crm erp scm

7/30/2019 CRM ERP SCM

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Enterprise Business Systems



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1. Identify and give examples to illustratethe following aspects of Integrated

Information Systems, customer

relationship management, enterpriseresource management, and supply chain

management systems:

• Business processes supported

• Customer and business value provided

• Potential challenges and trends

Learning Objectives



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Why?

• "many organizations are using informationtechnology to develop integrated cross-

functional enterprise systems that cross

the boundaries of traditional businessfunctions (such as marketing and finance),

in order to reengineer and improve vital

business processes all across the

enterprise and improve the efficiency andeffectiveness of business objectives.



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How?

• Organizations view cross-functionalenterprise systems as a strategic way to

use IT to share information resources and

improve the efficiency and effectivenessof business processes, and develop

strategic relationships with customers,

suppliers, and business partners.



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• Thus, instead of having functionalmainframe-based legacy systems,

organizations are shifting to integrated

cross functional client/server applications,for example

• ERP, SCM or CRM software systems from

SAP, People Soft, Oracle, etc.



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Why Integrated solutions?

• Enterprise software focuses on supporting integratedgroups of business processes rather than informationprocessing requirements of the respective businessfunction.• ERP focuses on efficiency of a firm’s internal production

logistics distribution, HR, and Financial processes.

• CRM focuses on acquiring and retaining profitablecustomers through marketing, sales and serviceprocesses

• SCM focuses on developing the most efficient andeffective souring and procurement processes with

suppliers for the products and services needed by abusiness.

• Knowledge management (KM) applications focus onproviding a firm’s employees with tools that support groupcollaboration and decision support (Sawhney Mohan, andJeff Zabin, 2001).


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What is Cross – Functional Enterprise

• cross-functional components are a set of extremely powerful components designed

for streamlining, simplifying and handling

critical processes found within mostindustries and businesses.

• These processes include business

performance, customer relationship

management, supply chain management,

business modeling, as well as document,

quality and project management.



• Business Modeler lets companies viewtheir organization in terms of businessprocesses.

• Through its PC-based tools, methods, andgraphical models that make it easier tomatch a company’s existing processeswith the best-practice processes that IFS

Applications supports, it gives insight intoways to re-engineer businesses to bemore efficient, more profitable andfocused on customer satisfaction.



Corporate Performance Management

• Continuous improvement is essential for long-term profitability.

• Corporate Performance Management is

an integrated performance managementsystem for measuring functions and

processes.

• It allows users to analyze areas for improvement and focus on results gained

from changes, in order to make better

strategic and operational decisions.



Customer Relationship Management (CRM)

• Customer Relationship Management isessential for all types of business

situations, enabling support for business

proposals and decisions in everyinteraction with the customer.



Quality Management

• Quality management relies on two major considerations.

• One a proactive decision making process.

And

• two, failure prevention.

• Therefore to maintain quality you need a

Quality Management system that ensures

you receive a steady flow of data via a

totally integrated and highly accessible

solution.



Document Management

• With Document Management™, you getfull control over your company's

documentation to focus on the things that

really matter:• selling your products and services,

• keeping your plant and equipment in top

shape, and

• ultimately meeting or exceeding your

business goals.



Project Management

• Without a progressive approach to projectmanagement a business runs the risk of

allowing its operational efficiency to

gradually decline.• With the right project management

enterprise tools a company can review its

business projects, both new and old, and

continually raise them to higher levels.



Business Modeling

• Anticipating your customers changingrequirements is the best way to maintain

their loyalty.

• But it can only be successfully achievedwhen you have a business modeling

solution that gives you a precise insight

into what you’ll need to re-engineer your

business to meet the change.



Why Study Customer

Relationship Management?

• It is easier than ever for customers to

comparison shop and, with a click of the

mouse, to switch companies. As a result,

customer relationships have become acompany’s most valued asset.




Definition:• The use of information technology to

create a cross-functional enterprise

system that integrates and automatesmany of the customer-serving processes

in sales, marketing, and customer

services that interact with a company’s

customers




• CRM is application which takes care of the sales activities, customer interactions,

marketing products and customer service.

• The role of CRM is restricted to the salesrelated activities only.



