Chapter 9 Reading Notes

Describe the value of the SCM systems

- They allow companies to match supply to demand - Reduce inventory levels - Improve delivery service - Speed product time to market - Use assets more efficiently The total costs for most businesses approach 75% of their operating costs so by reducing the supply chain costs it has a major impact on firm profitability. It helps to increase sales because it allows for the manufacturer to have the product available when the customer wants it.

Define customer relationship management and explain why customer relationships are so important today.

CRM is based on information that you need to build and nurture strong, longer lasting relationships with your customers. They would answer questions such as: - Who is the customer - Are they costly to service or do they provide profitability - What kind of products do they want - How much money do they spend at the company By have good CRM, firms can use it to acquire new customers, provide better service and support to existing customers, customize offerings more precisely to their preferences and provide ongoing value to their profitable customers.

Define an enterprise system and explain how enterprise software works

Enterprise systems feature a set of integrated software modules and a central database by which the business processes and functional areas throughout the enterprise can share data. The key business areas include: finance & accounting, sales & marketing, Human resources, Manufacturing & Production. Enterprise software is built around thousands of pre-defined business processes that reflect business processes. Because these types of software are highly complex it's best to limit customization and instead change business processes to match the software's capabilities. This will ensure product degradation does not occur.

List and describe the challenges enterprise applications pose.

Expensive and difficult to implement taking several years with 64% reporting cost overruns and 79% reporting timeline overruns. Require technological changes and business operation changes. Impacts to employees can include: new job functions, responsibilities, performing a new set of work activities and understand how the information they enter into the system affects other parts of the company. Switching costs are introduced because it can be difficult to change vendors once you implement such a complex system.

Explain how supply chain management systems help reduce the bullwhip effect and how they provide value for a business

Note: supply chain inefficiencies waste as much as 25% of a company's operating costs. The perfect supply chain system would allow manufacturers to know exactly how many units of a product customers want, when they want them and when it should be produced, but this is impossible so they strive towards it as much as possible with a "just in time strategy". Bullwhip effect: information about the demand for a product is distorted as it passes from one entity to the next in a supply chain which causes excess inventory for suppliers along the supply chain to occur which can be expensive. This effect can be reduced by reducing the uncertainties about demand and supply. To do this, you need to be able to share dynamic information about the inventory levels, schedules, forecasts and shipments across all the members of the supply chain. This allows them to make better purchasing and scheduling decisions.

Distinguish between operational and analytical CRM.

Operational CRM: includes customer-facing applications such as tools for sales force automation, call center and customer service support and marketing automation Analytical CRM: applications that analyze customer data generated by operational CRM application to provide information for improving business performance. Customer lifetime value (CLTV): based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing the customer, and the expected life of the relationship between the customer and company. A good CRM will allow a company to determine the customer churn rate: measures the number of customers who stop using or purchasing products or services from a company which is an indicator of growth or decline of a firm's customer base.

Describe how partner relationship management (PRM) and employee relationship management (ERM) are related to customer relationship management (CRM).

PRM: used to enhance collaboration between a company and its selling partners. It helps channels to sell to customers directly providing them with ability to trade information, distribute leads and data about customers, integrate lead generation, pricing, promotions, order configurations and availability. ERM: deals with employee issues such as setting objectives, performance management, performance base compensation and employee training. Both of these use many of the same data, tools and systems as CRM management.

Distinguish between a push-based and a pull-based model of supply chain management and explain how contemporary supply chain management systems facilitate a pull-based model.

Push-based (build-to-stock) production master schedules are based on forecasts or best guesses of demand for products, and products are pushed to customers. Pull-based (demand driven or build-to-order): customer orders or purchases trigger events in the supply chain. This allows for manufactures to use only actual order demand information to drive their production schedules and procurement of components or raw materials. Example: Walmart's replenishment system. Internet technology allows for movement along the supply chains to move from sequential to concurrent, where products can move along the supply chain in many different directions simultaneously, looking more like a digital logistics nervous system.

