Ch.11 - Enterprise systems
A well-designed ERP system offers the following benefits:
Increased availability and timeliness of integrated information Increased data accuracy and improved response time Improved customer satisfaction Improved employee satisfaction Improved planning and scheduling Improved supplier relationship Improved reliability of information Reduction in inventory costs Reduction in labor costs Reduction in order-to-fulfillment time
Four key decisions in SCM related to manufacturing are:
Location—Where should manufacturing facilities be placed? Inventory—When should an order be placed? How much should be ordered? Production—What should be produced? How much should be produced? Transportation—Which transportation systems will reduce costs and expedite the delivery process?
3D printing plays a major role in SCM:
Manufacturing lead times will be significantly reduced, from weeks to days to hours and minutes. Customer demand will be met more quickly and more specifically. Manufacturers will print on demand, eliminating the need to carry inventory. New designs will come to market much quicker. Materials will be used more efficiently, as leftovers can be used for other projects.
In a manufacturing firm's SCM system, communication takes place among the following areas:
Product flow—Managing the movement of goods all the way from suppliers to customers, including customer service and support Information flow—Overseeing order transmissions and delivery status updates throughout the order-processing cycle Finances flow—Handling credit terms, payment schedules, and consignment and title ownership arrangements
A knowledge management system should help an organization do one or more of the following:
Promote innovation by encouraging the free exchange of ideas. Improve customer service by reducing response time. Increase revenue by reducing the delivery time for products and services. Improve employee retention rates by rewarding employees for their knowledge.
vendors offering SCM:
SAP, Oracle, JDA, Ariba, Manhattan Associates
A CRM system includes the following activities:
Sales automation Order processing Marketing automation Customer support Knowledge management Personalization technology
(t/f) Marketing strategies in a CRM system focus on long-term relationships with customers instead of transactions.
true
enterprise resource planning system
used to coordinate operations, resources, and decision making among manufacturing, production, marketing, and human resources.
Collaborative planning, forecasting, and replenishment (CPFR) (SCM technologies)
used to coordinate supply chain members through point-of-sale (POS) data sharing and joint planning. - In other words, any data collected with POS systems is shared with all members of the supply chain, which is useful in coordinating production and planning for inventory needs. - The goal is to improve operational efficiency and manage inventory - With a structured process of sharing information among supply chain members, retailers can compare customer demands or sales forecasts with a manufacturer's order forecast, for example. If there is a discrepancy between forecasts, members can get together and decide on the correct quantity to order. - One main obstacle to improving supply chain performance is companies not knowing enough about what customers want, which can lead to lost sales and unsold inventory for retailers and manufacturers - has the advantage of decreasing merchandising, inventory, and logistics costs for all supply chain members. - ensures that inventory and sales data are shared across the supply chain so everyone knows the exact sales and inventory levels. The collaboration part of this process is the agreement between all supply chain partners that establishes how data is shared, how problems with overstock are solved, and how to ensure that costs for each partner are shared or minimized.
4D Printing (SCM technologies)
uses special materials and sophisticated designs that are "programmed" to prompt the 3D printed objects to change its shape and structure by the influence of external factors. - external factors may include temperature, light, or other environmental stimuli. This technology will enable companies to manufacture products that can self-assemble, reshape themselves, or otherwise react to changing conditions - applications of this include: - Aerospace: to make self-deploying structures for air ventilation, engine cooling, and other similar uses. - Defense: to make military uniforms that can alter their camouflage or better protect against poisonous gases or shrapnel on contact. - Medical: for tissue engineering and smart biomedical devices and the fabrication of nanoparticles and nanorobots for chemotherapy. - Automotive: to produce car components that can adapt to changing environmental conditions - Consumer goods
advantages of cloud computing to apply enterprise system
- Cost savings: Cloud computing cost is paid incrementally, saving organizations money. Also, because the software development cost is divided among many participants, it is generally cheaper than traditional computing methods. - Increased storage: Organizations can store more data than on private computer systems and storage can grow as the organization grows. - Highly automated - Flexibility and scale: Cloud computing offers much more flexibility and scale than traditional computing methods. It can offer vertical as well as horizontal flexibility and scale. - Increased mobility: Employees can access information wherever they are, rather than having to remain at their desks. - Allows IT to shift focus: No longer having to worry about constant server updates and other computing issues, the adopting organization will be free to concentrate on innovation and growing the business. Mission-critical applications become the main focus. - Improved security: Although some people think that cloud computing may be less secure than traditional computing, you should remember that most providers of cloud services will have multiple copies of your data for redundancy, often in different geographic locations.
