IS Test 4 Ch 9

Advantages of Good Supply Chain Management

Streamline processes Provide more accurate information for decision making Help match supply to demand Reduce inventory levels Support Just-in-Time strategies Improve delivery service Speed product time to market Use assets more effectively Reduce supply chain costs Increase sales and profitability

Enterprise systems evolution

System Evolution -Standalone Systems -Integrated System *Intra-organizational* -Integrated Systems *Inter-Organizational* vs System Types (See image)

Customer Lifetime Value (CLTV)

difference between revenues produced by a specific customer and the expenses for acquiring and servicing that customer minus the cost of promotional marketing over the lifetime of the customer relationship

Effective SCM reduces the *Bullwhip Effect*

occurs when distorted product demand information passes from one entity to the next throughout the supply chain

Downstream

(Once I've done my part, you are going to ship it to the distributor) Organizations & processes responsible for delivering products to customers Products flow "downstream" to customers

Supply Chain (Management Systems)

*an integrated network consisting of an organization, its suppliers, transportation companies and brokers used to deliver goods and services to customers* (output) Includes procuring raw materials, transforming them into intermediate and finished products, and distributing the finished products to customers Both service and manufacturing organizations have supply chains Complexity of a supply chain may vary depending on the organization and industry

Up-selling

*increasing* the value of the sale by selling a larger amount or size

Customer touch point (contact point)

- a method of interaction with a customer (phone, e-mail, customer service desk, mail, social media, etc.)

The Supply Chain has three main links/sections:

1. Upstream 2. Transformation 3. Downstream *Look at slide to view image* She will ask questions about like "if you were a manufacture, what stage would you be at" answer: Transformation *it is possible to be at more than one supply chain* *manufactures can manipulate the chain system*

Upstream

A firm's suppliers, supplier's suppliers, processes for managing relationships with them Materials flow from suppliers and their "upstream" suppliers at all levels to your firm

ERP Software

Built around thousands of predefined business processes that reflect *best practices* `Finance/accounting: general ledger, accounts payable, etc. `Human resources: personnel administration, payroll, etc. `Manufacturing/production: purchasing, shipping, etc. `Sales/marketing: order processing, billing, sales planning, etc.

Customer Service CRM Modules support:

Call centers/contact centers/help desks --Automatic call distribution --Predictive dialing --Interactive voice response (IVR) --Call scripting systems --Web-based self service

Customer Relationship Management Systems

Capture and integrate customer data from the entire organization Consolidate and analyze customer data Provide single enterprise view of customers Distribute customer information to various systems and *customer touch points* across enterprise

Marketing CRM Modules:

Capture prospective and current customer data, qualify leads for target marketing, and provide support for scheduling and tracking direct-marketing mailings and e-mails Include tools for analyzing customer and marketing data, identifying profitable and non-profitable customers, and designing products and services to meet specific customer needs Support survey management - automate electronic surveys, polls, questionnaires to gather customer feedback *Support Cross-selling and Up-selling*

Effective SCM can support a *Just-in-time strategy (JIT)*

Components arrive as they are needed Finished goods shipped after leaving assembly line

Pull-based model (demand-driven, build-to-order)

Customer orders trigger events in supply chain Actual order demand information drives production schedules and procurement of materials "Make What We Sell"

Operational CRM

Customer-facing applications such as sales force automation, call center and customer service support, and marketing automation Supports traditional transactional processing for day-to-day front-office operations, or systems that deal directly with the customers

Reasons ERP Systems are Powerful Organizational Tools (Drivers of ERP System)

ERP is a logical solution to the mess of incompatible applications that have sprung up in most businesses ERP is used to avoid the pain and expense of fixing *legacy systems* ERP addresses the need for global information sharing and reporting

ERP System Benefits (Opportunities)

Elimination of costly, inflexible legacy systems Improved work processes - supports *best practices* Increased availability and timeliness of information Increased data accuracy and improved response time Improved customer satisfaction Improved employee satisfaction Improved planning and scheduling Improved supplier relationships Improved reliability of information Reduction in inventory costs Reduction in labor costs *Upgrade your technology infrastructure*

How Enterprise Systems Work - from a Functional View

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 (Heart of an ERP system is the data)

Effective SCM can reduce the need for *Safety stock*

Extra stock or inventory that serves as a buffer for lack of flexibility in supply chain - use judiciously - costs money!

