chapter eight

CHAPTER EIGHT

Enterprise applications

Introduction

Supply Chain Management (SCM) Customer Relationship Management

(CRM) Enterprise Resource Planning (ERP)

SCM / OM

The two disciplines are hopelessly interconnected Your book talks about them separately

but I’ll talk about them together

Operations Management (transformation – making things)

Supply Chain Management (movement of things)

Operations Management (Terms 1) Operations management (OM) - the

management of systems or processes that convert or transform resources (inputs) into goods and services (outputs)

Production is a subset of OM Production - is the creation of goods using the

factors of production (making things from raw materials with machines)

Production management - describes all the activities managers do to help companies create goods

Operations Management (Terms 2) Value-added - the term used to describe the

difference between the cost of inputs and the value of outputs

Materials requirement planning (MRP) systems Make sure raw materials are available for

the manufacturing process Supply chain – All parties and processes

involved in procurement of raw materials and the distribution of finished goods

Operations Management (Terms 3)

Transportation planning systems track and analyze the movement of goods (raw materials, work in progress, finished goods) JC Penney

Distribution management systems manage goods to distribution centers and to retail outlets

These systems are tightly coupled

The IT Role in SCM / OM

IT provides the systems (transactional, MIS, DSS, GIS, GPS, wireless) to make all of this work in real time or near real time)

OM Business Tasks

Forecasting Capacity planning Locating facilities Scheduling (and synchronizing)

Raw materials, production, distribution Managing inventory Quality assurance

SCM / OM Components (Steps) Plan Source (we buy goods used in the means

of production) Make (we transform raw materials into

finished goods) And the time it takes to transform resources

(production) or move resources (distribution) Deliver (We get them where they are

going) Return (Defective / unwanted goods come

back to us)

Supply Chain (Illustration)

SCM Strategic Goals (Plan)

The strategic portion of SCM Set up a system for managing the

entire supply chain Partners SCM monitoring

Wal-Mart and others Location of distribution centers

UPS package flow systems Minimize trucks and transportation distances

OM Strategic Goals (Plan)

Lower costs for commoditized items Improve product or process quality

MINI, Lays Example Optimize delivery speed Flexibility in process conversion

MINI example

SCM Components (Source)

Find suppliers Boeing and the 787 Wal-Mart

Establish trading protocols EDI

Establish pricing metrics

Determine what resources will be needed When resources will be needed Where resources will be needed

SCM Components (Make)

Schedule production Just-in-time inventory management We produce assemblies and finished

goods Account for production downtime

Measure production output Account for production variances

against expected values

SCM Components(Make)

SCM Components (Make)

Review the Mini video Discuss assembly processes

SCM Components (Deliver)

The logistics component Implementation of effective

transportation and distribution systems Outsource warehousing Location of distribution centers

Selection of transportation companies

Discuss Wal-Mart video

SCM Components (Return)

We use the term reverse logistics The system whereby customer can

return good they don’t want Particularly important in the e-

commerce world

Technology and SCM

EDI allows automated transaction processing Purchasing / fulfillment / payment

systems Decision-support systems to

optimize routing and transportation Cross-functional systems to

integrate finance / sales / accounting / etc…

SCM Success Metrics

Quality Systems

Six sigma – reduce defects to 3.4 per million opportunities

ISO 9000 – Quality assurance standards

IS 14000 – Environmental best practices

CMMI – develop best practices

CRM (Introduction)

CRM goals Customer has a complete view of the

organization Organization has a complete view of

the customer

CRM (Illustration)

CRM Strategy

It’s more than a software application – it’s a business strategy

Harrah’s Walgreens Brokerages The list is endless

Business Value of CRM

You know your customer Purchase activity

RecencyFrequencyMonetary value

Your customer knows you American Express

CRM Benefits / Goals

Provide better customer service Make call centers more efficient Cross sell products more effectively Help sales staff close deals faster Simplify marketing and sales

processes Discover new customers Increase customer revenues

Evolution of CRM

We began with basic reporting Who bought what

We began to analyze the core data to identify customer habits

We now use predictive technologies to assess future customer behavior

CRM Examples

IT and CRM

Marketing Sales and operations Customer service

CRM Marketing

List generation for existing and future customers

Managing and measuring the effectiveness of marketing campaigns

Cross-selling and up-selling Amazon.com Lands End

CRM Sales and Operations

Sales force automation Generate prospects (leads) and

manage them Sales Management and contact

management systems Salesforce.com Siebel

The Sales Process

CRM and Customer Service

Call centers Use CRM software to solve common

questions Increase single call solutions The risks of outsourcing and off shoring Keyword detection

Automatic call routing Wait time calculations

CRM and Customer Service

Web-based self service Improve customer satisfaction and

reduce costs through decreased call center use

Click to talk technology Examples

Harrah’s TotalRewards online FedEx and UPS package tracking

CRM and Call Scripting

Benefits Track and solve common problems Presents uniform outputs to the

customer Risks

Does not always account for ‘savvy’ customers

Is it plugged in?