drawbacks of global supply chain management
- It will create large-scale and challenging management issues including inventory management and distribution issues. - It will involve high risks such as natural disasters, port closures, and political uprisings. - It will involve global competition with other players that are competing for the same resources. - It will face challenges for information collection because the key elements of the supply chain network are scattered throughout the world. - It will face legal issues related to business practices, privacy, and transborder data flow.
benefits of Global supply chain management
- It will expand sourcing opportunities. Organizations will have a broad selection of workers, materials, and products. This could lead to higher-quality products with lower cost. - It will enhance and increase access to new customers in new markets and possibly with new needs. This will improve the organization's top line as well as bottom line. - It will extend growth opportunity as a result of accessing new markets.
disadvantages of cloudy computing to apply enterprise system
- Lack of customization: The adapting organization has to accept the standard offering of the cloud provider and it may not meet the specific needs of a particular organization. - Possible downtime: Cloud platforms sometimes go down and this is a major disadvantage. Service outages are always a possibility and can occur for many reasons - Vendor lock-in: When an organization signs a contract with a particular vendor, switching to another vendor may become difficult. In addition to cost, during the migration to another provider the organization's data may get exposed, which could cause additional security and privacy risks.
With a CRM system, an organization can do the following:
- Provide services and products that meet customers' needs. - Offer better customer service through multiple channels (traditional as well as the Internet). - Increase cross-selling and upselling of products to increase revenue from existing customers. - Help sales personnel close deals faster by offering data on customers' backgrounds. - Retain existing customers and attract new ones.
RFID applications
- Tracking and identification - Payment and stored-value systems - Access control - Anticounterfeiting - Health care
Five popular applications of drones in supply chain
- Warehousing: drones can fly around large warehouses, distribution centers, and yards reading inventory RFID tags for continuous monitoring of inventory, preventing inventory mismatches, and determining item locations. - Last-mile delivery: after regulatory approval, drones can be used to deliver groceries, clothing, medications, and other items to certain areas - Farming and agriculture: equipped with sensors, cameras, and GPS, drones can spot areas of insect infestation, areas needing watering, sections needing fertilizer, failing plants, and other problem areas and then allow farmers to specifically target those areas for treatment, improving crop yields - Construction: drones can be used for surveying, progress tracking, inspections, security, safety, risk mitigation, and bid processing for bridges, tunnels, towers, factories, power plants, power lines, pipelines, and windfarms - Global infrastructure: drones can be used for inspections, monitoring, providing estimates, and handling insurance claims
online auctions (SCM technologies)
By using the Internet, an online auction brings traditional auctions to customers around the globe and makes it possible to sell far more goods and services than at a traditional auction. - based on the brokerage business model, which brings buyers and sellers together in a virtual marketplace. - Typically, the organization hosting the auction collects transaction fees for the service. Online auctions are particularly cost-effective for selling excessive inventory. - Some companies use reverse auctions, which invite sellers to submit bids for products and services. In other words, there is one buyer and many sellers
CRM Applications
CRM applications are implemented with one of two approaches: on-premises CRM or Web-based CRM. - Organizations with an established IT infrastructure often choose on-premises CRM, which is implemented much like any other IT system - With Web-based CRM, the company accesses the application via a Web interface instead of running the application on its own computers and pays to use CRM software as a service (SaaS) - Although these packages vary in capabilities, they share the following features: - Salesforce automation—Assists with such tasks as controlling inventory, processing orders, tracking customer interactions, and analyzing sales forecasts and performance. It also assists with collecting, storing, and managing sales contacts and leads. - eCRM or Web-based CRM—Allows Web-based customer interaction and is used to automate e-mail, call logs, Web site analytics, and campaign management. Companies use campaign management to customize marketing campaigns - Survey management—Automates electronic surveys, polls, and questionnaires, which is useful for gathering information on customers' preferences. - Automated customer service—Used to manage call centers and help desks and can sometimes answer customers' queries automatically - Social CRM—interaction with customers through the Internet and social media - Individuation of messaging to customers through analytics using customers' social media information. - Hypertargeting—delivery of highly customized content to highly specific customer subgroups of the total customer population. This creates personal communication that makes the customer feel special.
