MIS Ch. 8

enterprise resource planning (ERP)

integrates all departments and functions throughout an organization into a single MIS system (or integrated set of MIS systems) so employees can make decisions by viewing enterprise wide information about all business operations Today's business leaders need significant amounts of information to be readily accessible with real-time views into their businesses so that decisions can be made when they need to be, without the added time of tracking data and generating reports To truly understand the complexity of ERP systems you must think about the many different functional business areas and their associated business processes as well as cross-functional business processes such as supply chain management and customer relationship management and beyond At its most basic level, ERP software integrates these various business functions into one complete system to streamline business processes and information across the entire organization Essentially, ERP helps employees do their jobs more efficiently by breaking down barriers between business units Many organizations fail to maintain consistency across business operations If a single department, such as sales, decides to implement a new system without considering the other departments, inconsistencies can occur throughout the company Not all systems are built to talk to each other and share data, and if sales suddenly implement a new system that marketing and accounting cannot use or is inconsistent in the way it handles information, the company's operations become siloed If sales database and accounting database have differences in data formats, numbers and identifiers, correlating this data would be difficult and the inconsistencies would cause numerous reporting errors from an enterprise wide perspective ERP systems share data supporting business processes within and across departments In practice, this means that employees in different divisions, for example,accounting and sales, can rely on the same information for their specific needs ERP software also offers some degree of synchronized reporting and automation Instead of forcing employees to maintain separate databases and spreadsheets that have to be manually merged to generate reports, some ERP solutions allow staff to pull reports from one system For instance, with sales orders automatically flowing into the financial system without any manual re-keying, the order management department can process orders more quickly and accurately, and the finance department can close the books faster Other common ERP features include a portal or dashboard to enable employees to quickly understand the business's performance on key metrics Figure 8.29 shows how an ERP systems takes data from across the enterprise, consolidates and correlates it, and generates enterprise wide organizational reports It consolidates corporate data from employees, orders, customers, sales, and inventory into an enterprise wide Global Sales Report, Global Manufacturing Report, and Global Shipping Report Original ERP implementations promised to capture all information onto one true "enterprise" system, with the ability to touch all the business processes within the organization Unfortunately, ERP solutions have fallen short of these promises, and typical implementations have prentrated only 15-20 percent of the organization The issue ERP intends to solve is that knowledge within a majority of organizations currently resides in silos that are maintained by a select few, without the ability to be shared across the organization, causing inconsistency across business operations The heart of an ERP system is a central database that collects information from and feeds information into all the ERP system's individual application components (called modules), supporting diverse business functions such as accounting, manufacturing, marketing, and human resources When a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system Information is connected to and from all departments: marketing and sales, purchasing, accounting and finance, manufacturing, inventory, and human resources ERP automates business processes such as order fulfillment - taking an order from a customer, shipping the purchase, and then billing for it With an ERP system, when a customer service representative takes an order from a customer, he or she has all the information necessary to complete the order (the customer's credit rating and order history, the company's inventory levels, and the delivery schedule) Everyone else in the company sees the same information and has access to the database that holds the customer's new order When one department finishes with the order, it is automatically routed via the ERP system to the next department To find out where the order is at any point, a user need only log in to the ERP system and track it down This is illustrated in figure 8.31 with the ERP process flow: information is in the middle connected to and from sales (sales order and sales quote), warehouse (pack and ship), accounting (billing and payment), and receiving (returns) In most organizations, information has traditionally been isolated within specific departments, whether on an individual database, in a file cabinet, or on an employee's PC ERP enables employees across the organization to share information across a single, centralized database With extended portal capabilities, an organization can also involve its suppliers and customers to participate in the workflow process, allowing ERP to penetrate the entire value chain, and help the organization achieve greater operational efficiency (now all parts of the organization are together and connected instead of separate) THE BENEFITS OF ERP: Originally, ERP solutions were developed to deliver automation across multiple units of an organization, to help facilitate the manufacturing process and address issues wish cas raw materials, inventory, order entry, and distribution However, ERP was unable to extend to other functional areas of the company such as sales, marketing, and shipping It could not tie in any CRM capabilities that would allow organizations to capture customer-specific information, nor did it work with websites or portals used for customer service or order fulfillment Call center or quality assurance staff could not tap into the ERP solution, nor could ERP handle document management, such as cataloging contracts and purchase orders ERP has grown over the years to become part of the extended enterprise From its beginning as a tool for materials planning, it has extended to warehousing, distribution, and order entry With its next evolution, ERP expands to the front office including CRM Now administrative, sales, marketing, and human resources staff can share a tool that is truly enterprise wide To compete on a functional level today, companies must adopt an enterprise wide approach to ERP that utilizes the Internet and connects to every facet of the value chain The Evolution of ERP: it has grown to accommodate the needs of the entire organization ERP (1990): Materials planning, order entry, distribution, general ledger, accounting, shop floor control Extended ERP (2000): scheduling, forecasting, capacity planning, ecommerce, warehousing, logistics ERP-II (present): project management, knowledge management, work flow management, customer relationship management, human resource management, portal capability, integrated financials Applications such as SCM, CRM, and ERP are the backbone of ebusiness Integration of these applications is the key to success for many companies Integration allows the unlocking of information to make it available to any user, anywhere, anytime Most organizations today have no choice but to piece their SCM, CRM, and ERP applications together since no one vendor can respond to every organization need; hence, customers purchase applications from multiple vendors As a result, organizations face the challenge of integrating their systems For example, a single organization might choose its CRM components from Siebel, SCM components from i2, and financial components and HR management components from Oracle Primary Users and Business Benefits of Strategic Initatives: Figure 8.34 displays the general audience and purpose for each of these applications that have to be integrated Enterprise Application: CRM Primary users: sales, marketing, customer service Primary business benefit: sales forecasts, sales strategies, marketing campaigns SCM: Primary users: customers, resellers, partners, suppliers, distributors Primary business benefit: market demand, resource and capacity constraints, real-time scheduling ERP: Primary users: accounting, finance, logistics, production Primary business benefit: forecasting, planning, purchasing, material management, warehousing, inventory, distribution Extended ERP components meet the organizational needs not covered by the core components and primarily focus on external operations Many are Internet-enabled and require interaction with customers, suppliers, and business partners outside the organization The four most common extended ERP components are: Business intelligence ERP Components: ERP systems offer powerful tools that measure and control organizational operations Many organizations have found that these valuable tools can be enhanced to provide even greater value through the addition of powerful business intelligence systems The business intelligence components of ERP systems typically collect information used throughout the organization (including data used in many other ERP components), organize it, and apply analytical tools to assist managers with decisions Data warehouses are one of the most popular extensions to ERP systems, with over two-thirds of US manufacturers adopting or planning such systems Customer Relationship Management ERP Components: ERP vendors are expanding their functionality to provide services formerly supplied by customer relationship management (CRM) vendors such as Siebel, CRM components provide an integrated view of customer data and interactions allowing organizations to work more effectively with customers and be more responsive to their needs CRM components typically include contact centers, sales force automation, and marketing functions These improve the customer experience while identifying a company's most (and least) valuable customers for better allocation of resources Supply Chain Management ERP Components: ERP vendors are expanding their systems to include SCM functions that manage the information flows between and among supply chain stages, maximizing total supply chain effectiveness and profitability SCM components allow a firm to monitor and control all stages in the supply chain from the acquisition of raw materials to the receipt of finished goods by customers Ebusiness ERP Components: the original focus of ERP systems was the internal organization. In other words, ERP systems are not fundamentally ready for the external world of ebusiness The newest and most exciting extended ERP components are the ebusiness components Two of the primary features of ebusiness components are elogistics are eprocurement Ebusiness and ERP complement eac other by allowing companies to establish a web presence and fulfill orders expeditiously Customers and suppliers are now demanding access to ERP information including order status, inventory levels, and invoice reconciling Plus, the customers and partners want all this information in a simplified format available through a website This is a difficult task to accomplish because most ERP systems are full of technical jargon, which is why employee training is only of the hidden costs associated with ERP implementations Removing the jargon to accommodate untrained customers and partners is one of the most difficult tasks when web-enabling an ERP system ORGANIZATIONAL INTEGRATION WITH ERP: the goal of ERP is to integrate all of the organizational systems into one fully functioning, high-performance system that is capable of meeting all business needs and user requirements Traditional ERP System were typically accessed from a computer on the customer's premise or office Tomorrow's ERP systems will enhance the ability of organizations to apply context to decision making and adapt more easily to changing events ERP systems in the future will focus on usability, ubiquity, accessibility, and mobility drawing many advantages including Drive cost efficiencies Faster time to market Better enable mobile workforce Better leverage data to provide insights New product development Of course, ERP of the future will have many challenges including data management, source record management, and coordinating integrations and support activities ERP Implementation Choices: The Three Primary ERP Implementation Choices Driving the Next Generation of Business Operations ON-PREMISE ERP Own all Hardware and Software Significant capital investment Complete ownership

