chapter eight
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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 - PowerPoint PPT PresentationTRANSCRIPT
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