achieving operational excellence and customer intimacy
TRANSCRIPT
9.1 Copyright © 2015 Pearson Education
9Chapter
Achieving Operational
Excellence and Customer
Intimacy: Enterprise
Applications
9.2 Copyright © 2015 Pearson Education
Enterprise Systems
• Also called “enterprise resource planning (ERP)
systems”
• Suite of integrated software modules and a
common central database
• Collects data from many divisions of firm for use in
nearly all of firm’s internal business activities
• Information created by one process is immediately
available for other processes
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
Enterprise Systems
9.3 Copyright © 2015 Pearson Education
Enterprise Systems
• Built around thousands of predefined
business processes that reflect best practices
• Finance/accounting: general ledger, accounts
payable, and so on
• Human resources: personnel administration, payroll,
and so on
• Manufacturing/production: purchasing, shipping, and
so on
• Sales/marketing: order processing, billing, sales
planning, and so on
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
Enterprise Software
9.4 Copyright © 2015 Pearson Education
Enterprise Systems
• To implement enterprise software, firms:
• Select functions of system they wish to use.
• Map business processes to software processes.
• Use softwares configuration tables for customizing.
• If software doesn’t support business
processes
• Businesses can rewrite some portions, but this can
compromise information and process integration
• Changing business processes to match software’s
processes is better alternative
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.5 Copyright © 2015 Pearson Education
Enterprise Systems
Figure 9-1
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
How Enterprise Systems Work
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.6 Copyright © 2015 Pearson Education
Enterprise Systems
• Business value of enterprise systems
• Increase operational efficiency.
• Standardize and coordinate business processes
• Provide firm wide information to support decision
making.
• Enable rapid responses to customer requests for
information or products.
• Include analytical tools to evaluate overall
organizational performance.
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.7 Copyright © 2015 Pearson Education
The Supply Chain
• Network of organizations and processes for:
• Procuring raw materials
• Transforming them into products
• Distributing the products
• Upstream supply chain:
• Firm’s suppliers, suppliers’ suppliers, processes for managing
relationships with them
• Downstream supply chain:
• Organizations and processes responsible for delivering
products to customers
• Internal supply chain
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.8 Copyright © 2015 Pearson Education
Nike’s Supply Chain
Supply Chain Management Systems
Figure 9-2
This figure
illustrates the
major entities in
Nike’s 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.
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.9 Copyright © 2015 Pearson Education
Information Systems and Supply Chain Management
• Inefficiencies cut into a company’s operating costs
• Can waste up to 25 percent of operating expenses
• Just-in-time strategy:
• Components arrive as they are needed
• Finished goods shipped after leaving assembly line
• Safety stock
• Buffer for lack of flexibility in supply chain
• Bullwhip effect
• Information about product demand gets distorted as it passes
from one entity to next across supply chain
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.10 Copyright © 2015 Pearson Education
The Bullwhip Effect
Supply Chain Management Systems
Figure 9-3
Inaccurate
information can
cause minor
fluctuations in
demand for a
product to be
amplified as one
moves further back
in the supply chain.
Minor fluctuations in
retail sales for a
product can create
excess inventory for
distributors,
manufacturers, and
suppliers.
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
Figure 9-3
9.11 Copyright © 2015 Pearson Education
Supply Chain Management Software
• Supply chain planning systems
• Model existing supply chain.
• Demand planning.
• Optimize sourcing, manufacturing plans.
• Establish inventory levels.
• Identify transportation modes.
• Supply chain execution systems
• Manage flow of products through distribution centers and
warehouses.
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.12 Copyright © 2015 Pearson Education
Global Supply Chains and the Internet
• Global supply chain issues:
• Greater geographical distances
• Greater time differences
• Participants from different countries
• Different performance standards
• Different legal requirements
• Internet helps companies manage global complexities
• Warehouse management
• Transportation management
• Logistics
• Outsourcing
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.13 Copyright © 2015 Pearson Education
Interactive Session: TechnologyLand O’Lakes Butter Becomes Fresher with Demand Planning
• Read the Interactive Session and then discuss the
following questions:
• Why are inventory management and demand planning so important for
Land O’Lakes? What is the business impact of not being able to manage
inventory or predict demand for this company?
• Why are inventory management and demand planning so important for
Land O’Lakes? What is the business impact of not being able to manage
inventory or predict demand for this company?
• How did implementing Demantra change management decision making and
the way that Land O’Lakes ran its business?
• Describe two decisions that were improved by implementing Demantra.
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
Supply Chain Management Systems
9.14 Copyright © 2015 Pearson Education
Demand-Driven Supply Chains
• Supply chain management systems
• Push-based model (build-to-stock)
• Schedules based on best guesses of demand
• Pull-based model (demand-driven)
• Customer orders trigger events in supply chain
• Help businesses move from sequential supply
chains to concurrent supply chains
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.15 Copyright © 2015 Pearson Education
Push- versus Pull-Based Supply Chain Models
Figure 9-4
The difference
between push-
and pull-based
models is
summarized by
the slogan
“Make what we
sell, not sell
what we make.”
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.16 Copyright © 2015 Pearson Education
The Emerging Internet-Driven Supply Chain
Figure 9-5
The emerging Internet-
driven supply chain
operates like a digital
logistics nervous
system. It provides
multidirectional
communication among
firms, networks of
firms, and
e-marketplaces so that
entire networks of
supply chain partners
can immediately adjust
inventories, orders,
and capacities.
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.17 Copyright © 2015 Pearson Education
• Match supply to demand.