bullwhip effect

occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain A good example of inventory issues that occur when a company does not have a clear vision of its entire supply chain is the bullwhip effect The misinformation regarding a slight rise in demand for a product could cause different members in the supply chain to stockpile inventory These changes ripple throughout the supply chain magnifying the issue and creating excess inventory and costs for all For example, if a car dealership is having a hard time moving a particular brand of car, it might offer significant discounts to try to move the inventory Without this critical information, the car manufacturer might see a rise in demand for this particular brand of car and increase production orders, not realizing that the dealerships are actually challenged with selling inventory Today, integrated supply chains provide managers with the visibility to see their suppliers' and customers' supply chains, ensuring that supply always meets demand

sales analytics

involves gathering, classifying, comparing, and studying company sales data to analyze product cycles, sales pipelines, and competitive intelligence Software with advanced analytics capabilities helps you attract and retain loyal and profitable customers and gives you the insight you need to increase revenues, customer satisfaction, and customer loyalty

customer analytics

involves gathering, classifying, comparing, and studying customer data to identify buying trends, at-risk customers, and potential future opportunities Firms can find their most valuable customers by using the RFM formula - recency, frequency, and monetary value In other words, an organization must track: How recently a customer purchased items How frequently a customer purchases items The monetary value of each customer purchase After gathering this initial CRM information, the firm can analyze it to identify patterns and create marketing campaigns and sales promotions for different customer segments For example, if a customer buys only at the height of the season, the firm should send a special offer during the off-season If a certain customer segment purchases shows but never accessories, the firm can offer discounted accessories with the purchase of a new pair of shoes If the firm determines that its top 20 percent of customers are responsible for 80 percent of the revenue, it can focus on ensuring these customers are always satisfied and receive the highest levels of customer serrvices

the power of the customer

A standard rule of business states that the customer is always right Although most businesses use this as their motto, they do not actually mean it Ebusiness firms, however, must adhere to this rule as the power of the customer grows exponentially in the information age Various websites and videos on YouTube reveal the power of the individual consumer Sites such as DoNotBuyDodge.com and JetBlueHostage.com demonstrate the power of the consumer in the digital age A decade ago if you had a complaint against a company, you could make a phone call or write a letter Now, you can contact hundreds or thousands of people around the globe and voice your complaint or anger with a company or product You, the customer, can now take your power directly to millions of people and companies have to listen

the current generation of ERP

ERP II is composed of two primary components: core and extended

electronic data interchange (EDI)

a standard format for the electronic exchange of information between supply chain participants For example, a supply chain execution might electronically route orders from a manufacturer to a supplier using Electronic data interchange (EDI):

legacy system

an old system that is fast approaching or beyond the end of its useful life within an organization The ERP, SCM, and CRM systems that run on-premise are referred to as legacy systems CLOUD ERP: All Hardware and Software Owned and Remotely Hosted by Cloud Vendor The cloud has changed the legacy model of ERP implementation

the two key sales strategies a marketing campaign can deploy

are cross-selling and up-selling

enterprise application integration (EAI)

connects the plans, methods, and tools aimed at integrating separate enterprise systems A legacy system is a current or existing system that will become the base for upgrading or integrating with a new system EAI reviews how legacy systems fit into the new shape of the firm's business processes and devises ways to efficiently reuse what already exists while adding new systems and data

outbound logistics

distributes goods and services to customers

supply chain execution system

ensures supply chain cohesion by automating the different activities of the supply chain, flows from supplier to manufacture to distributor to retailer to customer For example, a supply chain execution might electronically route orders from a manufacturer to a supplier using Electronic data interchange (EDI)

supplier relationship management (SRM)

focuses on keeping suppliers satisfied by evaluating and categorizing suppliers for different projects SRM applications help companies analyze suppliers based on number of key variables including prices, inventory availability, and business focus or strategies It can help them determine the best supplier to collaborate with and develop strong relationships with to streamline processes, outsource services, and provide products the firm could not offer alone

CRM reporting technologies

help organizations identify their customers across other applications Evolution of CRM - a few of the important questions an organization can answer by using CRM technologies: What is the total revenue by customer How many units did we make? What were total sales by product? How many customers do we have? What are the current inventory levels?

CRM predicting technologies

help organizations predict customer behavior, such as which customers are at risk of leaving Evolution of CRM - a few of the important questions an organization can answer by using CRM technologies: What customers are at risk of leaving? Which products will our customers buy? Who are the best customers for a marketing campaign? How do we reach our customers? What will sales be this year? How much inventory do we need to pre order

elogistics

manages the transportation and storage of goods

customer relationship management (CRM)