CRM Application Clusters



CRM Application Components

• Contact and Account Management – helpssales, marketing, and service professionals

capture and track relevant data about every

past and planned contact with prospects and

customers, as well as other business and lifecycle events of customers

• Sales – provides sales reps with tools andcompany data sources needed to support and

manage sales activities, and optimize cross-

selling and up-selling




• Marketing Fulfillment – help marketingprofessionals accomplish direct marketing

campaigns by automating such tasks as

qualifying leads for targeted marketing, and

scheduling and tracking direct marketingmailings

• Customer Service and Support – providesservice reps with software tools and real-time

access to the common customer database

shared by sales and marketing professionals



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• Retention and Loyalty Programs – help acompany identify, reward, and market to

their most loyal and profitable customers



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Three Phases of CRM



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Three Phases of CRM

• Acquire new customers by doing a superior jobof contact management, sales prospecting,selling, direct marketing, and fulfillment

• Enhance relationship with customer bysupporting superior service from a responsivenetworked team of sales and service specialistsand business partners

• Retain and expand business with customers byproactively identifying and rewarding the mostloyal and profitable customers



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Benefits of CRM

• CRM allows a business to identify andtarget their best customers so they can be

retained as lifelong customers for greater

and more profitable services.

• CRM makes possible real-time

customization and personalization of products and services based on customer

wants, needs, buying habits, and life

cycles.



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Benefits of CRM

• CRM can keep track of when a customer contacts the company, regardless of the

contact point.

• CRM systems can enable a company to

provide a consistent customer experience

and superior service and support acrossall the contact points a customer chooses.



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CRM Failures

• Lack of understanding and preparation

• Rely on CRM to solve business problemwithout first developing the businessprocess changes and changemanagement programs that are required

• CRM projects implemented without theparticipation of the business stakeholdersinvolved



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Trends in CRM

• Operational

• Analytical

• Collaborative

• Portal-based



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Operational CRM

• Supports customer interaction with greater convenience through a variety of

channels.

• Synchronizes customer interactions

consistently across all channels

• Makes your company easier to do

business with



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Analytical CRM

• Extracts in-depth customer history, preferences,and profitability information from your data

warehouse and other databases

• Allows you to analyze, predict, and derive

customer value and behavior and forecast

demand

• Lets you approach your customers with relevant

information and offers that are tailored to their

needs



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Collaborative CRM

• Enables easy collaboration withcustomers, suppliers, and partners

• Improves efficiency and integrationthroughout the supply chain

• Allows greater responsiveness to

customer needs through sourcing of products and services outside of your enterprise



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Portal-based CRM

• Provides all users with the tools and informationthat fit their individual roles and preferences

• Empowers all employees to respond to

customer demands more quickly and becometruly customer-focused

• Provides the capability to instantly access, link,and use all internal and external customer

information



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Partner Relationship Management (PRM)

Definition:• Applications that apply many of the same

tools used in CRM systems to enhance

collaboration between a company and itsbusiness partners, such as distributors

and dealers, to better coordinate and

optimize sales and service to customers

across all marketing channels



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Enterprise Resource Planning (ERP)

Definition:• A cross-functional enterprise system

driven by an integrated suite of software

modules that supports the basic internalbusiness processes of a company



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Enterprise Resource Planning (ERP)

• ERP is application software, which automatesthe internal functional departments of an

organization. There will be a smooth flow of

information across the functions like accounts,

production, human resource and administration.

• ERP looks after the supply chain management,

production management and accounts

management. There is no such a tool available

in the industry which can cater all the issues

across the company.



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ERP Application Components



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ERP Process & Information Flows



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ERP Benefits

• Quality and Efficiency – ERP creates aframework for integrating and improving a

company’s internal business processes

that results in significant improvements in

the quality and efficiency of customer

service, production, and distribution

• Decreased Costs – Significant reductions

in transaction processing costs and

hardware, software, and IT support staff



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ERP Benefits

• Decision Support – Provides vital cross-functional information on business

performance quickly to managers to

significantly improve their ability to make

better decisions in a timely manner

• Enterprise Agility – ERP breaks downmany former departmental and functional

walls of business processes, information

systems, and information resources



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Costs of ERP



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Causes of ERP Failures

• Business mangers and IT professionalsunderestimate the complexity of the planning,development, and training needed

• Failure to involve affected employees in the

planning and development phases

• Trying to do too much too fast in the conversionprocess

• Failure to do enough data conversion andtesting



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Trends in ERP



Enterprise Resources Planning(ERP) Definition 1 (Cont.)