Next-Generation Enterprise Applications

Focus on Enterprise solutions/suites that make applications more flexible, mobile, Web-enabled, integrated with other systems; make your CRM, SCM and ERP systems work closely together -Open-source applications -Cloud-based, on-demand solutions -*Social CRM* -Inclusion of Business Intelligence features to support flexible reporting, ad hoc analysis, "what-if" scenarios, digital dashboards, and data visualization

Sales Force Automation CRM Modules:

Help increase sales force productivity Help sales people focus on the most profitable customers Provide sales prospect and contact information, product information, product configuration capabilities, and sales quote generation Reduce cost per sale as well as cost of acquiring new customers Include tools for sales forecasting, territory management, and team selling Enable sales, marketing and shipping departments to share customer and prospect information easily

ERP System *Risks/Costs*

High monetary costs --ERP System SW --HW upgrades --Possible consulting fees --Possible customization fees May require radical changes to business processes to conform to the *best practices* supported by the ERP Difficulties in installation - time involved Extensive training required Difficulty integrating with other systems you may still need to use

Enterprise Application Challenges (ERP, SCM and CRM)

Highly expensive to purchase and implement - total cost may be four to five times the price of just the software Required Technology changes Required Business process changes Required Organizational changes Switching costs, dependence on software vendors Costs of data standardization, management, cleansing

RFID in the Supply Chain

Image

Bullwhip Effect

Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.

Customer Relationship Management Systems, cont.

Include processes to track & organize customer contacts Involve managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability Focus on long-term relationships with customers instead of transactions Identify segments of customers Improve products and services to meet customers' needs Improve customer retention Identify a company's most profitable (and loyal) customers Help make better use of data, information, and knowledge to understand customers Give organizations more complete pictures of their customers

Business benefits:

Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition/retention Increased sales revenue Reduced *Churn Rate*

ERP Systems

Information is stored in a single data repository and can be accessed and updated by all functional systems

What Is Customer Relationship Management?

Knowing the customer ... Who are they, how can you contact them, what products & services do they buy, how much money do they spend, how much profit do they generate for you?

Supply chain *execution systems* help companies:

Manage flow of products through distribution centers and warehouses Ensure products are delivered to the right location efficiently Track physical status of goods Manage material, warehouse and transportation operations

Supply chain *planning systems* help companies:

Model the existing supply chain Improve demand planning Optimize sourcing, manufacturing plans, facility types & sizes Establish optimal inventory levels Identify transportation modes

Churn Rate

Number of customers who stop using or purchasing products or services from a company Indicator of growth or decline of firm's customer base

CRMS Different packages have modules for:

Operational CRM Analytical CRM

CRM packages range from niche tools to large-scale enterprise applications Variety of CRM SW vendors .... Core Operational CRM modules support

Sales Marketing Customer Service

Enterprise Systems Work from a Workflow View

Sales -> warehouse -> Receiving -> Accounting -> all sources from Information/Data

Push-based model (build-to-stock)

Schedules based on forecasts or best guesses of demand Products are "pushed" to customers "Sell What We Make"

Results of Poor Supply Chain Management

Slow or inaccurate information from one company to another Excessive inventories or stock outs/backorders Inaccurate manufacturing & facilities capacity plans Excessive inventory levels Missed production schedules Decreased profits Poor customer service

The Internet helps companies manage many aspects of global supply chains:

Sourcing, transportation, communications, international finance

Push-Based Versus Pull-Based Supply Chain Models

The difference between push- and pull-based models is summarized by the slogan "Make what we sell, not sell what we make."