Internet of Things (IoT) (SCM technologies)
This will impact SCM in many ways, from automation of the manufacturing process to improved visibility of products in transit and in the warehouse. - When products are transferred from manufacturers, suppliers, distribution centers, retailers, and finally to customers, IoTs can provide timely information that decision makers can use to improve the effectiveness of their decisions. - Timely arrival of products, temperature control, or even avoiding traffic jams will be reported ahead of time for decision makers to act upon. In other words, a reactive process will be converted to a proactive process - will assist SCM to achieve the following goals: - Reduce loss of inventory in warehouses or products in transit. - Reduce fuel costs by choosing the best routes and avoiding traffic jams. - Ensure temperature stability during product transit, particularly for perishable products. - Manage warehouse inventory for out-of-stock inventory. - Improve customer service by fast and efficient delivery of products and quick notification of order status. - Gather business intelligence regarding product usage by customers after a product is sold.
EDI expedites the delivery of accurate information in the following processes, among others:
Transaction acknowledgments Financial reporting Invoice and payment processing Order status Purchasing Shipping and receiving Inventory management and sales forecasting
ERP components
Unified database, inventory management, supply chain, manufacturing, human resources, CRM, purchasing, accounting, vendor integration, e-commerce, and sales.
Quick Response Codes (SCM technologies)
a matrix barcode consisting of black modules arranged in a square pattern on a white background - It offers a larger storage capacity compared to standard UPC barcodes - have recently grown in popularity, particularly as a marketing tool. - Compared to conventional barcodes, QR codes have the following features: - High storage capacity - Small printout size - Dirt and dust resistance - Readable from any direction - Compatible with the Japanese character set - can be read by smartphones that are equipped with cameras. - QR codes could offer some challenges. Some users do not scan them for important information such as nutritional facts
Collaborative filtering (CF)
a search for specific information or patterns using input from multiple business partners and data sources. It identifies groups of people based on common interests and recommends products or services based on what members of the group purchased or did not purchase. - It works well for a single product category - One drawback of CF is that it needs a large sample of users and content to work well. In addition, it is not useful for making recommendations across unrelated categories - One application of collaborative filtering is making automatic predictions about customers' preferences and interests based on similar users.
Knowledge management (KM)
a technique used to improve CRM systems (and many other systems) by identifying, storing, and disseminating "know-how"—facts about how to perform tasks. Know-how can be explicit knowledge (formal, written procedures) or tacit knowledge (personal or informal knowledge). - draws on concepts of organizational learning, organizational culture, and best practices to convert tacit knowledge into explicit knowledge, creates a knowledge-sharing culture in an organization, and eliminates obstacles to sharing knowledge. - Knowledge is an asset that should be shared throughout an organization to generate business intelligence and maintain a competitive advantage in the marketplace. - Explicit knowledge, such as how to close a sale, can be captured in data repositories and shared - Tacit knowledge, however, cannot be captured as easily. Knowledge that someone has gained through experience might vary depending on the situation in which it was used—the context. Typically, the best way to gather this information is interactively, such as asking the employee specific questions about how he or she would handle an issue. Because interaction is a key part of managing tacit knowledge, a knowledge management system must encourage open communication and the exchange of ideas - By storing knowledge captured from experts, a knowledge repository can be created for employees to refer to when needed. - Employees might be reluctant to share their expertise because, once everybody knows what they know, their value to the organization would be diminished. To motivate them to share knowledge, rewards must be offered.