Includes:Typical MRP II Functions Quality Functions

Sales Force Automation Field Service Functions

Engineering Function / PDM Complete Financial Functions

Advance Manufacturing Function Human Resources Functions

Distribution / Logistics Functions Management Reporting

ERP is a System for the Entire Company – A Global Tightly

Integrated Closed-Loop System

(1) Source: APICS Complex Industries Special Interest Group



Typical ERP Functionality

Engineering / Product Date MGT



Engineering / Product Date MGT.

Document Creation, Management & Control

CAD Interface / Image Management

Configuration Management

- Change Order Creation & Control

- Revision Control

Engineering Data Management



Engineering / Product Date MGT.(Cont.)

Product Information Management

Technical Data Management

Technical Information Management

Engineering Item Data & BOMs



Manufacturing

MRPII Functionality

- MPS, BOM, Routings, MRP, CRP, PAC

Sales & Operations Planning

Integrated Production Configuration

Statistical Inventory Control

Flexible Product & Job Costing Options

Kanban / JIT / Flow Manufacturing Support

Theory of Constraints / Advanced Planning

Systems



Sales and Operations Planning

Balance market demand with resource capability

Develops a contract between Manufacturing and

Marketing

A single set of numbers upon which to base plans

and schedules

Manages Inventory and Backlog

Forecasting



Advance Planning and OptimizingSystems

Supply Chain optimization

Constraint-based multi-location master planning

- Generation of feasible production plans across

multiple plants

Ad Pl i d O ti i i



Advance Planning and OptimizingSystems (Cont.)

Constraint-based factory level scheduling

- Generation of feasible schedules (integrated with

feasible production plan)

Optimized distribution and transportation planning

- Intelligent allocation of inventory through a

network



Distribution / Logistics

Purchasing

Supplier Reliability Analysis

Distribution Requirement Planning

Global Transportation Management

Fleet Management

Shipping & Receiving

Import / Export

Warehouse Management



Human Resources

Requisition Management

Applicant Tracking

Employee Master

Job Descriptions

Employee Evaluations

Training & Certification Management

Payroll Deduction Accounting

Benefits Tracking



Quality

Quality Management Plans

Quality Specifications / Requirements

Test / Inspection Results

Cause and Corrective Action Tracking

Process / Product Certification

Statistical Quality Control

Cost of Quality Reporting

Equipment & Tool Calibration Mgt



Finance Financial Budgets

General Ledger

Accounts Payable

Accounts Receivable

Payroll

Fixed Assets

Cash Management

Activity Based Costing

Financial Statements



Field Service

Installation Management

As-maintained BOM

Warranty Tracking

Preventative Maintenance Scheduling & Control

Service Order Planning & Control



Typical ERP Integration




System Wide Elements

Project Management & Project Costing (EVM)

Executive Management Information System

Work Flow Management

Multi-Company




Multi-Currency

Multi-Lingual

Multi-Mode

EDI / Electronic Commerce

Web Enabled / Internet Communications

Imaging & Multi Media

F t



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Features

• Each application has got its own features andbenefits in a different way.

• With the help of ERP, the business owner

integrates the internal business process byautomating all the departments.

• CRM, tracks the marketing related activates,

individual sales performances, customer

services and all.

• CRM is restricted to only marketing and sales

departments.

Benefits of CRM



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Benefits of CRM

• Automated sales and marketing process

• Regular work tracking of the sales person, which in

turn leads to the higher sales productivity

• Helps the company in cross selling the products, if the

company is into multiple product lines

• Ameliorated customer service as the system will

automatically warns the sales person regarding the

deadlines and this also leads to higher sales closures• Reduced expenses

• Overall, higher profitability

Benefits of ERP



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Benefits of ERP

• Automated business environment leads to effectivecommunication

• Smooth flow of information between the inter-

departments and intra-departments

• Reduced lead time of the manufacturing products

• Availability of relevant and accurate information on

timeliness

• Better decision making

• Helps in improving ROI in the long-run

Supply Chain Management (SCM)



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Supply Chain Management (SCM)

Definition:• A cross-functional interenterprise system

that uses information technology to help

support and manage the links betweensome of a company’s key business

processes and those of its suppliers,

customers, and business partners

SCM Life Cycle



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SCM Life Cycle

Electronic Data Interchange (EDI)



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Electronic Data Interchange (EDI)