Global supply chain issues

Typically span greater geographic distances and time differences Involve more complex pricing issues (local taxes, transportation, etc.) Must accommodate Foreign government regulations Must accommodate Cultural differences

Automatic call distribution

a phone switch routes inbound calls to available agents Time on hold? How long? What happens when the customer is on hold?

Call scripting systems

access organizational databases that track similar issues or questions and automatically generate the details to the customer service rep who can then relay them to the customer

Web-based self service

allows customers to use the Web to find answers to their questions or solutions to their problems FAQs On-line chat Order tracking Forms for product registration, returns, warranty information

Predictive dialing

automatically dials outbound calls and when someone answers, the call is forwarded to an available agent Leave your number and they will call you back

SCM inefficiencies add to a company's operating costs

can waste up to 25 percent of operating expenses

Interactive voice response (IVR)

directs customers to use touch-tone phones or keywords to navigate or provide information Are the options useful? Can you ever get to a live operator?

Extranets

help to coordinate supply chain processes shared *with business partners*

Intranets

help to improve coordination among *internal supply chain* processes

What is Salesforce? 2.28

https://www.youtube.com/watch?v=di6iwHhrH6s

Salesforce CRM Demo for Small Business 3.33

https://www.youtube.com/watch?v=mbo8_VHaBWw

Social CRM

incorporating data from social networking sources, company social networks, and supporting customer interaction via Facebook, Twitter ...

Legacy (standalone) Systems

information is not readily shared between systems (ex. Inbound Logistics inventory information is not shared with Operations)

Enterprise Resource Planning Systems (ERP)

integrate 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 *`Are based on a suite of integrated SW modules and a common central database `Integrate data from key business processes into single system `Speed communication of information throughout firm `Information entered in one process is immediately available for other processes `Enable greater flexibility in responding to customer requests, greater accuracy in order fulfillment `Enable managers of large firms to assemble overall view of operations*

Cross-selling

selling *additional (complementary)* products or services to increase the value of the sale

Enterprise Applications

systems that span functional areas, focus on executing business processes across the firm, and include multiple levels of management

Effective SCM supports *Supply Chain Visibility*

the ability to view all areas up and down the supply chain

Transformation

the company's *internal supply chain* Processing of materials into semifinished & finished products thru your organization's own production processes (My part)

Best Practices

the most successful solutions or problem solving methods for consistently and effectively achieving a business objective To implement, firms select functions of system they wish to use, then map business processes to software processes.

Personalization

when a company knows enough about a person's likes and dislikes that it can fashion offers that are more likely to appeal to that person

Legacy System

~A system that has been in existence for a long time and that continues to be used to avoid the high cost of replacing or redesigning them ~Designed to support one or a few related business functions ~Little or no integration with other organizational systems so information is not readily shared between systems ~Often run on a variety of HW and SW platforms, also complicating compatibility ~Are close to, or are at the end of their useful life *EVERY PROGRAM HAS ITS OWN DATA SET*

Global Supply Chains and the Internet

~Before the Internet, supply chain coordination was hampered by difficulties of using different internal supply chain systems ~Enterprise systems supply some integration of internal supply chain processes but are not designed to deal with external supply chain processes ~Intranet ~Extranet

Supply Chain Management Systems

~Manage relationships with suppliers, purchasing firms, distributors and logistics companies ~Process of working with suppliers and other partners in the supply chain to improve procedures for delivering products and services ~Managing the information flows between and among stages in the supply chain to maximize effectiveness and profitability ~Goal is to move correct amount of product from source to point of consumption as quickly as possible and at lowest cost ~Coordinates: ---Procuring materials ---Transforming materials into intermediate and finished products or services ---Distributing finished products or services to customers