means of managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability CRM allows an organization to gain insights into customers' shopping and buying behaviors in order to develop and implement enterprise wide strategies The key players in CRM initiatives are outline in figure 8.16: Customer Relationship Management Key Players: Lead: a person or company that is unknown to your business Account: an existing business relationship exists and can include customers, prospects, partners and competitors Contact: specific individual representing the account Sales Opportunity: an opportunity exists for a potential sale of goods or services related to an account or contact CRM strategic goals include: Identify sales opportunties Classify low-value customers and create marketing promotions to increase consumer spending Classify high-value customers and create marketing promotions to increase consumer loyalty Analyze marketing promotions by product, market segment, and sales region Identify customer relationship issues along with strategies for quick resolution The complicated piece of the CRM puzzle is identifying the customers and the many communication channels they use to contact companies including call centers, web access, email, sales representatives, faxes, and cell phones A single customer may access an organization multiple times through many different channels Customer Contact Points: Text Message Instant Message to Voice Mail Voice call, to Email Letter, to web Order Phone Order to Meeting or Customer Service Call to Twitter/FaceBook/Blog CRM systems can help to collect all of the points of customer contact along with sales and financial information to provide a complete view of each customer A CRM connects all of the types of customer contact to accounting system, order fulfillment system, inventory system, and customer service system CRM systems track every communication between the customer and the organization and provide access to cohesive customer information for all business areas from accounting to order fulfillment Understanding all customer communications allows the organization to communicate effectively with each customer It gives the organization a detailed understanding of each customer's products and services record regardless of the customer's preferred communication channel For example, a customer service representative can easily view detailed account information and history through a CRM system when providing information to a customer, such as expected delivery dates, complementary product information, and customer payment and billing information Companies that understand individual customer needs are best positioned to achieve success Of course, building successful customer relationships is not a new business practice; however, implementing CRM systems allows a company to operate more efficiently and effectively in the area of supporting customer needs CRM movies far beyond technology by identifying customer needs and designing specific marketing campaigns tailored to each This enables a firm to treat customers as individuals, gaining important insights into their buying preferences and shopping behaviors Firms that treat their customers well reap the rewards and generally see higher profits and highly loyal customers Identifying the most valuable customers allows a firm to ensure that these customers receive the highest levels of customer service and are offered the first opportunity to purchase new products Today, most competitors are simply a mouse-click away This intense marketplace has forced organizations to switch from being sales focused to being customer focused

two primary components of a CRM strategy

operational CRM and analytical CRM

enterprise application integration (EAI) middleware

takes a new approach to middleware by packaging commonly used applications together, reducing the time needed to integrate applications from multiple vendors

supply chain visibility

the ability to view all areas up and down the supply chain in real time To react to demand, an organization needs to know all customer events triggered upstream and downstream and so must their suppliers and their suppliers' suppliers Without this information, supply chain participants are blind to the supply and demand needs occurring in the marketplace, a factor required to implement successful business strategies To improve visibility across the supply chain, firms can use supply chain planning systems and supply chain execution systems

cloud computing

According to the National Institute of Standards and Technology (NIST) cloud computing: stores, manages, and processes data and applications over the Internet rather than on a personal computer or server Cloud computing offers new ways to store, access, process, and analyze information and connect people and resources from any location in the world an Internet connection is available Users connect to the cloud from their personal computers or portable devices by using a client, such as a web browser (individual devices connect to Gmail, Facebook, Amazon EC2, Windows Live, Moxy for example) To these individual users, the cloud appears as their personal application, device, or document It is like storing all of your software and documents in the cloud, and all you need is a device to access the cloud No more hard drives, software, or processing power - that is all located in the cloud, transparent to the users Users are not physically bound to a single computer or network; they can access their programs and documents from wherever they are, whenever they need to The best part is that even if your machine crashes, is lost, or is stolen, the information hosted in the cloud is safe and always available

computer-aided design/computer-aided manufacturing (CAD/CAM)

CAD/CAM systems are used to create the digital designs and then manufacture the products For example, a user creates a design with a CAD application and then manufactures the product by using CAM systems Before 3D printers existed, creating a prototype was time consuming and expensive, requiring skilled craftsmen and specific machinery Instead of sending modeling instructions to a production company, advances in 3D printing allow users to create prototypes and products on demand from their desks Shipping required parts from around the world could become obsolete because the spare parts can now be 3D printed on demand This could have a major impact on how businesses large and small operate and interact on a global scale in the future

marketing and operational CRM

Companies are no longer trying to sell one product to as many customers as possible; instead they are trying to sell one customer as many products as possible Marketing departments switch to this new way of doing business by using CRM technologies that allow them to gather and analyze customer information to tailor successful marketing campaigns In fact, a marketing campaign's success is directly proportional to the organization's ability to gather and analyze the right customer information

customer service and operational CRM

Most companies recognize the importance of building strong customer relationships during the marketing and sales efforts, but they must continue this effort by building strong post-sale relationships also A primary reason firms lose customers is due to negative customer service experiences Providing outstanding customer service is challenging, and many CRM technologies can assist organizations with this important activity The three primary CRM technologies for providing outstanding customer service Contact center Web based self-service Call scripting

sales and operational CRM

Sales departments were the first to begin developing CRM systems: they had 2 primary motivations to track customer sales information electronically First, sales representatives were struggling with the overwhelming amount of customer account information they were required to maintain and track Second, managers found themselves hindered because much of their vital customer and sales information remained in the heads of their sales representative, even if the sales representative left the company Finding a way to track customer information became a critical success factor for many sales departments

the three enterprise systems most organizations use to integrate their disparate departments and separate operational systems

Supply Chain Management (SCM) Customer Relationship Management (CRM) Enterprise Resource Planning (ERP) Companies run on interdependent applications such as SCM, CRM, and ERP If one application performs poorly, the entire customer value delivery system is affected For example, no matter how great a company is at CRM, if its SCM system does not work and the customer never receives the finished product, the company will lose that customer The world-class enterprises of tomorrow must be built on the foundation of world-class applications implemented today

the two key components of an ERP system to help resolve these issues of failing to maintain consistency across business operations include

a common data repository and a modular software design

maker space

a community center that provides technology, manufacturing equipment, and educational opportunities to the public that would otherwise be inaccessible or unaffordable The growth of the maker movement is often attributed to the rise of community makerspaces Although the majority of makers are hobbyists, entrepreneurs and small manufacturers are also taking advantage of the classes and tools available in makerspaces

uplift modeling

a form of predictive analytics for marketing campaigns that attempts to identify target markets or people who could be convinced to buy products The "uplift" refers to the increased sales that can follow after this form of analytical CRM analysis

inbound logistics

acquire raw materials and resources and distributes them to manufacturing as required

click-to-talk

allows customers to click on a button and talk with a representative via the Internet Powerful customer driven features such as these add value to any organization by providing customers with real time information that helps resolve their concerns

common data repository

allows every department of a company to store and retrieve information in real-time allowing information to be more reliable and accessible

sales force automation (SFA)

automatically tracks all steps in the sales process SFA products focus on increasing customer satisfaction, building customer relationships, and improving product sales The three primary operational CRM technologies a sales department can adopt are: Sales management CRM systems Contact management CRM systems Opportunity management CRM systems

list generator

compiles customer information from a variety of sources and segments it for different marketing campaigns These sources include website visits, questionnaires, surveys, marketing mailers, and so on After compiling the customer list, it can be filtered based on criteria such as household income, gender, education level, political facilitation, age, or other factors List generators provide the marketing department with valuable information on the type of customer it must target to find success for a marketing campaign

call scripting system

gathers product details and issue resolution information that can be automatically generated into a script for the representative to read to the customer Companies that market and sell highly technical products have a difficult time finding competent customer service representatives These systems even provide questions the representative can ask the customer to troubleshoot the problem and find a resolution This feature not only helps reps answer difficult questions quickly but also presents a uniform response so customers don't receive different answers

