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• Customer Relationship Management (CRM) • Enterprise Resource Planning (ERP) • Supply Chain Management (SCM) Customer Relationship Management (CRM): WHAT IS CRM? •
Customer relationship management (CRM) is a system for managing a company’s interactions with current and future customers. It often involves using technology to organize, automate and synchronize sales, marketing, customer service, and technical support.
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Managing the full range of the customer relationship involves
Providing customer-facing employees with a single, complete view of every customer at every touch point and across all channels
Providing the customer with a single, complete view of the company and its extended channels
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CRM uses IT to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes.
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CRM systems include a family of software modules that provides the tools that enable a business and its employees to deliver fast, convenient, dependable, and consistent service to its customers. Siebel Systems, Oracle, PeopleSoft, SAP AG, and Epiphany are some of the leading vendors of CRM software.
APPLICATION COMPONENTS OF CRM? 1. Contact and Account Management: •
CRM systems store the data in a common customer database that integrates all customer account information and makes it available throughout the company via Internet, intranet, or other network links for sales, marketing, service, and other CRM applications.
2. Sales: A CRM system provides sales reps with the tools and data resources they need to
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Support and manage their sales activities
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Optimize cross-and up-selling
CRM also provides the means to check on a customer’s account status and history before scheduling a sales call 3. Marketing and Fulfillment: CRM systems help with direct marketing campaigns by automatic such tasks as •
Qualifying leads for targeted marketing
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Scheduling and tracking mailings
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Capturing and managing responses
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Analyzing the business value of the campaign
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Fulfilling responses and requests
4. Customer Service and Support: A CRM system gives service reps real-time access to the same database used by sales and marketing •
Requests for service are created, assigned, and managed
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Call center software routes calls to agents
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Help desk software provides service data and suggestions for solving problems
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Web-based self-service enables customers to access personalized support information
5. Retention and Loyalty Programs: •
Enhancing and optimizing customer retention and loyalty is a major business strategy and primary objective of customer relationship management.
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CRM systems try to help a company identify, reward, and market to their most loyal and profitable customers.
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THE THREE PHASES OF CRM: 1. Acquire: A business relies on CRM software tools and databases to help it acquire new customers by doing a superior job of contact management, sales prospecting, selling, direct marketing, and fulfillment. 2. Enhance: Web-enabled CRM account management and customer service and support tools help keep customers happy by supporting superior service from a responsive networked team of sales and service specialists and business partners. 3. Retain: CRM analytical software and databases help a company proactively identify and reward its most loyal and profitable customers to retain and expand their business via targeted marketing and relationship marketing programs.
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Benefits of CRM: • •
Identify and target the best customers Real-time customization and personalization of products and services
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Track when and how a customer contacts the company Provide a consistent customer experience
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Provide superior service and support across all customer contact points
CRM Failures: Business benefits of CRM are not guaranteed • •
50 percent of CRM projects did not produce promised results 20 percent damaged customer relationships
Reasons for failure • Lack of understanding and preparation • Not solving business process problems first • No participation on part of business stakeholders involved TRENDS IN CRM / TYPES OF CRM SYSTEMS: • • • •
Operational CRM Analytical CRM Collaborative CRM Portal-based CRM
Operational CRM • • •
Supports customer interaction with greater convenience through a variety of channels including phone, fax, e-mail, chat, and mobile devices Synchronizes customer interactions consistently across all channels Makes the company easier to do business with
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 with customers, suppliers, and partners Improves efficiency and integration throughout the supply chain Allows greater responsiveness to customer needs through sourcing of products and services outside of your enterprise
Portal-based CRM: • • • •
Provides all users with the tools and information that fit their individual roles and preferences Empowers all employees to respond to customer demands more quickly and become truly customer-focused Provides the capability to instantly access, link, and use all internal and external customer information
ENTERPRISE RESOURCE PLANNING (ERP): THE BUSINESS BACKBONE ERP is a cross-functional enterprise backbone that integrates and automates processes within • • • • • •
Manufacturing Logistics Distribution Accounting Finance Human resources
ERP is recognized as a necessary ingredient for the companies to gain the efficiency, agility and responsiveness required to succeed in the business. What is ERP? •
It means enterprise resource planning, which itself means planning the resources in an enterprise (business). So, this abbreviation simply means, that this is a way of using the resources in a company more effectively.
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Various processes that are essential to running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and beyond. At its most basic level, ERP software integrates these various functions into one complete system to streamline processes and information across the entire organization.
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It is a set of business software tools designed to facilitate the flow of information between all departments or functions within a business.
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The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions—for example, accounting and sales—can rely on the same information for their specific needs.
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ERP Application Components:
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Benefits and Challenges of ERP ERP Business Benefits: 1. Integration across all business processes 2. Automation enhances productivity 3. Increase overall performance 4. Quality Reports and Performance Analysis 5. Enterprise Agility 6. Decision Supports ERP Costs: 1. Risks and costs are considerable 2. Hardware and software are a small part of total costs 3. Failure can cripple or kill a business 4. The costs and risks of failure in implementing a new ERP system are substantial. Most companies have had successful ERP implementations, but a sizable minority of firms experienced spectacular and costly failures that heavily damaged their overall business.