Definition:• Involves the electronic exchange of

business transaction documents over the

Internet and other networks betweensupply chain trading partners

EDI Activities



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EDI Activities

Role of SCM



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Role of SCM

SCM Planning Functions



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SCM Planning Functions

• Supply Chain Design – optimize networkof suppliers, plants, and distribution

centers

• Collaborative Demand and Supply

Planning – develop an accurate forecast

of customer demand by sharing demand

and supply forecasts instantaneously

across multiple tiers

SCM Execution Functions



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• Materials Management – share accurate

inventory and procurement order information,

ensure materials required for production are

available in the right place at the right time, and

reduce raw material spending, procurementcosts, safety stocks, and raw material and

finished goods inventory

• Collaborative Manufacturing – optimize plans

and schedules while considering resource,

material, and dependency constraints




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• Collaborative Fulfillment – commit to delivery

dates in real time, fulfill orders from all channelson time with order management, transportationplanning, and vehicle scheduling, and supportthe entire logistics process, including picking,packing, shipping, and delivery in foreigncountries

• Supply Chain Event Management – monitor every stage of the supply chain process, fromprice quotation to the moment the customer receives the product, and receive alerts whenproblems arise




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• Supply Chain Performance Management – report key measurements in the supply

chain, such as filling rates, order cycle

times, and capacity utilization

Porter’s Value Chain Model (1985)



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Porter s Value Chain Model (1985)

PRIMARY ACTIVITIES

• In bound logistics (in puts)• Operations (manufacturing & testing)

• Outbound logistics (storage & distribution)

• Marketing & sales

• Service

Supply

Chain

SCM Objectives



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SCM Objectives

C



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Case: How Dell Reengineered its Supply Chain

Problem:

Dell pioneered the mail order approach to selling PCs In 1993, Compaq cuts prices to drive Dell out of the market. Dell experiences

$65 million in losses.

Solution:

Dell implements the following re-engineering strategies: mass customization

just-in-time marketing

electronic orders & shipments

e-collaboration with major buyers

reduction in testing period

monitoring of productivity & returns on investments




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(cont.)

Results: In 2001, Dell made over $4 million in computer web sales/ day.

Becomes leader in Customer Relationship Management (CRM)

Online tracking of orders & shipments

Viewer approved configurations and pricing

Customized home pages for clients.

Use of Intelligent Agents in production process.

Increased communication with suppliers.

By 1999, Dell becomes the number two PC seller and is a leader inmanagement & profitability.



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Lessons from the Case

By introducing a new business model , one can change the manner in which business is done.

To implement this model on a large scale, one needs to build superbsupply chain management.

Another major success factor in Dell‟s plans was the improvementsmade in its logistics system along the entire supply chain.

Improved communications and customer service, which are part of Dell‟s CRM program, are the cornerstones of its success.

Dell was using c-Commerce with its business partners.



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Supply Chain & Value Chain Definitions

SUPPLY CHAIN flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses, to the end customers.

DEMAND CHAIN the process of taking orders.

SUPPLY CHAIN MANAGEMENT (SCM) to plan, organize, and coordinate all the supply chain’s activities.



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Benefits of SCM

Contributes to

overall

increase inprofitability &

competitive

advantage.

This positivelyaffects inventory

levels, cycle time,business

processes &customer service.

Reduces

uncertainty

& risks in

the supply

chain.



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Components of Supply Chain



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Components of Supply Chains

Upstream Supply Chain

Organization‟s first tier suppliers & their suppliers.

Internal Supply Chain

Processes used by an organization to transform their inputs to

outputs.

Downstream Supply Chain

Processes involved in delivering the product to the final

customers.

Th S l Ch i



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The Supply Chain

Involves the life of a product from „dirt to dust‟.

Involves movement of tangible & intangible inputs.

Can come in all shapes and sizes and may be fairly complex.

Can be bi-directional and involve the return of products (reverselogistics)

The flow of goods, services, information & financial resourcesmust be followed with an increase in value.

S f S l Ch i P bl



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Sources of Supply Chain Problems

UNCERTAINTY

In demand forecast In delivery times &

production delays

POOR COORDINATION

With Internal units andbusiness partners

Ineffective customer service

High inventory costs,loss of revenue & extra

cost for expeditingservices.



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The Bull Whip Effect

The most persistent SCM problem.

Erratic shifts in orders up & down the supply chain.

Distributor orders fluctuate because of poor demand forecast,

price fluctuation, order batching & rationing with supply chain.