contact management CRM system

maintains customer contact information and identifies prospective customers for future sales, using tools such as organizational charts, detailed customers notes, and supplemental sales information For example, a contact management system can take an incoming telephone number and automatically display the person's name along with a comprehensive history including all communications with the company This allows the sales representative to personalize the phone conversation and ask such things as "How is your new laptop working, Sue?" or "How was your family vacation to Colorado?" The customer feels valued since the sales associate knows her name and even remembers details of their last convo

the future of CRM

organizations are discovering a wave of other key business areas where it is beneficial to build strong relationships beyond customers. These include supply relationship management, partner relationship management, and employee relationship management

the three components of supply chain management on which companies focus to find efficiencies include

procurement, logistics, and materials management

cradle-to-grave

provides logistics support throughout the entire system or life of the product

forward integration

takes information entered into a given system and sends it automatically to all downstream systems and processes

supply chain management (SCM)

the management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and corporate profitability In the past, manufacturing efforts focused primarily on quality improvement efforts within the company; today, these efforts reach across the entire supply chain, including customers, customers' costumes, suppliers, and suppliers' suppliers Today's supply chain is an intricate network of business partners linked through communication channels and relationships Supply chain management systems manage and enhance these relationships with the primary goal of creating a fast, efficient, and low-cost network of business relationships that take products from concept to market SCM systems create the integrations or tight process and information linkages between all participants in the supply chain Supply chain management performs three main business processes: 1. Material flow from suppliers and their upstream suppliers at all levels 2. Materials are transformed into semi-finished and finished products - the organization's own production processes 3. Products are distributed to customers and their downstream customers at all levels Consider a customer purchasing a mountain bike from a dealer Dozens of steps are required to complete this transaction from beginning to end The customer places an order with the dealer The dealer purchases the bike from the manufacturer The manufacturer purchases the raw materials required to make the bike The raw materials are stored in the manufacturer's warehouse until a production order requires the bike to be built, at which time the finished product is sent to the dealer or in some cases, directly to the customer The supply chain for a bike manufacturer includes all processes and people required to fulfill the customer's order Walmart and Proctor & Gamble (P&G) have implemented a successful SCM system that links Walmart's distribution center directly to P&G's manufacture centers The customer generates order information by purchasing a product from Walmart Walmart supplies the order information to its warehouse or distributor The warehouse or distributor transfers the order information to P&G which provides pricing and availability information to the store and replenishes the product to the distributor Payment is transferred electronically Effective and efficient supply chain management systems can enable an organization to have these impacts on Porter's Five Forces Model: Decrease the power of its buyers. Increase its supplier power Increase buyers' switching costs to reduce the threat of substitute products or services Create entry barriers to reduce the threat of new entrants Increase efficiencies while seeking a competitive advantage through cost leadership Supply chain management systems can increase profitability across an organization For example, a manufacturing plant manager might focus on keeping the inventory of product A as low as possibly, which will directly reduce the manufacturing costs and make the plant manager look great However, the plant manager and the business might not realize that these savings are causing increased costs in other areas, such as having to pay more to procure raw materials for immediate production needs or increasing costs due to expedited shipping services Only an end-to-end view or an integrated supply chain would uncover these issues allowing a firm to adjust business strategies to increase profitability across the enterprise The supply chain is only as strong as its weakest link Companies use supply chain management metrics to measure the performance of supply chains to identify weak links quickly A few of the common supply chain management metrics include: Back order: an unfilled customer order for a product that is out of stock Inventory cycle time: the time it takes to manufacture a product and deliver it to the retailer Customer order cycle time: the agreed upon time between the purchase of a product and the delivery of the product Inventory turnover: the frequency of inventory replacement

core ERP component

the traditional components included in most ERP systems and primarily focus on internal operations The three most common core ERP components focusing on internal operations: accounting and finance, production and material management, human resources These components all come together in the Enterprise Resource Planning Software

eintegration

the use of the Internet to provide customers with the ability to gain personalized information by querying corporate databases and their information sources

web-based self service system

allows customers to use the web to find answers to their questions or solutions to their problems FedEx uses web based self service systems to let customers electronically track packages without having to talk to a customer service representative Another feature of web-based self service is Click-to-talk: a

CRM analysis technologies

help organizations segment their customers into categories such as best and worst customers Evolution of CRM - a few of the important questions an organization can answer by using CRM technologies: Why did sales not meet forecasts? Why was production so low? Why did we not sell as many units as previous years? Who are our customers? Why was revenue so high?

website personalization

occurs when a website has stored enough data about a person's likes and dislikes to fashion offers more likely to appeal to that person Many marketers use CRM to personalize customer communications and decide which customers are worth pursuing

integrations between SCM, CRM, and ERP Applications

SCM on one side: business, partners, suppliers, distributors, resellers ERP: logistics, production, distribution (employees) CRM: marketing, sales, customer service (employees) SCM on the other side: customers

the extended supply chain

As the supply chain management market matures, it is becoming even more sophisticated and incorporating additional functionality such as marketing, customer service, and even product development to its extended supply chain Advanced communications, tools, easy-to-use decision support systems, and building trust among participants when sharing information are all making the home-based supply chain possible Extending the Supply Chain: a few of the fastest growing extensions for supply chain management: Supply chain evenement management (SCEM): enables an organization to react more quickly to resolve supply chain issues. SCEM software increases real-time information sharing among supply chain partners and decreases their response time to unplanned events. SCEM demand will skyrocket as more and more organizations begin to discover the benefits of real-time supply chain monitoring Selling chain management: applies technology to the activities in the order life cycle from inquiry to sale Collaborative engineering: allows an organization to reduce the cost and time required during the design process of a product Collaborative demand planning: helps organizations reduce their investment in inventory while improving customer satisfaction through product availability

RFID in the supply chain

RFID tags are added to every product and shipping box. At every step of an item's journey, a reader scans one of the tags and updates the information on the server The Manufacturer: a reader scans the tags as items leave the factory The Distribution Center: readers in the unloading area scan the tags on arriving boxes and update inventory, avoiding the need to open packages The Store: tags are scanned upon arrival to update inventory. At the racks, readers scan tags as shirts are stocket. At the checkout counter, a cashier can scan individual items with a handheld reader As items leave the store, inventory is updated. Manufacturers and retailers can observe sales patterns in real time and make swift decisions about production, ordering, and pricing The Home: the consumer can have the tag disabled at the store for privacy or place readers in closets to keep track of clothes. With customers' approval, stores can follow purchasing patterns and notify them of sales

the three components to an RFID system

Tag: a microchip holds data, in this case an EPC (electronic product code), a set of numbers unique to an item. The rest of the tag is an antenna that transmits data to a reader. EPC example: 01-0000A77-000136BR5 Reader:a reader uses radio waves to read the tag and sends the EPC to computers in the supply chain Computer network: each computer in the supply chain recognizes the EPC and pulls up information related to the iem, such as dates made and shipped, price, and directions for use, from a server maintained by the manufacturer. The computers track the item's location throughout the supply chain