5. Example: The most recent example of ERP failure is Shane Co., the family owned jewelry retailer and one of the 10 largest jewelry retailers in the world. In January 2009, Shane Co. sought bankruptcy protection, attributing the company’s decline to delays and cost overruns in their $36 million SAP AG inventory-management system. Shane Co. claimed SAP took almost three years to install and implement the system instead of one year, while costs “ballooned” to $36 million from a projected maximum of $10 million. CAUSES OF ERP FAILURE: Most common causes of ERP failure • • • • • •
Under-estimating the complexity of planning, development, training Failure to involve affected employees in planning and development Trying to do too much too fast Insufficient training Insufficient data conversion and testing Over-reliance on ERP vendor or consultants
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Trends in ERP: ERP is still evolving—adapting to developments in technology and the demands of the market. Four important trends are shaping ERP’s continuing evolution: improvements in integration and flexibility, extensions to e-business applications, a broader reach to new users, and the adoption of Internet technologies. Figure 8.12 illustrates four major developments and trends that are evolving in ERP applications.
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First, the ERP software packages that were often criticized for their inflexibility, have gradually been modified into more flexible products.
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Web enabling ERP software - is a second development in the evolution of ERP.
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The growth of the Internet and corporate intranets and extranets prompted software companies to use Internet technologies to build Web interfaces and networking capabilities into ERP systems.
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This Internet connectivity has led to the development of interenterprise ERP systems that provide Web-enabled links between key business systems (such as inventory and production) of a company and its customers, suppliers, distributors, and others.
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All of these developments have provided the business and technological momentum for the integration of ERP functions into e-business suites.
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SUPPLY CHAIN MANAGEMENT (SCM): What is Supply Chain Management (SCM)? •
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The interrelationships o
With suppliers, customers, distributors, and other businesses
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Needed to design, build, and sell a product
Each supply chain process should add value to the products or services a company produces o
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Frequently called a value chain
Fundamentally, supply chain management helps a company o
Get the right products
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To the right place
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At the right time
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In the proper quantity
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At an acceptable cost
Goals of SCM: The goal of SCM is to efficiently •
Forecast demand
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Control inventory
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Enhance relationships with customers, suppliers, distributors, and others
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Receive feedback on the status of every link in the supply chain
SUPPLY CHAIN LIFE CYCLE: •
The figure below illustrates the basic business processes in the supply chain life cycle and the functional SCM processes that support them.
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It also emphasizes how many companies today are reengineering their supply chain processes, aided by Internet technologies and supply chain management software.
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For example, the demands of today’s competitive business environment are pushing manufacturers to use their intranets, extranets, and e-commerce Web portals to help them reengineer their relationships with their suppliers, distributors, and retailers.
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The objective is to significantly reduce costs, increase efficiency, and improve their supply chain cycle times.
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SCM software can also help to improve interenterprise coordination among supply chain process players. The result is much more effective distribution and channel networks among business partners.
Electronic Data Interchange (EDI): •
One of the earliest uses of information technology for supply chain management
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The electronic exchange of business transaction documents between supply chain trading partners
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The almost complete automation of an e-commerce supply chain process
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Many transactions occur over the Internet, using secure virtual private networks
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EDI is an example of the almost complete automation of an e-commerce supply chain process. EDI over the Internet, using secure virtual private networks , is a growing B2B e-commerce application.
Roles and Activities of SCM in Business: The top three levels of Figure 8.17 show the strategic, tactical, and operational objectives and outcomes of SCM planning, which are then accomplished by the business partners in a supply chain at the execution level of SCM. The role of information technology in SCM is to support these objectives with interenterprise information systems that produce many of the outcomes a business needs to manage its supply chain effectively.
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BENEFITS AND CHALLENGES OF SCM: Key Benefits •
Decide when and what to produce, store and move
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Rapidly communicate orders
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Track the status of the orders
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Monitor the inventory levels
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Track Shipments
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Plan production based on actual customer demand
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Rapidly communicate changes in product design
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Lower transaction and materials costs
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Strategic relationships with supplier
Key Challenges •
Lack of demand planning knowledge, tools, and guidelines
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Inaccurate data provided by other information systems
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Lack of collaboration among marketing, production, and inventory management
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SCM tools are immature, incomplete, and hard to implement
Trends in SCM: •
In the first stage, a company concentrates on making improvements to its internal supply chain processes and its external processes and relationships with suppliers and customers. Its e-commerce Web site and those of some of its trading partners provide access to online catalogs and useful supply chain information as they support limited online transactions.
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In stage two, a company accomplishes substantial supply chain management applications by using selected SCM software programs internally, as well as externally via intranet and extranet links among suppliers, distributors, customers, and other trading partners. Companies in this stage also concentrate on expanding the business network of Web-enabled SCM-capable trading partners in their supply chain to increase its operational efficiency and effectiveness in meeting their strategic business objectives.
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In the third stage, a company begins to develop and implement cutting-edge collaborative supply chain management applications using advanced SCM software. Examples include collaborative supply chain planning and fulfillment applications like collaborative product design and delivery, and collaborative planning, forecasting, and replenishment (Renewal, Replacement) (CPFR).
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Example of SCM:
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