Management Information SystemsManagement Information Systems

Fall-2009- B(CS) 06Fall-2009- B(CS) 06

Amina TariqRoom # N111-C-------------------- Ext # 161

amina.tariq@nu.edu.pk

National University of Computer & Emerging Sciences (Islamabad Campus)

“Life was simple before World War II. after that, we had

systems.”

Admiral Grace Hopper

Achieving Operational Achieving Operational Excellence and Customer Excellence and Customer

Intimacy: Enterprise Intimacy: Enterprise ApplicationsApplications

Achieving Operational Achieving Operational Excellence and Customer Excellence and Customer

Intimacy: Enterprise Intimacy: Enterprise ApplicationsApplications

Today We ExploreToday We Explore

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LEARNING OBJECTIVES

• Demonstrate how enterprise systems achieve operational excellence by integrating and coordinating diverse functions and business processes in the firm.

• Demonstrate how supply chain management systems coordinate planning, production, and logistics with suppliers.

• Demonstrate how customer relationship management systems achieve customer intimacy by integrating all customer information and making it available throughout the firm.

• Describe how enterprise applications can be used in platforms for new cross-functional services.

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Whirlpool Fixes Its Supply Chain

• Problem: Uncontrollable supply chain, outdated systems.

• Solutions: Eliminate manual procedures and implement supply chain software suite to allocate inventory more accurately and forecast demand.

• i2 Technologies forecasting software and SAP ERP software reduce inventory and increase sales.

• Demonstrates IT’s role in coordinating supply chains.

• Illustrates digital technology as part of a solution that can benefit both a firm and its customers.

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Recap: Enterprise Systems

An ENTERPRISE is a group of people with a common goal, having resources to achieve that goal.

RESOURCES include money, manpower, materials, machines, technologies, etc. and PLANNING is

putting necessary functions in place and pulling them together

Enterprise systemsEnterprise systems aim to correct the problem of firms not having integrated information. Also known as

Enterprise Resource Planning (ERP) systems - their main goal is to bridge the communication gap among

all departments and all users of information within a company

Enterprise software

• Enterprise software allows every functional area to share every process and every piece of data.

• The software uses predefined processes and requires the company to adapt itself to the software.

• While many companies may balk at having to change, the software is designed around the best practices

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How Enterprise Systems WorkHow 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.

Enterprise Application ArchitectureEnterprise Application Architecture

Strategic and Operational Planning

Manufacturing

Material Management

Quality Management

Sales & Distribution

Maintenance Management

Logistic Management

Human Resource

Finance

Functional View of Enterprise Systems

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Supply Chain Management Systems

A supply chain is similar to a spider’s web. It includes all of the internal functions of an organization, along with suppliers, distributors, retailers, and customers.

“ SCM -Integration of supplier, distributor & customer logistics requirements into one cohesive process”

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Components of Supply Components of Supply ChainChain

Supply chain consists of three distinct directional groups

1. Upstream: Suppliers that deal directly with the manufacturer and their suppliers

2. Downstream: Distributors and those that deliver the products to the customers

3. Internally: Employees that transform the materials, components, and services into the actual products

• Key Problem: ‘Bullwhip Effect’

• Solution: Reducing Uncertainties about demand & Supply

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Nike’s Supply ChainNike’s Supply Chain

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.

Supply Chain Management Systems

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Materials Planning

Requisition

Requirement Determination

Purchasing

Consumption

Valuation

Vendor selection

10

20

30

Purch.order

10

20

30

Order processingPurchase order monitoring

StorageInventory Management

Invoice VerificationBestellung

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20

30

Vendorinvoice ?

Invoice Verification

Purch.order

Payment (FI)

Source determination

Goods receiptGoods Issue

SCM at Work

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Supply chain planning systems can provide information up and down the chain and help everyone involved do a better forecasting job. It enable firms to:

-Generate demand forecasts

-Develop sourcing and manufacturing plans

-Share information about changes easier and faster so work can be better coordinated

-Coordinate activities with supply chain partners

- Handle complex interdependencies among various supply chain processes- Allow users to balance the costs of transportation, delivery, and handling

Information is the glue that holds the supply chain - Lack of or faulty information can wreak havoc on the entire chain from getting supplies into the manufacturing process and getting the final product to the customer.