ERP costs

The primary risk for an ERP implementation includes the associated costs: Software costs: purchasing the software can cost millions of dollars for a large enterprise Consulting fees: hiring external experts to help implement the system correctly can cost millions of dollars Process rework: redefine processes to ensure that the company is using the most efficient and effective processes Customization: if the software package does not meet all of the company's needs, customizing the software may be required Integration: ensuring that all software products, including disparate systems not part of the ERP system, are working together or are integrated Testing: testing that all functionality works correctly along with testing all integrations Training: training all new users and creating the training user manuals Data Warehouse Integration and Data Conversions: moving data from an old system into the new ERP system

maker movement

a cultural trend that places value on an individual's ability to be a creator of things as well as a consumer of things In this culture, individuals who create things are called "makers" The movement is growing rapidly and is expected to be economically disruptive; as ordinary people become more self sufficient, they will be able to make their own products instead of procuring brand-name products from retail stores Makers come from all walks of life, with diverse skill sets and interests The thing they have in common is creativity, an interest in design, and access to tools and raw materials that make production possible The growth of the maker movement is often attributed to the rise of community makerspaces

balanced scorecard

a management system, as well as a measurement system, that a firm uses to translate business strategies into executable tasks One of the best methods of measuring ERP success is the balanced scorecard. Created by Dr. Robert Kaplan and Dr. David Norton, both from the Harvard Business School It provides feedback for both internal and external business processes, allowing continuous improvement Kaplan and Norton describe the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for the industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success.These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." The balanced scorecard uses for perspectives to monitor an organization The learning and growth perspective: "To achieve our vision, how will we sustain our ability to change and improve?" The internal business process perspective: "To satisfy our shareholders and customers, what business processes must we excel at?" The customer perspective: "To achieve our vision, how should we appear to our customers?" The financial perspective: "to succeed financially, how should we appear to our shareholders?"

customer service and support (CSS)

a part of operational CRM that automates service requests, complaints, product returns, and information requests Figure 8.24 depicts the typical sales process, which begins with an opportunity and ends with billing the customer for the sale - A Typical Sales Process Opportunity generated - lead sent to sales person - potential customer contacted - potential customer meeting - problems and solutions identified -customer sales quote generated - sales order placed - order fulfilled - customer billed Leads and potential customers are the lifeblood of all sales organizations, where they sell computers, clothing, consulting, or cars How leads are handled can make the difference between revenue growth and decline

supply chain

all parties involved, directly or indirectly, in obtaining raw materials or a product The five basic supply chain activities a company undertakes to manufacture and distribute products Plan: prepare to manage all resources required to meet demand Source: build relationships with suppliers to procure raw materials Make: manufacture products and create production schedules Deliver: plan for transportation of goods to customers Return:support customers and product returns To automate and enable sophisticated decision making int these critical areas, companies are turning to systems that provide demand forecasting, inventory control, and information flows between suppliers and customers The average company spends nearly half of every dollar it earns on suppliers and raw materials to manufacture products It is not uncommon to hear of critical success factors focusing on getting the right products, to the right place, at the right time, at the right cost

integration

allows separate systems to communicate directly with each other, eliminating the need for manual entry into multiple systems Building integrations allows the sharing of information across databases along with dramatically increasing its quality The army can now generate reports detailing its state of readiness and other essential intelligence, tasks that were nearly impossible before the integrations Until the 1990s, each department in the United Kingdom's Ministry of Defense and Army headquarters had its own information system, and each system had its own database Sharing information was difficult, requiring employees to manually input the same information into different systems multiple times Often, management could not even compile the information it needed to answer questions, solve problems, and make decisions To combat this challenge, the ministry integrated its systems, or built connections among its many databases

drone

an unmanned aircraft that can fly autonomously, or without a human Amazon.com is piloting drone aircraft for package deliveries Amazon is now working on small drones that could someday deliver customers' packages in half an hour or less UPS and FedEx have also been experimenting with their own versions of flying parcel carriers Drones are already here and use GPS to help coordinate the logistics of package delivery The problems with drones include FAA approval and the advanced ability to detect and avoid objects GPS coordinates can easily enable the drone to find the appropriate package delivery location, but objects not included in the GPS, such as cars, dogs, and children, will need to be detected and avoided FedEx founder Fred SMith stated that his drones are up and running the lab; all he requires to move his fleet of drones from the lab to production is approval from regulators (FAA) It is just a matter of getting the laws in place so companies can begin building to those specifications and doing some real field testing

sales management CRM system

automates each phase of the sales process, helping individual sales representatives coordinate and organize all their accounts Features include calendars, reminders for important tasks, multimedia presentations, and document generation These systems can even provide an analysis of the sales cycle and calculate how each individual sales representative is performing during the sales process

The second integration method

builds a central repository for a particular type of information: there's the customer information system in the center with arrows pointing out to the order entry system, billing system, sales system, and orderulfillment system Figure 8.1 provides an example of customer information integrated using this method across four different systems in an organization Users can create, update, and delete customer information only in the central customer database As users perform these tasks, integrations automatically send the new and/or updated customer information to the other systems The other systems limit users to read-only access of the customer information stored in them Both integration methods do not entirely eliminate information redundancy, but they do ensure information consistency among multiple systems

35 printing (additive manufacturing) - support procurement

builds, layer by layer, in an additive process, a three-dimensional solid object from a digital model The additive manufacturing process of 3D printing is profoundly different from traditional manufacturing processes The Financial Times and other sources are stating that 3D printing has the potential to be vastly more disruptive to business than the Internet The reason people are betting on 3D printing to disrupt business is that it brings production closer to users, thus eliminating steps in the supply chain similar to disintermediation by the internet 3D printing also promotes mass customization, small production batches, and reduction in inventory Traditionally, the costs associated with 3D printing made it accessible to small and mid-sized businesses and home users With the advances in 3D printing, the need to procure materials will become far easier because businesses can simply print the parts and components required for the production process There is no doubt about it: 3D printing will affect production process and supply chains and cause business disruption These printers are creating auto parts, cell phone covers, jewelry, toys, bicycles, and manufacturing prototypes for testing purposes To print a 3D product, users create a digital model that is sliced into thin cross-sections called layers During the printing process, the 3D printer starts at the bottom of the design and adds successive layers of material to complete the product

software as a service (SAAS)

delivers applications over the cloud using a pay-per-use revenue model Before its introduction, companies often spent huge amounts of money implementing and customizing specialized applications to satisfy their business requirements Many of these applications were difficult to implement, expensive to maintain, and challenging to use Usability was one of the biggest drivers for creating interest in and success for cloud computing service providers SaaS ERP uses the cloud platform to enable organizations not only to unite around business processes, but also to gather data across supplier networks and supply chains to drive greater efficiency in manufacturing projects The move to SaaS ERP is attracting many small and midsize businesses that simply cannot afford the costs associated with a traditional large ERP implementation SaaS offers a number of advantages: The most obvious is tremendous cost savings The software is priced on a per-use basis with no up front costs, so companies get the immediate benefit of reducing capital expenditures They also get the added benefit of scalability and flexibility to test new software on a rental basis Advantages of SaaS Implementations: Cost saving Flexibility Reliability Portability Capacity on demand backup//recovery Scalability Availability Accessibility Cloud ERP has been slow to take off across business because many people were initially uncomfortable with placing sensitive data in the cloud As the tremendous cost-saving advantages associated with cloud applications and SaaS become more apparent, the reservations against cloud ERP are dissipating Large organizations tend to have difficulty adjusting to cloud solutions simply because they want greater levels of control over their enterprise applications Smaller, less complex organizations that lack sophisticated MIS departments are more likely to gravitate toward the cloud because it is easy for them to change business processes to fit the software SaaS ERP can provide a company with the flexibility of on-premise software and the added benefits of a vendor maintaining and housing the applications off premises The biggest concerns for organizations interested in cloud ERP solutions is data security and potential vendor outages causing business downtime Without an on-premise MIS department, the organization is truly at the mercy of the vendor during any system outage, and for critical organizational systems like ERP, this could be an unacceptable risk