CRM Metrics (Sales)

Number of prospective customers Number of new customers Number of retained customers Number of open leads Number of sales calls Number of proposals Amount of new revenue Amount of recurring revenue

CRM Metrics (Service)

Cases closed same day Number of cases handled by agent Number of service calls Average number of service requests

by type Average time to resolution Average number of service calls per

day

CRM Metrics (Marketing)

Customer retention rates Churn rate

Number of responses by marketing campaign

Number of purchases by marketing campaign

Revenue generated by marketing campaign

Analytical CRM Tools

These are decision support systems Use for customer personalization Identify profitable or unprofitable

customers Treat good customers well

Harrah’s / American Express Identify customers that might be

leaving and why

CRM Trends

Manage supplier relationships Manage partner relationships Manage employees

This is really HR

CRM Failures

Employees feel threatened and don’t adopt the tools

The customer becomes just a number

Web 2.0

ERP (Your Book’s Definition)

Enterprise resource planning – integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations

ERP (My Definition)

All of an organization’s business processes are integrated into a single system (SCM, CRM, accounting, finance, manufacturing, along with specialized function applicable to specific industries)

ERP (Players)

SAP has 30+ percent of the market Oracle / PeopleSoft IBM Microsoft Dynamics

ERP (Functions)

ERP (Business Processes)

ERP (Benefits)

Breaks down or eliminates information silos

Business processes are performed more efficiently

All functional systems interact together

ERP (Risks)

Failure can be catastrophic Hershey http://www.slideshare.net/ankitm2/erp-f

ailure-in-hersheys-presentation This list is endless

Failure is typically caused by Poor planning Not understanding and adapting

business process to the ERP

The Evolution of ERP

Core ERP Components (1)

Accounting and Finance Integrates traditional AR / AP /

inventory / payroll / general ledger Financial reporting systems Operates with multiple currencies

Core ERP Components (2)

Production and materials management Raw materials supply chain Manufacturing

You can’t make what you don’t have Distribution

You can’t ship what you have not made Human resources

ERP (Manufacturing and Production)

Extended Components

Business intelligence integration CRM SCM

Often considered a core component Ebusiness

Also becoming a core component Procurement (B2B) Sales (B2C)

Enterprise Application Integration

Integrate SCM, CRM, ERP business partners, suppliers, distributers, resellers, customers typically by creating SOA middleware

Collaboration Systems (Introduction)

Simply put, they help people (employees / partners / customers) effectively work together and share information

Collaboration Systems (Illustration)

Collaboration Systems (Types)

Groupware to collaborate Content management systems are

used as an information repository Knowledge management Workflow management

Much of the software performs many of these tasks

Collaboration Systems (Groupware)

Groupware allows us to work together

Functions Calendaring, scheduling, and

conferencing File sharing and change tracking

Providers Lotus Notes SharePoint

Collaboration Systems (Content Management)

Manage Information creating Information storage Changes to information Information publishing and acquisition

Collaboration Systems (Knowledge Management)

Closely related to content management

Capture, classify, retrieve, and share information

It preserves organizational memory SharePoint

Collaboration Systems (Workflow)

Workflow describes how work gets done You don’t have the prerequisites for a

class you want to take You fill out the College of Business

automated add slip form It’s routed to the department or

advisement centerAn advisor approves or disapproves the

requestYou are notified

ERP Demo

Accounting Financial / Managerial

Sales and Distribution Customers and products

Procurement Production Quality management Warehouse management HR And whatever else…

SO HOW DO WE DO ALL OF THIS

SAP Oracle Supply chain IBM

SAP Demo (Manufacturing Process)

Bill of Material describes what we make (a bicycle) and the raw materials needed to make it

SAP Demo (Manufacturing Process)

Routings describe how we make it

SAP Demo (Manufacturing Process)

Create a production order

Which leads us into the ERP discussion