems • Streamline operations throughout chain • Newer SCM systems connect multiple organizations

24. The Importance of Trust • Supply chain systems work best when all businesses are sharing information • Trust between allied companies facilitates collaboration • Nissan UK: parts come from UK and Europe, and the systems are linked to Nissan’s Production Control System • 97% of parts are delivered on time • 98% of cars are completed well within time

25. Distrust: • Risk of disclosing important figures is present, like taking advantage of demand figures: • If Comp A buys from Comp B and has access to Comp B’s demand figures, it might disclose the information to competitors, stirring competition forcing prices down! • GM and Goodyear • Goodyear can have lower inventory if it knows the demand schedule for tyres.

26. Goodyear: • It could then calibrate its own order for raw materials • Manufacturing capacity to suit GM • Save money and pass some of the savings to its client in the form of cheaper products • It could replenish the client’s inventory of tyres before GM run out of them OR • It could deliver it straight to the assembly line, just as needed and save warehouse costs!

27. The Musical Chairs of Inventory • Small enterprises do not use SCM systems • Affects more powerful organization that small enterprise is linked to • Inventory turns: the number of times the business sells its inventory per year: • Sales revenue/average value of inventory • Example: • GM has an increase of 55% • Goodyear decreased in the same period by 21%

28. Why? • GM avoided buying tyres from Goodyear until they needed them on the assembly line • Goodyear did not have that information when the tyres will be needed and kept overstock! • When SCM of companies are not linked, supplier requirements unknown so companies must overstock inventory • One company sits with lean inventory while other stands, hence musical chairs

29. Collaborative Logistics • Web allows organizations from different industries to collaborate • Businesses combine freight, sharing trucks • Optimize logistics by connecting SCM systems • SCM systems help collaborative warehousing • Share warehouse space

30. Enterprise Resource PlanningStudy p115 • Replace old, disparate information systems with enterprise applications, supporting all or most of the business activities. • Enterprise resource planning: manages daily operations • Complex • Require special tailoring for specific organizations • Relatively expensive

31. Summary • Effectiveness is the degree to which a task is accomplished • Efficiency is the ratio of output to input • Productivity is the measure of people’s efficiency • Information systems have been integrated into accounting services • Financial information systems help managers track cash

32. Summary (continued) • Computer-aided design systems help engineers design new projects • Computer-aided manufacturing systems direct machines that assemble parts • Supply chain management systems optimize workload, speed, and cost in supply chains • Customer relationship management includes the entire cycle of relationships with customers

33. Summary (continued) • Human resource management systems facilitate staff selection and record keeping • Multiple companies’ SCM systems can be linked, facilitating cooperation, which requires trust • Installing an enterprise resource planning system can encompass all business processes