Information & SCM Systems

An overview of InrAnets & Extranets of SCM

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Demand-Driven Supply Chains: From Push & Pull based model (In manufacturing and efficient customer response)

Push-based model -Traditionally, customers purchase whatever products are available. Although the colors, sizes, and prices may have varied somewhat, generally the manufacturer decided what to produce by forecasting what the potential demand would be through a push-based model. It quickly changes the model into…

Pull-based model - in which the customer tells the manufacturer ahead of time what he/she wants to buy e.g. Dell’s design/ build-to-order business model. Dell doesn’t build a computer until it receives a customer order.

The Future Internet Driven Supply-Chain

Demand Driven SCMDemand Driven SCM

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The benefits of implementing an integrated, networked supply chain management system (SCM) includes:

Match supply to demand

Reduce inventory levels

Improve delivery service

Speed product time to market

Use assets more effectively

In turn a company can…

Improve customer service and responsiveness

Reduce costs

Utilize cash better

BUSINESS VALUE OF SCM SYSTEMS

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Customer Relationship Management Systems

While many companies strive to be “customer-centric” very few have been able to completely focus every functional area on the customer.

Customer Relationship Management (CRM)

“The business & technology discipline that uses IS to coordinate all of the business processes surrounding the firm’s interactions with its customers in sales, marketing & services”

The goals of customer relationship management systems are to optimize:

R evenueP rofitabilityC ustomer satisfactionC ustomer retentionM arketability

The ability to turn raw data into useful information is where CRM systems shine.

CRM systems can gather customer information from all corners of a business, consolidate the information and then provide it to the customer touch points.

By offering a consolidated viewpoint of the customer to these touch points, a company can cater to the customer that offers the most profitability.

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Customer relationship management softwareCRM application software ranges in size and complexity making it possible for an organization to select the type of software it needs the most.Modules focusing on Partner Relationship Management or Employee Relationship Management can be integrated into the Customer Relationship Management software at a later date. Partner relationship management (PRM) systems are a reflection of internal customer relationship management systems but extend past the immediate borders of a firm to its selling partners.

Employee relationship management (ERM) modules associated with CRM focus more on how employees perform and interact with customers. These modules help a company manageEmployee objectives

Employee performancePerformance-based compensation

Employee training

Sales Force Automation (SFA) - Sales force automation allows the sales force to focus on the most profitable customer. It also reduces the cost per sale for acquiring new customers and retaining old ones.Customer service - Customer service gathers information from a variety of sources and makes it available across organizational functions so that data is input only once.Marketing - Marketing allows companies to engage in cross-selling, up-selling, and bundling through better analysis of customer data.

CRM Software Capabilities

Customer Relationship Management Systems

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Operational & Analytical CRM

Operational and analytical aspects of CRM systems are different in nature.

Operational CRM - includes everything a company should provide those employees who interface directly or indirectly with the customer: the sales force, call centers, and support activities. Managers and decision makers would use the analytical CRM to help them improve business performance.

Analytical CRM - uses data from the operational CRM and provides managers with the opportunity to target smaller, specific customer groups or market segmentation. Rather than trying to blanket a huge group of potential customers, many of whom are not interested, managers use the analytical CRM to focus their efforts on those customers who can offer the most profit at the least cost.

One of the most important benefits of analytical CRM is the ability to determine the Customer Lifetime Value (CLTV).

KEY NOTE - It costs six times more to gain a new customer than to keep (retain) an old one. By measuring the CLTV of customers, organizations can calculate customer profitability and determine which customers they should prefer & cater to.

Types of CRM Systems

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Business value of CRM

CRM software will help managers better understand their customers thereby helping them make better decisions about product lines and marketing campaigns.

CRM systems can also help reduce the customer churn rate and identify which customers are most profitable.