Describe how enterprise systems provide value for a business.

They increase value by increasing operational efficiency and providing firmwide information to help managers make better decisions. Example: They help firms respond quickly to customer request for information and products. Because of it's cross business functionality integration, it's able to product or procure only what customers have ordered, stage the production and minimize the time the components or products remain in inventory. Example: because corporate headquarters have access to up-to-the minute data on sales, inventory and production and use this information to create more accurate sales and product forecasts. The software includes analytical tools to use system data and capture overall organizational performance. This allows managers to see which products are showing the most profit and calculate costs as a whole across the organization.

Describe the tools and capabilities of customer relationship management of software for sales, marketing, and customer service.

Sales Force Automation (SFA): helps sales staff increase productivity by focusing sales efforts on the most profitable customers, those who are good candidates for sales and services. Capabilities of SFA include: - Sales prospect and contact information - Product information and configuration capabilities - Sales quote generation - Customer's past purchases - Enable sales, marketing and shipping departments to share customer and prospect information - Reduces the cost per sale - Reduce the cost of acquiring new customers and retaining old ones - Sales forecasting, territory management and team selling Customer Service: provide information and tools to increase the efficiency of call centers, help desks and customer support staff. Capabilities of Customer Service modules include: - Appointment or advice telephone system - Improved access to consistent and accurate customer information - Allows centers to handle more calls per day and decrease the duration of each call leading to greater productivity, reduced transaction time and higher quality of service at a lower cost. Marketing: provide capabilities for capturing prospect and customer data, for providing produce and service information, for qualifying leads for targeting marketing and for scheduling and tracking direct marketing mailings or emails - Tools for analyzing marketing and customer data - Identifying profitable and unprofitable customers - Designing products and services to satisfy specific customer needs and interest - Identifying opportunities for cross-selling - Cross-selling: marketing of complementary products to customers.

Explain how the challenges to enterprise applications can be addressed. Describe how enterprise applications are taking advantage of cloud computing and business intelligence.

Scaled down versions of software as well as cloud enabled versions are being offered to support all types of businesses from small to large. Avoiding customizations or updating business processes to match the system is also helpful.

Define social CRM and explain how customer relationship management systems are using social networking.

Social CRM: allows for vendors to enhance their products by taking advantage of social networking technologies. They can help firms identify new ideas quickly improve team productivity and deepen interactions with customers. By using social media analytics and business intelligence it can help the vendor to optimize their social and traditional web-based campaigns.

Define and compare supply chain planning systems and supply chain execution systems

Supply Chain planning system: enable the firm to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans. They help companies make better decisions, such as: - how much to make of a product at a given interval - establish inventory levels for raw materials, intermediate products and finished goods - determine where to store finished goods - identifying transportation mode for the product Demand planning: determines how much product a business needs to make to satisfy all it's customers' demands. Supply chain execution system: manages the flow of products through distribution centers and warehouses to ensure the products are delivered to the right locations as efficiently as possible.

Define a supply chain and identify each of its components.

Supply Chain: network of organizations and business processes for procuring raw materials into intermediate and finished products, and distributing those products to customers. Upstream: suppliers, suppliers suppliers and the process for managing relationships with them Downstream: organizations and processes for distributing and delivering products to the final customers Internal supply chain processes: transforming materials, components and services their suppliers furnish into finished products or intermediate products for their customers and for managing inventory and materials.

Describe the challenges of global supply chains and how Internet tech can help companies manage them better.

They can span larger geographic regions and time differences. Most of the time they have participants from a larger number of countries. They need to consider foreign government regulations and cultural differences. The internet can help combat these challenges by providing the ability to manage sourcing, transportation, communications and international finance. By using web-based software they can give their customers a better view of their supply chain providing the ability to do things like check a secure website to monitor inventory and shipments.