supply chain design

determines how to structure a supply chain including the product, selection of partners, the location and capacity of warehouses, transportation methods, and supporting management information systems Considerable evidence shows that this type of supply chain design results in superior supply chain capabilities and profits

partner relationship management (PRM)

discovers optimal sales channels by selecting the right partners and identifying mutual customers A PRM system offers real-time sales channel information about such things as inventory availability, pricing strategies, and shipping information, allowing a company to expand its market by offering specialized products and services

customer segmentation

divides a market into categories that share similar attributes such as age, location, gender, habits, and so on. By segmenting customers into groups, it becomes easier to create targeted marketing and sales campaigns, ensuring that you are not wasting resources marketing products to the wrong customers analytical CRM provides this

module software design

divides the systems into a set of functional units (named modules) that can be used independently or combined with other modules for increased business flexibility Module software design allows customers to mix-and-match modules so they purchase only the required modules If a company wants to implement the system slowly it can begin with just one module, such as accounting, and then incorporate additional modules such as purchasing and scheduling

campaign management system

guides users through marketing campaigns by performing such tasks as campaign definition, planning, scheduling, segmentation, and success analysis These advanced systems can even calculate the profitability and track the results for each marketing campaign

production and materials management ERP component

handles production planning and execution tasks such as demand forecasting, production scheduling, job cost accounting, and quality control Demand forecasting helps determine production schedules and materials purchasing A company that makes its own product prepared a detailed production schedule, and a company that buys products for resale develops a materials requirement plan Companies typically product multiple products, each of which has many different parts Production lines, consisting of machines and employees, build the different types of products The company must then define sales forecasting for each product to determine production schedules and materials purchasing A typical ERP Production Planning process: Sales forecasting to operations planning (begins with forecasting sales in order to plan operations) to either detailed scheduling and material requirement planning and then detailed scheduling goes to production while materials requirement planning goes to purchasing A detailed production schedule is developed if the product is produced and a materials requirement plan is completed if the product is purchased

on-premise system

includes a server at a physical location using an internal network for internal access and firewalls for remote users' access Until a decade ago, virtually all ERP systems were installed on-premise Remote users had to access the ERP system through a firewall, which protected the system against unauthorized access These systems were known as on-premise systems and they are still in wide use today

materials management

includes activities that govern the flow of tangible, physical materials through the supply chain such as shipping, transport, distribution, and warehousing In materials management, you focus on the quality and quantity of materials as well as on how you will plan, acquire, use, and dispose of such materials It can include the handling of liquids, fuel, produce, and plants and a number of other potentially hazardous items Materials management focuses on handling all materials safely, efficiently, and in compliance with regulatory requirements and disposal requirements Materials management can help a company answer the following concerns: What are our current inventory levels? What items are running low in the warehouse? What items are at risk of spoiling in the warehouse? How do we dispose of spoiled items? What laws need to be followed for storing hazardous materials? Which items must be refrigerated when being stored and transported? What are the requirements to store or transport fragile items? As with all other areas of business, disruptive technologies are continuously being deployed to help businesses find competitive advantages in each component of the supply chain

logistics

includes the processes that control the distribution, maintenance, and replacement of materials and personnel to support the supply chain Recall from the value chain analysis in chapter 1 that the primary value activities for an organization include inbound and outbound logistics Inbound logistics: acquire raw materials and resources and distributes them to manufacturing as required Outbound logistics: distributes goods and services to customers Logistics controls processes inside a company (warehouse logistics) and outside a company (transport logistics) and focuses on the physical execution part of the supply chain Logistics include the increasingly complex management of processes, information, and communication to take a product from cradle to grave Logistics can help a company answer the following questions: What is the quickest way to deliver products to our customers? What is the optimal way to place items in the warehouse for picking and packing? What is the optimal path to an item in the warehouse? What path should the vehicles follow when delivering the goods? What areas or regions are the trucks covering?

up-selling

increasing the value of the sale MdDonald's performs up-selling by asking customers whether they would like to super-size their meals for an extra cost CRM systems offer marketing departments all kinds of information about customers and products, which can help identify up-selling and cross-selling opportunities to increase revenues

accounting and finance ERP component

manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management One of the most useful creatures included in a ERP accounting/finance component is it cread-management feature Most organizations manage their relationships with customers by setting credit limits or a limit on how much a customer can owe at any one time The company then monitors the credit limit whenever the customer places a new order or sends in a payment ERP financial systems help to correlate customer orders with customer account balances determining credit availability Another great feature is the ability to perform product profitability analysis ERP financial components are the backbone behind product profitability analysis and allow companies to perform all types of advanced profitability modeling techniques Accounting and finance ERP components: Deeley Harley-Davidson Canada (DHDC), the exclusive Canadian distributor of Harley-Davidson motorcycles, has improved inventory, turnaround time, margins, and customer satisfaction, all with the implements of a financial ERP system The system has opened up the power of information to the company and is helping it make strategic decisions when it still has the time to change things The ERP system provides the company with ways to manage inventory, turnaround time, and warehouse space more efficiently Grupo Farmanove Intermed, located in Costa Rica, is a pharmaceutical marketing and distribution company that markets nearly 2,500 products to approximately 500 customers in Central and South America The company identified a need for software that could unify product logistics management in a single country It decided to deploy PeopleSoft financial and distribution ERP components allowing the company to improve customer data management, increase confidence among internal and external users, and coordinate the logistics of inventory With the software the company enhanced its capabilities for handling, distributing, and marketing its pharmaceuticals

software customization

modifies existing software to meet specific user or business requirements Since ERP systems must fit business processes, many enterprises choose to customize their ERP systems to ensure that they meet business and user needs Software Customization Examples: different forms of software customization a business will undertake to ensure the success of an ERP implementation: Business Processes or Workflows: software can be customized to support the needs of business process work-flows unique to each business or department Code Modifications: the most expensive customization occurs when application code is changed and should only be done if the code changes provide specific competitive advantages Integrations: data integration is key for business process support that spans functional areas and legacy systems Reports, Documents, Forms: customization to reports, documents, and foms, can consist of simply layout or design changes or complex logic programming rules for specific business requirements User-Interface Changes: an ERP system can be customized to ensure that each user has the most efficient and effective view of the application Heavy customization leds to complex code that must be continuously maintained and upgraded It should be noted that customizing an ERP system is costly an complex and should only be done when there is a specific business advantage According to Meta Group, it takes the average company 8 to 18 months to see any benefits from an ERP system