Example: Porter & Gamble‟s distortion in SCM for manufacturing of disposable diapers.

Avoidable with proper interorganizational EC. EDI, Extranets & Groupware technology

S l i S l Ch i P bl



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Solutions to Supply Chain Problems

Vertical Integration

Purchasing & managing the supply source.

Building Inventories

“Insurance” against supply chain shortages.

Main problem: It is difficult to correctly determine inventory

level for each product & part. This can be costly.

CASE H Li l d I d i SCM



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CASE: How Littlewoods Improved its SCM

Problem: Littlewoods Large British clothing retailer with 136 stores in the UK &

Ireland. Overstocking problems in the supply chain management.

Solution: Introduced web-based performance reporting system.

Enabled merchandising personnel to make more accurate stock,sales and supplier decisions.

Results:

In 1997, Littlewoods saves $1.2 million as a direct result of its strategicprice merchandizing.

Oth S l ti t SCM P bl



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Other Solutions to SCM Problems

During peak times, outsource rather than do-it-yourself. “Buy” rather than “make” production inputs when appropriate.

Configure optimal shipping plans.

Create strategic partnerships with suppliers.

Use the just-in-time approach to purchasing.

Reduce the lead time for buying and selling.

Use fewer suppliers.

Improve supplier-buyer relationships.

Manufacture only after orders are in.

Achieve accurate demand by working closely with suppliers.

T T l f R d i S l Ch i P bl



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Two Tools for Reducing Supply Chain Problems

Supply Chain Teams

“Teams of tightly integrated business that work together andserve the customers”

Measurements & Metrics Use of IT for measuring areas in need of improvement. For

example;

Delivery on time

Quality at unloading area Cost performance Lead time for procurement

COMPUTERIZED SYSTEMS & S C M



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COMPUTERIZED SYSTEMS & S.C.M.

PHASE 1: 1950s - 60s, the first software programs to support thesupply chain arrive.

PHASE 2: Development of the Material Requirement Protocol(MRP).

PHASE 3: Enhanced MRP known as Material Resource Planningbecome available.

PHASE 4: Enterprise Resource Planning (ERP) integrates

transaction processing activities.PHASE 5: Extended ERP/SCM software.

COMPUTERIZED SYSTEMS & S C M



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COMPUTERIZED SYSTEMS & S.C.M.

Benefits of Systems Integration



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Benefits of Systems Integration Source: Sandoe & Saharia (2001)

TANGIBLE BENEFITS

Inventory reduction

Personnel reduction

Productivity improvement Order management

improvement

Financial-close cycle

improvements IT cost reduction

Procurement costreduction

Revenue/profit increases,

INTANGIBLE BENEFITS

Information visibility

New/improved processes

Customer responsiveness

Standardization

Flexibility

Globalization and business

performance

Value Chain Integration



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“The process by which multiple enterprises within a shared market channel collaboratively plan, implement, and manage

(electronically as well as physically) the flow of goods,

services, and information along the entire chain in a manner

that increases customer- perceived value.“

Integrating the Supply Chain & Value Chain



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Integrating the Supply Chain & Value Chain

A Supply Chain transforms into an integrated Value Chainwhen it…..

Extends the chain all the way from sub-suppliers tocustomers.

Integrates the back-office operations with those of thefront office.

Becomes highly customer-centric, focusing on demandgeneration and customer service.

Is proactively designed by chain members to compete as

an “extended enterprise”. Seeks to optimize the value added by information and

utility-enhancing services.




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Case Warner Lambert’s Integrated Supply Chain



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Case: Warner-Lambert’s Integrated Supply Chain

Problem:

WL requires assistance with demand forecast of products.

Solution:

They use Manugistic Inc.‟s Demand Planning Information System

to analyze their manufacturing, distribution and sales data. The system is able to anticipate seasonal impact or a production line

problem.

Results:

WL increases its „shelf fill‟ rate from 87% to 98%, earning them $8million/year in additional sales.

Enterprise Resource Planning



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Enterprise Resource Planning

ERP = Process of planning &managing all resources &

their use in the entire

enterprise.

Leading ERP softwareproducers

SAP, Oracle, J.D. Edwards,Computer Associates,

People Soft

MAIN OBJECTIVE of ERP

to integrate all departments &

functions across a company onto

a single computer system.

