CRM, Operational Excellence & Customer Intimacy K.S. School of Business Management (MIS) Samit Tibrewala Adaptations from: Management Information Systems (Laudon & Laudon, 10e) Enterprise Systems What are Enterprise Systems? Bridge communication gap between all departments and all users of information within a company Sales and Marketing plan a new advertising campaign => Anyone in the organization should have access to that information
Aim: Use information, enhance the bottom line The amount of savings can be enormous! Enterprise Systems Imagine your company had 10 different product lines, each produced in separate factories, and each with separate & incompatible sets of systems controlling production, warehousing & distribution How would your decision making be? Based on manual hard copy reports Often out of date Would be nearly impossible to look at the business position as a whole!
No clue about what your real costs are; how profitable your business is Enterprise Systems If a sales rep places an order for tyre rims The system verifies the customers credit limit Schedules the shipment Identifies the best shipping route Reserves the necessary items from inventory If inventory stock is insufficient, manufacturing request is sent (raw material trail created) Sales and production forecasts updated General ledger, Corporate cash levels updated LIVE tracking of order enabled
Enterprise Software Manufacturing responds to an order from Sales and produces a product for which Accounting and Finance sends an invoice. A Production manager sends an email to the HR department requesting five new employees Enterprise software allows every functional area to share every process and every piece of data
Initially designed to automate the firms internal backoffice business processes, enterprise systems have now become more externally oriented and capable of communicating with customers, suppliers & other interfaces Business Value of Enterprise Systems If done correctly, BIG REWARDS! If not, what? Changes in an organisation can be tremendous! A more uniform organisation More efficient operations & customer-driven business
processes Improved Management decision-making Coca Cola implemented an SAP enterprise system to standardize and co-ordinate key business processes in 200 countries! Lack of standard, company-wide business processes prevented the company from leveraging its world-wide buying power to obtain lower prices for raw materials & from reacting rapidly to market changes How Enterprise Systems work? Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many
different business processes and functional areas throughout the enterprise. Supply Chain Management Systems Key SCM Processes Nikes Supply Chain Nike designs, markets, and sells sneakers, socks, athletic clothing & accessories throughout the world Primary suppliers: Contract manufacturers with factories in China, Thailand, Indonesia, Brazil, etc.
These firms do not manufacture sneakers from scratch! They obtain components for the sneakers (laces, eyelets, uppers, soles) from other suppliers and then assemble them into finished sneakers These suppliers in turn have their own suppliers (e.g. suppliers of soles have suppliers for synthetic rubber, suppliers for chemicals used to melt the rubber for moulding, etc.) Nikes Supply Chain This figure illustrates the major entities in Nikes supply
chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the
upstream portion focusing only on the suppliers for sneakers and sneaker soles. More on SCM Inefficiencies ALL THESE ARE CAUSED
Part shortages BY INACCURATE / Under-utilized plant capacity UNTIMELY Excessive finished goods inventory INFORMATION! High transportation costs If manufacturer had information about exactly how many units of products customers wanted, when they wanted them, and when they could be produced, it would be possible to implement a highly efficient JIT strategy! Components would arrive exactly at the moment they were needed, and finished goods would be shipped as they left the assembly line!
More on SCM Uncertainties arise when Uncertain product demands Late shipments from suppliers Defective parts or raw materials Production process breakdowns Solution: Safety stock!
More on SCM The Bull-Whip Effect More on SCM Be ready for dynamism A large customer places a larger order than usual or changes the order on a short notice Additional raw materials may need to be ordered Manufacturing may have to change job scheduling
Transportation carrier may have to reschedule deliveries This is where demand planning comes into play (how much product a business needs to make to satisfy all of its customer demands) Issues in SCM Global Supply Chain Issues Cultural differences Local taxes or fees
Foreign government regulations Differing performance standards Supply Chain planning systems can assist organizations in navigating all the paperwork, customs, laws, and costs associated with doing business on a global basis. By allowing access through the internet to the information associated with producing, moving, and selling products, companies can reduce the total cost of overseas manufacturing. Outsourcing many of the functions associated with global supply chain issues through webbased services can help a company concentrate on its core processes Push versus Pull based Supply Chain Models The difference between pushand pull-based models is
summarized by the slogan Make what we sell, not sell what we make. Pull-Based Model Key Exponents of the Pull-Based Model Walmarts Continuous Replenishment System Dell Computers Build-to-order model Walmarts Continuous Replenishment System
Walmarts Continuous Replenishment System Sends orders for new merchandise directly to suppliers as soon as consumers pay for their purchases at the cash register. PoS terminals record the bar code of each item passing the checkout counter and send a purchase transaction directly to a central computer at Wal-Mart headquarters. This computer collects the orders from all Wal-Mart stores and places orders with their suppliers to replenish the sold products.