reverse auctions
invites sellers to submit bids for products and services. In other words, there is one buyer and many sellers: a one-to-many relationship. The buyer can choose the seller that offers the service or product at the lowest price.
E-Marketplaces (SCM technologies)
a third-party exchange (B2B model) that provides a platform for buyers and sellers to interact with each other and trade more efficiently online. - help businesses maintain a competitive edge in the supply chain in the following ways: - Providing opportunities for sellers and buyers to establish new trading partnerships - Providing a single platform for prices, availability, and stock levels that is accessible to all participants - Solving time-constraint problems for international trade and making it possible to conduct business around the clock - Making it easy to compare prices and products from a single source instead of spending time contacting each seller - Reducing marketing costs more than traditional sales channels can - E-distributors are common examples of e-marketplaces. An e-distributor is a marketplace owned and operated by a third party that provides an electronic catalog of products - Another common offering from e-distributors is maintenance, repair, and operations (MROs) services; a company can purchase an MRO package that might include services from different vendors, but the e-distributor coordinates them into one package for customers. This packaging is an example of a horizontal market, which concentrates on coordinating a business process or function involving multiple vendors
Customization
allows customers to modify the standard offering, such as selecting a different home page to be displayed each time you open your Web browser. - example, after registering with Yahoo!, a user can customize the start page by choosing preferred layout, content, and colors.
3D printing (SCM technologies)
also known as additive manufacturing - a process that creates a physical object from a three-dimensional digital mode by laying down many successive layers of material. - 3D printers have been around for more than three decades, but their high cost and complexity made them only affordable to large companies for much of that time. Advances in digital scanners and software technologies have made them accessible and more affordable for smaller organizations. - offers some of the same advantages of prototyping, such as cost reduction, decreasing risk, improving communication among decision makers, increasing feedback, and personalization of products and services - impacts almost all industries - These printers can make products that even traditional factories are unable to make—including human tissue. - could also have a positive impact on environmental and sustainability issues by reducing waste, generating longer lifespans for products, reducing transport, and fewer unsold products
enterprise system
an application used in all the functions of a business and that supports decision making throughout the organization. - another way to make important information readily available to decision makers throughout an organization. - ex's: supply chain management (SCM), customer relationship management (CRM), knowledge management systems, and enterprise resource planning (ERP)
supply chain
an integrated network consisting of an organization, its suppliers, transportation companies, and brokers used to deliver goods and services to customers - raw materials flow from suppliers to manufacturers (where they are transformed into finished goods), then to distributors, then to retailers, and finally to consumers. - exist in both service and manufacturing organizations, although the chain's complexity can vary widely in different organizations and industries. - In manufacturing, the major links in the supply chain are suppliers, manufacturing facilities, distribution centers, retailers, and customers. - In service organizations—such as those in real estate, the travel industry, temporary labor, and advertising—these links include suppliers (service providers), distribution centers (such as travel agencies), and customers.
Enterprise resource planning (ERP)
an integrated system that collects and processes data and manages and coordinates resources, information, and functions throughout an organization. - system has many components, including hardware, software, procedures, and input from all functional areas. To integrate information for the entire organization, most ERP systems use a unified database to store data for various functions - systems are available as modules, so an organization can purchase only the components it needs and add others later, if needed. Having modular components is a major factor in the success of ERP systems because it keeps costs down.
cloud version for choosing an enterprise system such as SCM, CRM, or ERP
cloud computing is accessed through remote servers and customers use it similarly as utility services. Cloud providers are responsible for providing hardware, software, and other needed utility programs.