Functions of ERP



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Functions of ERP

Provides a single interface for managing routine manufacturingactivities.

Facilitates customer interaction & manages relationships with

suppliers & vendors.

Forces discipline & organization around business.

Supports administrative activities.

Post ERP 2nd Generation ERP



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Post- ERP: 2nd Generation ERP

By the late 1990s, the major benefits of ERPs had beenfully exploited.

There was a need for planning systems oriented towardsdecision-making.

Emergence of SCM systems that complement ERPsystems.

Provide intelligent decision support capabilities.

Overlay existing system & pull data from every step of thesupply chain.

How is SCM Integration Achieved?



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How is SCM Integration Achieved?

SECOND APPROACH

ERP vendors adddecision support and

business intelligencecapabilities.

Creation of 2nd

generation ERP.

FIRST APPROACH

Work with different

software productsfrom different

vendors (i.e. one for

ERP & one for SCM).

3 Ways to Provide Supply Chain Intelligence



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3 Ways to Provide Supply Chain Intelligence

1) Use an enhanced ERP package that includes businessintelligence capabilities

2) Integrate the ERP with business intelligence software froma specialized vendor such as Brio, Cognus, or Comshare.

3) Create a “best of breed” system by using componentsfrom several vendors that will provide the required

capabilities.

Componentization



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Componentization

Breaking large ERP systems into individualcomponents that work together.

Makes it easier for ERP vendors to enhance their solutions and for customers to upgrade their software.

Helps vendors extend the core ERP system withsupply chain, sales force automation solutions, andcustomer relationship management (CRM).

ERP Implementation



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To avoid failures, the following factors should be considered;

The customer‟s expectations.

The ERP product capabilities, andgaps.

The level of change the customer

has to go through to make thesystem fit.

The level of commitment withinthe customer organization to seethe project through.

The customer‟s organizationand culture.

The risks presented by politics

within the customer organization.

The consultant‟s capabilities,

responsibilities and role (if applicable).

Application Service Providers & ERP Outsourcing



100

Application Service Providers & ERP Outsourcing

“ASP alternative” = A popular option today for businessesthat want ERP functions but lease applications rather thanbuilding systems.

Application Service Provider (ASP) is a software vendor that offers to lease ERP-based applications to other businesses.

The ASP concept is especially useful in ERP projects,

which are expensive to install and take a long time toimplement, and for which staffing is a major problem.

Global Supply Chains



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Global Supply Chains = Supplychains that involve suppliers

and/or customers in other countries.

Some of the issues involved in

global supply chains;

legal issues, customs feesand taxes

language and culturaldifferences

fast changes in currencyexchange rates

political instabilities.

CASE: LEGO Struggles with Global Issues



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CASE: LEGO Struggles with Global Issues

Problem: In a rush to get its innovative product to market, Lego did

not first solve all necessary issues, for example; The need for a supportive distribution & service system. Merging the offline and online operations

Existing warehouses were not optimized to handle distribution toindividual customers How to handle returns around the globe. Invoicing must comply with the regulations of many countries.

Results:

Lego closed the Web site for business. It took almost ayear to solve all global trade-related issues.

How EC contributes to SCM



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How EC contributes to SCM

Digitizes products such assoftware, which expedites theflow of materials.

Replaces all paper documents

with electronic documents.

Replaces faxes, phone &telegrams with electronicmessaging system.

Enhances collaboration &information sharing.

Change the nature and structureof the supply chain from linear toa hub.

Results in shorter supply chain

and minimum inventories.

Facilitates customer service.

Introduces efficiencies in buying& selling through the creation of e-marketplaces.

B i S lli l th S l Ch i



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Buying & Selling along the Supply Chain

A major role of EC is to facilitate buying and selling along the

supply chain. The major activities are;

UPSTREAM

INTERNAL SCM

DOWNSTREAM

COMBINED UPSTREAM / DOWNSTREAM

Integration of EC with ERP



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Integration of EC with ERP

Since most middle-sized and large companies already have anERP system, and since EC needs to interface with ERP, it makessense to interconnect the two.

By extending the existing ERP system to support e-commerce,

organizations not only leverage their investment in the ERPsolution, but also speed up the development of EC applications.

The problem is that the ERP software is very complex andinflexible (difficult to change), so it is difficult to achieve easy,

smooth, and effective integration.

Order Fulfillment in EC



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Order Fulfillment in EC

When a company sells direct to customers it is involved in thefollowing activities:

Quickly find the products to be shipped, and pack them.