• Reduce inventory levels.
• Improve delivery service.
• Speed product time to market.
• Use assets more effectively.
• Reduced supply chain costs lead to increased
profitability.
• Total supply chain costs can be 75 percent of operating
budget.
• Increase sales.
Business Value of Supply Chain Management Systems
Supply Chain Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.18 Copyright © 2015 Pearson Education
Customer Relationship Management
• Knowing the customer
• In large businesses, too many customers and too many ways
customers interact with firm
• Customer relationship management (CRM)
systems
• Capture and integrate customer data from all over the
organization.
• Consolidate and analyze customer data.
• Distribute customer information to various systems and
customer touch points across enterprise.
• Provide single enterprise view of customers.
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.19 Copyright © 2015 Pearson Education
Customer Relationship Management (CRM)
Figure 9-6
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.
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.20 Copyright © 2015 Pearson Education
CRM Software
• CRM packages range from niche tools to large-
scale enterprise applications.
• More comprehensive have modules for:
• Partner relationship management (PRM)
• Integrating lead generation, pricing, promotions, order
configurations, and availability
• Tools to assess partners’ performances
• Employee relationship management (ERM)
• Setting objectives, employee performance management,
performance-based compensation, employee training
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.21 Copyright © 2015 Pearson Education
CRM Software
• CRM packages typically include tools for:
• Sales force automation (SFA)
• Sales prospect and contact information, sales quote
generation capabilities
• Customer service
• Assigning and managing customer service requests, Web-
based self-service capabilities
• Marketing
• Capturing prospect and customer data, scheduling and
tracking direct-marketing mailings or e-mail, cross-selling
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.22 Copyright © 2015 Pearson Education
How CRM Systems Support Marketing
Figure 9-7
Customer relationship
management software
provides a single point
for users to manage and
evaluate marketing
campaigns across
multiple channels,
including e-mail, direct
mail, telephone, the
Web, and wireless
messages.
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.23 Copyright © 2015 Pearson Education
CRM Software Capabilities
Figure 9-8
The major CRM software
products support
business processes in
sales, service, and
marketing, integrating
customer information
from many different
sources. Included are
support for both the
operational and
analytical aspects of
CRM.
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.24 Copyright © 2015 Pearson Education
Customer Loyalty Management Process Map
This process map shows how a best practice for promoting customer
loyalty through customer service would be modeled by customer
relationship management software. The CRM software helps firms identify
high-value customers for preferential treatment.
Customer Relationship Management Systems
Figure 9-9
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.25 Copyright © 2015 Pearson Education
• Operational CRM:
• Customer-facing applications such as sales force
automation, call center and customer service support,
and marketing automation
• Analytical CRM:
• Based on data warehouses populated by operational
CRM systems and customer touch points
• Analyzes customer data (OLAP, data mining, etc.)
• Customer lifetime value (CLTV)
Customer Relationship Management Systems
Operational and Analytical CRM
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.26 Copyright © 2015 Pearson Education
Analytical CRM Data Warehouse
Figure 9-10
Analytical CRM
uses a customer
data warehouse
and tools to
analyze customer
data collected from
the firm’s
customer touch
points and from
other sources.
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.27 Copyright © 2015 Pearson Education
Interactive Session: Organizations
Graybar Goes for Customer Analytics
• Read the Interactive Session and then discuss the
following questions:
• What was the problem at Graybar described in this case? How did this
problem affect Graybar’s business performance?
• What people, organization, and technology issues had to be addressed
by Graybar to develop a customer analytics solution?
• How did analytical CRM change the way Graybar ran it business?
Compare the way Graybar handled its customer relationships before
and after it implemented analytical CRM?
• Give examples of three decisions that were improved by Graybar’s new
customer analytics system.
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
Enterprise Applications: New Opportunities and Challenges
9.28 Copyright © 2015 Pearson Education
Business Value of Customer Relationship Management
• Business benefits:
• Increased customer satisfaction
• Reduced direct-marketing costs
• More effective marketing
• Lower costs for customer acquisition/retention
• Increased sales revenue
• Churn rate:
• Number of customers who stop using or purchasing products
or services from a company
• Indicator of growth or decline of firm’s customer base
Customer Relationship Management Systems
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.29 Copyright © 2015 Pearson Education
Enterprise Application Challenges
• Highly expensive to purchase and implement
enterprise applications
• Average cost of ERP system is more than $7 million
• Average completion time is more than 17 months
• Deep-seated technology changes
• Business process changes
• Organizational learning, changes
• Switching costs, dependence on software vendors
• Data standardization, management, cleansing
Enterprise Applications: New Opportunities and Challenges
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
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• To bring greater value from enterprise applications
• Enterprise solutions/suites: make applications
more flexible, Web-enabled, integrated with other
systems
• Inclusion of SOA standards to link to 3rd party
software
• Open-source applications
• Cloud-based, on-demand solutions
Enterprise Applications: New Opportunities and Challenges
Next-Generation Enterprise Applications
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.31 Copyright © 2015 Pearson Education
• Social CRM
• Incorporating social networking technologies
• Company social networks
• Customer interaction via Facebook
• For example: Buzzient platform integrates social media
with enterprise applications
• Business intelligence
• Inclusion of BI with enterprise applications
• Flexible reporting, ad hoc analysis, “what-if” scenarios,
digital dashboards, data visualization
Enterprise Applications: New Opportunities and Challenges
Next-Generation Enterprise Applications
Essentials of Management Information SystemsChapter 9 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications
9.32 Copyright © 2015 Pearson Education
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