Customer relationship management (CRM)
consists of the processes a company uses to track and organize its contacts with customers. It improves services offered to customers and uses customer contact information for targeted marketing. - main goal of a CRM system is to improve services offered to customers and use customer contact information for targeted marketing. - Businesses know that keeping and maintaining current customers is less expensive than attracting new customers, and an effective CRM system is useful in meeting this goal. - marketing strats focus on long-term relationships with customers instead of transactions. These strategies include identifying customer segments, improving products and services to meet customers' needs, improving customer retention, and identifying a company's most profitable (and loyal) customers. - helps organizations make better use of data, information, and knowledge to understand their customers - captures information about customer interactions for sales personnel and customer service representatives so they can perform their jobs more effectively and efficiently. - include tools for conducting complex analyses on customer data, such as a data warehouse and data-mining tools - With these systems, organizations can integrate demographic and other external data with customers' transaction data to better understand customer behavior. Based on this analysis, organizations can better target products to customers and manage customer issues, which increases customer satisfaction and retention. - can also pay external agencies for additional data about their potential customers. - e-mail, the Internet, Web portals, and automated call centers have played a major role in CRM systems. E-commerce sites use e-mail to confirm items purchased, confirm shipping arrangements, and send notifications on new products and services. Web portals and extranets
Electronic data interchange (EDI) (SCM technologies)
enables business partners to send and receive information on business transactions. - Many companies substitute EDI for printing, mailing, and faxing paper documents, such as purchase orders, invoices, and shipping notices. - By using the Internet and established Web protocols for the electronic exchange of information, companies can improve the efficiency and effectiveness of the supply chain process. - using the Internet and Web protocols for EDI lowers the cost of transmitting documents. This method is called Web-based EDI or Open EDI. It also has the advantage of being platform independent and easy to use - transmitting across the Internet does involve more security risks than traditional EDI, which uses proprietary protocols and networks - more beneficial when there are more companies in the EDI network because when the number of partners is small, the cost per partner is higher. - With the advent of eXtensible Markup Language (XML), organizations can use the Internet and Open EDI to perform the same function that EDI performs
drawbacks of ERP
high cost, difficulties in installation, a need for extensive training, and compatibility problems with legacy systems.
Internet-Enabled SCM (SCM technologies)
improves information sharing throughout the supply chain, which helps reduce costs for information transmission and improves customer service. - can improve the following SCM activities: - Purchasing/procurement—Purchasing and paying for goods and services online, bargaining and renegotiating prices and term agreements, using global procurement strategies - Inventory management—Providing real-time stock information, replenishing stock quickly and efficiently, tracking out-of-stock items - Transportation—Allowing customers to use the Internet for shipping and delivery information - Order processing—Checking order placement and order status, improving the speed and quality of order processing, handling returned goods and out-of-stock notifications to customers - Customer service—Responding to customers' complaints, issuing notifications (such as product recalls), providing around-the-clock customer service - Production scheduling—Coordinating just-in-time (JIT) inventory programs with vendors and suppliers, coordinating production schedules between companies and their vendors and suppliers, conducting customer demand analysis
Global supply chain management
incorporates management processes around the globe that integrates the network of suppliers, manufacturers, warehouses, and retail outlets in order to source high-quality raw materials, efficiently converted to finished goods, and shipped in the right quantities to the right locations in a timely manner with the highest possible quality. - Similar to domestic SCM, for successful integration of a global supply chain, communication must take place among the following three areas: - Flows of information: purchase orders, shipping notices, and invoices - Flows of materials: raw and finished products - Flows of finances: payments and refunds - for successful implementation, three key factors should be properly integrated: people (with skills and knowledge of the supply chain), processes (sourcing, distribution, transportation, warehousing, sales, and customer service), and SCM technologies
chief knowledge officer (CKO)
individual is responsible for overseeing knowledge management within an organization. He or she makes sure that key knowledge resources are properly collected, stored, and disseminated among the key decision makers and also makes sure that the organization profits from knowledge resources, including its employees, its processes, and its intellectual property. Finally, the CKO tries to maximize the return on investment (ROI) related to knowledge management, knowledge management systems, and processes.