The benefits of using CRM systems are worth the challenges you’ll face…

@ 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 CRM Systems

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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

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• Read the Interactive Session: Technology, and then discuss the following questions:

• How does knowledge of customers impact IHOP’s business performance?

• Why did IHOP have trouble getting to know its customers?

• How has the company chosen to improve its knowledge of customers? Analyze the management, organization, and technology dimensions of the solution.

• Did IHOP choose the best solution? Explain your answer.

Interactive Session: IHOP Cooks Customer Data to Order

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Enterprise Applications: New Opportunities and Challenges

Enterprise application challengesThe ROI to companies those implement ERP systems can be enormous in terms of enhanced

information between suppliers, employees, customers, and business partners.

Yet the challenges remain their:

Daunting Implementation: technological and fundamental changes will pervade every corner of the organization as it hits the RESOURCE first. The organizational STRUCTURE, CULTURE and PROCESSES will drastically change.

High Up-Front Costs and Future Benefits: There is no such thing as an overnight success when implementing an ERP system. On average, 3 ~ 5 Years & 4 ~ 8 years (Demanding sustained approach)

Data Management: one database serves the entire organization, if data are mismanaged, it will affect the every business function and process.

Inflexibility: Make a change in one area of the business is much more difficult after implementing an enterprise system. The software is just too complex to easily change.

Realizing Strategic Value: Businesses that rely on unique or cutting-edge processes to gain a competitive advantage will lose that edge with enterprise system software. Enterprise systems are not the answer for every firm.

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EXTENDING ENTERPRISE SOFTWARE

As companies get more comfortable with SCM & CRM programs they realize the importance of branching out to enterprise solutions, enterprise suites, or e-business suites. Software manufacturers are creating these programs and ensuring firms can integrate more easily with customers, suppliers, and business partners.

Service Platforms

A service platform integrates multiple applications form multiple business functions, business units, or business partners to deliver a seamless experience for the customer, employee, manager, or business partner.

For instance Order-to-Cash process involves receiving an order & seeing it all the way thru obtaining payment for the order.

Enterprise Applications: New Opportunities and Challenges

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Midterm-1: Midterm-1: DiscussionDiscussion

PART 2

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MIS-MIDTERM ‘I’-MIS-MIDTERM ‘I’-PART 2PART 2

Key Business Identifications:– Fresh Food Items----some sort of Just in Time---

Reduced Inventory– Limited Geographical Expansion—But more local

Expansion– Decision Autonomy to local Managers----R&D—Some

sort of Knowledge Input Required

• Your Stakeholders– Customers (Home-based, Small shop keepers, etc )– Suppliers (Bakeries, Whole sale Fruit & Vegetable Sellers etc)– All the Employees (Operational, Tactical & Executive level)– Investors & Business Partners– Government and regulatory Agencies (Taxation, Land rental

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Cont…Cont…

• Your Key Competitors

– Local Retail Chains (City Mart, Best Price, Harrods, Euro Mart etc)

– International Retail Chains (Metro, Macro)– Weekly local Bazaars– Good Local Bakeries– Brand Franchises (KNNs)– Local sector-area based retail shops

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Cont..Cont..

• IS: Functional Area

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Proposed Functional Proposed Functional SystemsSystems

• Enterprise Systems

• SCM:– Spans all the functional areas of the chain– You need to have fresh and timely supply so you need

close coordination with your suppliers and also as fresh foods have short life so you need to be close to your customers as well. SCM can help you to manage that..

• R&D based KMS– Spans all the functional areas of the chain– The updated research information may be useful at the

various stages of the supply chain so you need a Knowledge Management System.

– Underlying data input gathered from Point of Sales System

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Proposed Functional Proposed Functional SystemsSystems

• Supporting Systems

• HR Systems: Employee Training System,

• Finance & Accounting: Payroll Management Systems (works for HR as well)

• Sales & Marketing: – Point of Sales – Pricing & Market Analysis System (Analyses the

information/ extracted knowledge from the KMS to generated forecasts and execute Marketing strategies/also acts as an input information resource for KMS)

– As the business expands the above system can be integrated with CRM that spans the value chain for providing customer focused value added services.

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