MIS - Chapter 9

Touch Point (Contact Point)

A method of interaction with the customer, such as telephone, email, customer service desk, conventional mail, Facebook, Twitter, website, wireless device, or retail store.

Supply Chain

A network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers.

Pull-Based Model

Also known as a demand-driven or build-to-order model, actual customer orders or purchases trigger events in the supply chain.

Customer Lifetime Value (CLTV)

Based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and the company.

Just-in-Time

Components would arrive exactly at the moment they were needed, and finished goods would be shipped as they left the assembly line.

9-3 How do customer relationship management systems help firms achieve customer intimacy?

Customer relationship management (CRM) systems integrate and automate customer-facing processes in sales, marketing, and customer service, providing an enterprise-wide view of customers. Companies can use this customer knowledge when they interact with customers to provide them with better service or sell new products and services. These systems also identify profitable or unprofitable customers or opportunities to reduce the churn rate. The major customer relationship management software packages provide capabilities for both operational CRM and analytical CRM. They often include modules for managing relationships with selling partners (partner relationship management) and for employee relationship management.

Demand Planning

Determines how much product a business needs to make to satisfy all its customers' demands.

Social CRM Tools

Enable a business to connect customer conversations and relationships from social networking sites to CRM processes.

Supply Chain Planning Systems

Enable the firm to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans. Such systems help companies make better decisions such as determining how much of a specific product to manufacture in a given time period; establishing inventory levels for raw materials, intermediate products, and finished goods; determining where to store finished goods; and identifying the transportation mode to use for product delivery.

9-4 What are the challenges that enterprise applications pose and how are enterprise applications taking advantage of new technologies?

Enterprise applications are difficult to implement. They require extensive organizational change, large new software investments, and careful assessment of how these systems will enhance organizational performance. Enterprise applications cannot provide value if they are implemented atop flawed processes or if firms do not know how to use these systems to measure performance improvements. Employees require training to prepare for new procedures and roles. Attention to data management is essential. Enterprise applications are now more flexible, web-enabled, and capable of integration with other systems, using web services and service-oriented architecture (SOA). They also have open source and on-demand versions and can run in cloud infrastructures or on mobile platforms. CRM software has added social networking capabilities to enhance internal collaboration, deepen interactions with customers, and use data from social networking sites. Open source, mobile, and cloud versions of some of these products are becoming available.

9-1 How do enterprise systems help businesses achieve operational excellence?

Enterprise software is based on a suite of integrated software modules and a common central database. The database collects data from and feeds the data into numerous applications that can support nearly all of an organization's internal business activities. When one process enters new information, the information is made available immediately to other business processes. Enterprise systems support organizational centralization by enforcing uniform data standards and business processes throughout the company and a single unified technology platform. The firm-wide data that enterprise systems generate help managers evaluate organizational performance.

Sales Force Automation (SFA)

Help sales staff increase productivity by focusing sales efforts on the most profitable customers, those who are good candidates for sales and services.

Analytical CRM

Includes applications that analyze customer data generated by operational CRM applications to provide information for improving business performance.

Operational CRM

Includes customer-facing applications, such as tools for sales force automation, call center and customer service support, and marketing automation.

Bullwhip Effect

Information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain.

Churn Rate

Measures the number of customers who stop using or purchasing products or services from a company. It is an important indicator of the growth or decline of a firm's customer base.

Push-Based Model

Production master schedules are based on forecasts or best guesses of demand for products, and products are pushed to customers.

9-2 How do supply chain management systems coordinate planning, production, and logistics with suppliers?

Supply chain management (SCM) systems automate the flow of information among members of the supply chain so they can use it to make better decisions about when and how much to purchase, produce, or ship. More accurate information from supply chain management systems reduces uncertainty and the impact of the bullwhip effect. Supply chain management software includes software for supply chain planning and for supply chain execution. Internet technology facilitates the management of global supply chains by providing the connectivity for organizations in different countries to share supply chain information. Improved communication among supply chain members also facilitates efficient customer response and movement toward a demand-driven model.

Cross-Selling

The marketing of complementary products to customers.