drones (SCM technologies)
is a specialized robot that is designed to fly and perform certain automated tasks - come in various shapes and sizes, and they vary in sophistication—many drones are used for recreation, but this is changing - can carry inventory and deliver it to specified locations - In agriculture, drones are used to supervise animals and in a dangerous environment, such as oil fields, they can perform maintenance tasks - Experts believe drones will play a major role in last-mile logistics and complement traditional logic systems.
on-premise option for choosing an enterprise system such as SCM, CRM, or ERP
similar to any IS implementation
radio-frequency identification (RFID) (SCM technologies)
tag is a small electronic device consisting of a small chip and an antenna. This device provides a unique identification for the card or the object carrying the tag. - device performs the same task as barcodes, universal product codes (UPCs), and magnetic strips on credit and debit cards: It provides a unique identification for the card or the object carrying the tag. - Unlike barcodes and other systems, RFID devices do not have to be in contact with the scanner to be read. - Because of its embedded antenna, it can be read from a distance of about 20 feet. The RFID tag's advantages, along with its decreasing price (less than 10 cents per tag), have made this device more popular with the retail industry and other industries. - There are two types of RFID tags: passive and active - Passive RFID tags have no internal power supply, so they can be very small. Typically, they absorb the signal from the receiver device, convert this signal into energy, and use this energy to respond to the receiver. Passive tags usually last longer than active tags; - Active RFID tags have an internal power source and are usually more reliable than passive tags and can broadcast signals over a much wider range. These tags can also be embedded in a sticker or under the skin (human or animal). - there are some technical problems and some privacy and security issues. On a technical level, signals from multiple readers can overlap, signals can be jammed or disrupted, and the tags are difficult to remove. Privacy and security issues include being able to read a tag's contents after an item has left the store, tags being read without the customer's knowledge
To implement a personalization system, several IT tools are needed, including:
the Internet, databases, data warehouse/data marts, data-mining tools, mobile networks, and collaborative filtering
Organizations have two options for choosing an enterprise system such as SCM, CRM, or ERP. They can either choose:
the on-premise option or the cloud version
Personalization
the process of satisfying customers' needs, building customer relationships, and increasing profits by designing goods and services that meet customers' preferences better. It involves not only customers' requests, but also the interaction between customers and the company. - using personalization requires gathering a lot of information about customers' preferences and shopping patterns, and some customers get impatient with answering long surveys about their preferences. In addition, collecting this information might affect customers' sense of privacy. - You are probably familiar with Web sites that tailor content based on interests and preferences. Amazon, for example, suggests products users might enjoy based on past browsing and purchasing habits.
Supply chain management (SCM)
the process of working with suppliers and other partners in the supply chain to improve procedures for delivering products and services. - Procuring materials (in service organizations, can include resources and information) - Transforming materials into intermediate and finished products or services - Distributing finished products or services to customers
disadvantages of EDI
transmitting across the Internet does involve more security risks than traditional EDI, which uses proprietary protocols and networks - EDI uses proprietary standards - An EDI provider sets up an EDI network (as a virtual private network [VPN]), and organizations enroll in the network.
(t/f) A knowledge management system can track how often an employee participates in knowledge-sharing interactions with other employees and track any resulting improvements in performance
true
(t/f) Customization, which is somewhat different from personalization, allows customers to modify the standard offering, such as selecting a different home page to be displayed each time a browser is opened.
true
(t/f) Knowledge management plays a key role in the success of a CRM system because it helps businesses use their knowledge assets to improve customer service and productivity, reduce costs, and generate more revenue.
true