robotics - supports materials management

ocuses on creating artificial intelligence devices that can move and react to sensory input The term robot was coined by Czech playwright Karl Capek in his play R.U.R (Rossum's Universal Robots), which opened in Prague in 1921 Robota is the Czech word for "forced labor" The term "robotics" was introduced by writer Isaac Asimov In his science fiction book I Robot, published in 1950, he presented three laws of robotics: A robot may not injure a human being, or, through inaction, allow a human being to come to harm A robot must obey the orders given it by human beings except where such orders would conflict with the First Law A robot must protect its own existence as long as such protection does not conflict with the First or Second Law You can find robots in factories performing high-precision tasks, in home vacuuming the floor and the pool, and in dangerous situations such as cleaning toxic wastes or defusing bombs Amazon alone has more than 10,000 robots in its warehouses, picking, packing, and managing materials to fulfill customer orders The robots are made by Kiva Systems, a company Amazon bought for $77 million in 2012 Kiva pitches its robots, which can cost between a few million dollars and as much as roughly $20 million, as simplifying and reducing costs via materials management The robots are tied into a complex grid that optimizes item placement in the warehouse and allows the robots to pick the inventory items and bring them to the workers for packing Watching an order fulfillement center equipped with Kiva robots is amazing; the operators stand still while the products come to them. Inventory pods store the products that are carried and transferred by a small army of little orange robots, eliminating the need for traditional systems such as converyors and sorters Though assessing the costs and benefits of robots versus human labor can be difficult Kiva boasts that a packer working with its robots can fulfill three to four times as many orders per hour Zappos, Staples, and Amazon are just a few of the companies taking advantage of the latest innovation in warehouse management by replacing traditional order fulfillment technologies such as conveyor belts with Kiva's little orange robots

RFID's electronic product code (RFID EPC)

promotes serialization or the ability to track individual items by using the unique serial number associated with each RFID tag Although a bar code might identify a product such as a bottle of salad dressing, an RFID EPC tag can identify each specific bottle and allow item-level tracking to determine whether the product has passed its expiration date Businesses can tell automatically where all its items are in the supply chain just by gathering the data from RFID chips The possibilities of RFID are endless, and one area it is affecting is logistics RFID tags for applications such as highway toll collection and container tracking remain in continuous use for several years Like regular electronic components, the tags are adhered to rigid substrates and packaged in plastic enclosures In contrast, tags on shipping cartons are used for a much shorter time and are then destroyed Disposable tags are adhered to printed, flexible labels pasted onto the carton,and these smart labels contain an RFID chip and antenna on the back A thermal printer/encoder prints alphanumeric and bar code data on the labels while encoding the chip at the same time

enterprise system

provides enterprisewide support and data access for a firm's operations and business processes These systems can manage customer information across the enterprise, letting you view everything your customer has experienced from sales to support Enterprise systems are often available as a generic, but highly customizable, group of programs for business functions such as accounting, manufacturing, and marketing Generally, the development tools for customization are complex programming tools that require specialist capabilities

employee relationship management (ERM)

provides web-based self-service tools that streamline and automate the human resource department Employees are the backbone of an enterprise and the communication channel to customers, partners, and suppliers. Their relationship with the company is far more important and long lasting than the relationship with customers; thus, many enterprises are turning to ERM systems to help retain key employees

there are three phases of CRM

reporting, analyzing predicting

cross-selling

selling additional products or services to an existing customer For example, if you were to purchase Tim Burton's movie Alice in Wonderland on Amazon, you would also be asked if you want to purchase the movie's soundtrack or the original book Amazon is taking advantage of cross-selling by offering customers goods across its book, movie, and music product line

middleware

several different types of software that sit between and provide connectivity for two or more software applications Integrations are achieved using middleware Middleware translates information between disparate systems

two of the primary forces driving ERP failure include

software customization and ERP costs

hybrid ERP

splits the ERP functions between an on-premises ERP system and one or more functions handled as Software as a Service (SaaS) in the cloud Building an all-encompassing ERP system traditionally ended in expensive failures Nike, K-Mart, and Hershey all lost over $100 million in failed ERP implementations Based on the need to avoid expensive failures along with the emergence of cloud computing, enterprises can now adopt hybrid ERP architectures Typically, the on-premise legacy application operates at the corporate headquarters, whereas cloud-based specific applications support business needs such as movilit and web-based functionality It is also becoming increasingly popular In fact many analysts are predicting that hybrid ERP will become a mainstay in the ERP market in the next few years Often a hybrid ERP system is implemented when the legacy system becomes very large and costly to customize, maintain, and upgrader or when mergers and acquisitions leave an organization with multiple ERP solutions that it is unable to consolidate to a single ERP system Hybrid ERP architectures also support organizations with multiple operations based in multiple geographic locations The following scenarios are common in organizations that use hybrid architectures of ERP A business with a very specific local focus - single site or multisite within a single country or region A business with operations geared strongly toward a specific industry that doesn't feature strongly at corporate headquarters A newly acquired operation with a mismatch of multiple outdated, unsupported ERPs A small subsidiary with no formal ERP in place Managing the data across the enterprise is one of the biggest concerns for organizations deploying hybrid ERP architectures It is critical for the business to have absolutely no duplication of effort between two ERP systems Consistency is required for any hybrid application to ensure that there is always a single source of information for accounting, financials, customer service, production, and other business areas Hundreds of ERP vendors offer best-of-breed ERP applications or vertical market solutions to meet the unique requirements of specific industries such as manufacturing, distribution, retail, and others ERP Vendors by Tier: Tier I: large enterprise ERP Vendor: SAP, Oracle, Microsoft Tier II: midsize business ERP vendor: Infor, Lawson, Epicor, Sage Tier III: Small business ERP vendor: Exact Globe, Syspro, NetSuite, Consona Important factors driving the future of ERP: cloud ERP, tiered architecture, SaaS ERP, and mobility Enterprise resource planning in the middle surrounded with arrows pointing out to ebusiness, business intelligence, customer relationship management, supply chain management, material requirement planning, finance accounting resource management, human resource management HYBRID ERP: Own Components of Hardware and Software Host Components of Hardware and Software with Cloud Vendor It is conventional wisdom that a diversified stock portfolio is a very effective hedge against investment risk For the same reason, companies that are not comfortable with the risk and/or loss of control associated with moving wholesale into ERP cloud computing, but still want to explore this evolving infrastructure, might find a hybrid ERP approach to be the perfect answer By "hybrid ERP approach" we mean mostly on site, but with some carefully selected hosted applications