Arrange for the packages to be delivered quickly to thecustomer‟s door.

Collect the money, either in advance, in COD, or by individualbill.

Handle the return of unwanted or defective products.

Many companies find it very difficult to fulfill these activitieseffectively & efficiently. This reveals that they have problems in their own supply chains.

Online Order Fulfillment & Logistics



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Online Order Fulfillment & Logistics

While order fulfillment is a part of the back-office operations, it isstrongly related to front-office operations.

Recently, e-Tailors have faced continuous problems in order fulfillment, especially during the holiday season.

For example, Amazon.com had to add physical warehouses inorder to expedite deliveries and reduce order fulfillment costs.

EC is based on the concept of “pull” operations, which begin with anorder, frequently a customized one.

In the “pull” case it is more difficult to forecast demand.

Furthermore, in a B2C pull model, the goods need be deliveredto the customer ‟s door.

Innovative Solutions to Supply Chain Problems



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Innovative Solutions to Supply Chain Problems

Galleryfurniture.comUses dozens of cameras,(Webcam) to demonstrate itsproduct inventory on the Web.This is an alternative to paper or

electronic catalogs.

Garden.com Developed proprietary softwarethat allows it to collaborate withits 70 suppliers efficiently andeffectively.

Mail Boxes Etc. & Return.com

Developed a logistics systemthat determines whether a

customer is entitled to a return& refund.

.

Rightfreight.com Manages a marketplace thathelps companies with goods tofind "forwarders" -- theintermediary that prepare goodsfor shipping.

Automated Warehouses



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Automated Warehouses

Traditional warehouses are built to deliver large quantities to a small number of stores and plants. But in B2C EC, companies need tosend small quantities to large number of individuals.

Large-volume EC fulfillment requires special automated warehouses.

This may include robots and other devices that expedite the pickup of products.

Most B2C is shipped via outsourcers.

Fingerhut handles the logistics of mail orders (including onlineorders) for Wal-Mart, Macys, and many others.

Options for Dealing with Returns



110

Options for Dealing with Returns

Return an item to the place where it was purchased. This only works when there is a small amount of returns.

Returns are shipped to an independent unit and handled separatelyinside the company.

May be more efficient, but the buyer is still unhappy. Allow the customer to physically drop the returned items at collection

stations.

Such as convenience stores or Mail Boxes, Etc.

Completely outsource returns.

Several outsourcers, including UPS provide such services.

MANAGERIAL ISSUES



111

MANAGERIAL ISSUES

Ethical issues. Conducting a supply chain management project mayresult in the need to lay off, retrain, or transfer employees. Other ethicalissues may involve sharing of personal information and computer programs.

How much to integrate? While companies should consider extremeintegration projects, including ERP, SCM, and electronic commerce,they should recognize that integrating sometimes results in failure.

Role of IT. Almost all major SCM projects use IT. However, it isimportant to remember that technology plays a supportive role toorganizational and managerial issues.

SCM Benefits



112CRM - SCM - ERP

• Faster, more accurate order processing

• Reductions in inventory levels

• Quicker times to market

• Lower transaction and material costs

• Strategic relationship with suppliers

Causes of SCM Failures



113CRM - SCM - ERP

• Lack of proper demand planning knowledge, tools and

guidelines

• Inaccurate or overoptimistic demand forecasts

• Inaccurate production, inventory and other business

data provided by a company’s other informationsystems

• Lack of adequate collaboration among marketing,production, and inventory management departments

within a company

• Immature, incomplete or hard to implement SCMsoftware tools

Trends in SCM



114CRM - SCM - ERP

Summary



115CRM - SCM - ERP

• Customer relationship management is a

cross-functional enterprise system that

integrates and automates many of the

customer-serving processes in sales,

marketing, and customer services thatinteract with a company’s customers.

Summary



116CRM - SCM - ERP

• Enterprise resource planning is a cross-

functional enterprise system that

integrates and automates many of the

internal business processes of a

company, particularly those within themanufacturing, logistics, distribution,

accounting, finance, and human resource

functions of the business.

Summary



117CRM - SCM - ERP

• Supply chain management is a cross-

functional inter-enterprise system that

integrates and automates the network of

business processes and relationships

between a company and its suppliers,customers, distributors, and other

business partners.



End of Chapter

Chapter

crm erp scm

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