Suppliers can also access Wal-Mart's sales and inventory data using Web technology. Walmarts Continuous Replenishment System Because the system can replenish inventory with lightning speed, Wal-Mart does not need to spend much money on maintaining large inventories of goods in its own warehouse
The continuous updating of data shared between suppliers and customers such that replenishment, as managed by the supplier, may occur daily or even less. A successful continuous replenishment system requires accurate product demand forecasting and an information system that includes up-to-date warehouse withdrawal data, shipping data, and point-of-sale data, so that the inventory and distribution process can be managed with pinpoint control. CRM What is Customer Relationship Management?
What kind of information would you need to build and nurture strong lasting relationships with customers? Who your customers are How to contact them Whether they are costly to service and sell to What kinds of products and services they are interested in How much money they spend on your company
Compare to a small-town shop CRM What is Customer Relationship Management? CRM captures and integrate customer data from all over the organization, consolidate the data, analyze the data, and then distribute the results to various systems and customer touch points across the enterprise. Answer questions such as What is the value of a particular customer to the firm over his or her lifetime? Who are our most loyal customers? Who are our most profitable customers?
What do these profitable customers want to buy? CRM Remember Preserving relationships with existing customers is important for businesses because acquiring new ones is expensive. Once you build relationship with a customer, then you can sell additional products to them, they recommend you to others, cost of serving goes down, they become less sensitive to price. In the beginning, you may end up paying to acquire them, but if you have selected the right type of customer, they become profitable.
CRM Systems The Integrated View CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing. Business Value of CRM Systems Increased customer satisfaction Reduced marketing costs More effective marketing
Lower costs for customer acquisition and retention Increased sales revenue Better response to customer needs Business Value of CRM Systems The Bottom Line CRM systems allow a firm to focus all of their energy and attention on developing profitable customers and forgetting unprofitable ones
Useful information produced by CRM systems allow firms to improve business performance while reducing costs associated with gaining and retaining customers Information can be shared internally and externally Fundamental changes in the organizational culture and business processes are a must CRM Systems / Software Sales Force Automation (SFA) Helps sales staff increase their productivity by focusing sales efforts on the most profitable customers, those who are good candidates for sales and services CRM systems provide sales prospect & contact info, product info, product configuration capabilities, sales
quote generation capabilities Can assemble customers past purchases to assist the salesperson in making personalized recommendations. Reduces the cost per sale, and the cost of acquitting new customers and retaining old ones. How each team member is performing Forecast future trends and company profits CRM Systems / Software Customer Service Provide information & tools to increase the efficiency of call centers, help desks & customer support staff When a customer calls a standard phone number, the system routes the call to the correct service person,
who inputs information about the customer into the system only once. Anyone can now deal with this customer! Advantage Call Center: Can handle more calls per day, and reduce the duration of each call, implying greater productivity, reduced transaction time, higher quality of service at lower cost Advantage Customer: Spends less time on the phone restating his / her priorities to customer service reps Discuss: Web-based self service capabilities CRM Systems / Software Marketing
Capturing & using customer data for targeted marketing Direct marketing mailings Cross-selling Evaluate marketing campaigns across multiple channels
Direct Mail Telephone Web Email SMS Trade Fair Airport Enterprise Systems Opportunities & Challenges Enterprise Application Challenges Daunting Implementation Tech changes, cultural changes It will be good!
High up-front costs and future benefits No overnight success formula! 3-5 years average implementation time Inflexibility Complexity of change after implementation Switching costs Realizing Strategic Value Businesses that rely on unique / cutting-edge processes to gain a competitive advantage might lose that edge Enterprise systems are not the answer for every firm Enterprise Systems Opportunities &
Challenges Extending Enterprise Software Service platforms Integrates multiple applications from multiple business functions, business units, or business partners to deliver a seamless experience for the customer, employee, manager, or business partner
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