analytical CRM

supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers Data warehouse, data mining are connected to collaborative CRM system provides information about customers and products that was once impossible to locate, such as which type of marketing and sales campaign to launch and which customers to target and when Unlike operational CRM, which automates call centers and sales forces with the aim of enhancing customer service, analytical CRM works by using business intelligence to identify patterns in product sales and customer behaviors Analytical CRM provides priceless customer information, supports important business decisions, and plays a vital role in your organization's success Analytical CRM tools can slice and dice vast amounts of information to create custom views of customers, products, and market segments, highlighting opportunities for cross-selling and up-selling Here are a few examples of the information insights analytical CRM can help an organization gain: Find new profitable customers: analytical CRM could highlight that the most profitable market segment consists of women between 35 and 45 years old who drive SUVs and live within 30 miles of the city limits. The firm could then find a way to locate these customers for mailings and other opportunities Exceed customer expectations: analytical CRM helps a firm move past the typical "Dear Mr. Smith" greeting by personalizing communications. For example, if the firm knows the customer's favorite brand and size of shoe, it can notify the customer that a pair of size 12 Nike cross trainers are available for him to try on the next time he visits the store Discover the activities the firm performs the best: analytical CRM can determine what an organization does better than its competitors. If a restaurant caters more lunches to mid sized companies than its competition does, it can purchase a specialized mailing targeting these customers for future mailings Eliminate competition: analytical CRM can determine sales trends allowing the company to provide customers with special deals outsmarting its competition. A sports store might identify its best customers for outdoor apparel and invite them to a private sale right before the competition runs its sale Care about customers: analytical CRM can determine what customers want and need, so a firm can contact them with an invitation to a private sale, reminder that a product needs a tune-up, or send them a personalized letter along with a discount coupon to help spark a renewed relationship

operational CRM

supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers Sales systems, marketing systems, customer service systems that all point to back official analytical CRM of data warehouse Operational CRM technologies: Marketing Operational CRM Technology: list generator, campaign management, Cross-Selling and Up-Selling Sales Operational CRM Technology: Sales management, contact management, opportunity management Customer Service Operational CRM Technology: contact center, web-based self service, call scripting The three primary operational CRM technologies a marketing department can implement to increase customer satisfaction are: List generator Campaign management Cross-selling and up-selling

backward integration

takes information entered into a given system and sends it automatically to all upstream systems and processes

opportunity management CRM system

targets sales opportunities by finding new customers or companies for future sales They determine potential customers and competitors and define selling efforts including budgets and schedules Advanced systems can even calculate the probability or a sale, which can save sales representatives significant time and money when qualifying new customers The primary difference between contact management and opportunity management is that connect management deals with existing customers and opportunity management with new or potential customers

eprocurement

the business-to-business (B2B) online purchase and sale of supplies and services A common mistake many businesses make is jumping into online business without properly integrating the entire organization on the ERP system One large toy manufacturer announced less than a week before Christmas that it would be unable to fulfill any of its online orders The company had all the toys in the warehouse, but it could not organize the basic order processing function to get the toys delivered to consumers on time

extended ERP component

the extra components that meet organizational needs not covered by the core components and primarily focus on external operations Examples: business intelligence, customer relationship management, supply chain management, ebusiness

two common methods are used for integrating databases

the first is to create forward and backward integrations that link processes (and their underlying databases) in the value chain: arrows move back and forth between the 4: sales system, order entry system, order fulfillment system, billing system (Figure 8.1 demonstrates how this method works across the systems or processes of sales, order entry, order fulfillment, and billing In the order entry system, for example, an employee can update the customer's information Via the Integrations, that information is sent upstream to the sales system and sent downstream to the order fulfillment and billing systems Ideally, an organization wants to build both forward and backward integrations, which provide the flexibility o create, update, and delete information in any of the systems However, integrations are expensive and difficult to build and maintain, causing most organizations to invest in forward integrations only) The second integration method builds a central repository for a particular type of information: there's the customer information system in the center with arrows pointing out to the order entry system, billing system, sales system, and orderulfillment system

application integration

the integration of a company's existing management systems to each other

data integration

the integration of data from multiple sources, which provides a unified view of all data

procurement

the purchasing of goods and services to meet the needs of the supply chain The procurement process is a key supply chain strategy because the capability to purchase input materials at the right price is directly correlated to the company's ability to operate Without the right inputs, the company simply can't create cost-effective outputs For example, if McDonald's could not procure potatoes or had to purchase potatoes at an outrageosus price, it would be unable to create and sell its famous french fries In fact, procuring the right size of potatoes that can produce the famous long french fries is challenging in some countries where locally grown potatoes are too small Procurement can help a company answer the following questions: What quantity of raw material should we purchase to minimize spoilage? How can we guarantee that our raw materials meet production needs? At what price can we purchase materials to guarantee profitability? Can purchasing all products from a single vendor provide additional discounts

Human Resources ERP components

tracks employee information including payroll, benefits, compensation, and performance assessment and ensures compliance with all laws Human resource components even offer features that allow the organization to perform detailed analysis on its employees to determine such things as the identification of individuals who are likely to leave the company unless additional compensation or benefits are provided These components can also identify which employees are using which resources, such as online training and long-distance telephone services They can also help determine whether the most talented people are working for those business units with the highest priority - or where they would have the greatest impact on profit

supply chain planning system

uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory To yield accurate results, however, supply chain planning systems require information inputs that are correct and up to date regarding customers, orders, sales, manufacturing, and distribution capabilities Ideally, the supply chain consists of multiple firms that function as efficiently and effectively as a single firm with full information visibility Flows from customer to retailers to distributor to manufacturer to supplier

radio-frequency identification (RFID) - supports logistics

uses electronic tags and labels to identify objects wirelessly over short distances It holds the promise of replacing existing identification technologies such as the bar code RFID tags are evolving, too, and the advances will provide more granular information to enterprise software Today's tags can store an electronic product code In time, tags could hold more information, making them portable mini-databases it supports logistics: A TV commercial shows a man in a uniform quietly moving through a family home- he replaces the empty cereal box with a full one just before the hungry child opens the cabinet; he then opens a new sack of dog food as the hungry bulldog eyes him warily and finally hands a full bottle of shampoo to the man in the shower whose bottle had just run out The next wave in supply chain management will be home-based supply chain fulfillment Walgreens is differentiating itself from the other national chains by marketing itself as the family's just-in-time supplier Consumers today are becoming incredibly comfortable with the idea of going online to purchase products when they want, how they want, and at the price they want Walgreens is developing custom websites for each household, which allow families to order electronically and then at their convenience go to the store to pick up their goods at a special self-service counter or the drive-through window Walgreens is making a promise that goes beyond low prices and customer service and extends right into the home

Measuring CRM success

using CRM metrics to track and monitor performance is a best practice for many companies A Few Common CRM Metrics a manager can use to track the success of the system (just remember that you only want to track between five and seven of the hundreds of CRM metrics available) An example of sales metrics are number of prospective customers, number of new customers, number of open leads, number of sales calls etc. An example of customer service metrics are cases closed same day, number of cases handled by agent, number of service calls, average number of service requests by type, and average time to resolution, etc An example of marketing metrics are number of marketing campaigns, new customer retention rates, number of responses by marketing campaign, number of purchases by marketing campaign etc.

contact center or call center

where customer service representatives answer customer inquiries and solve problems usually by email, chat, or phone It is one of the best assets a customer driven organization can have because maintaining a high level of customer support is critical to obtaining and retaining customers Common services provided by contact centers: Automatic Call Distribution: routes inbound calls to available agents Interactive Voice Response (IVR): directs customers to use touch-tone phones or keywords to navigate or provide information Predictive Dialing: automatically dials outbound calls and forwards answered calls to an available agents Contact centers also track customer communication histories along with problem resolutions, information critical for providing a comprehensive customer view to the service representative Representatives who can quickly comprehend the customer's concerns provide tremendous value to the customer and to the company Nothing makes frustrated customers happier than not having to explain their problems all over again to yet another customer service representative