CHAPTER NINE

Enterprise
Applications to
Manage Supply
Chains and
Respond to
Customers
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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

LEARNING OBJECTIVES

After reading this chapter, you will be able to answer the

following questions:

1. How do enterprise systems help businesses achieve

operational excellence?

2. How do supply chain management systems

coordinate planning, production, and logistics with
suppliers?

3. How do customer relationship management systems

achieve customer intimacy?
Continued
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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

LEARNING OBJECTIVES (continued)

4. What are the challenges posed by enterprise

applications?

5. How are enterprise applications used in platforms for

new cross-functional services?
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems

What are enterprise systems?

Suite of integrated software modules and a
common central database

The database collects data from many different

divisions and departments in a firm and from a
large number of business processes

Information collected from one process can be

accessed and used by other processes in the firm
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems

Enterprise Software
Built around thousands of predefined business processes that
reflect best practices

Finance/accounting Cash management, tax accounting, etc

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems

Enterprise Software
Built around thousands of predefined business processes that
reflect best practices

Finance/accounting cash management, tax accounting, etc

Human resources Personnel administration, payroll, etc

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems

Enterprise Software
Built around thousands of predefined business processes that
reflect best practices

Finance/accounting cash management, tax accounting, etc

Human resources Personnel administration, payroll, etc

Manufacturing/produ Purchasing, shipping, etc

ction
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems

Enterprise Software
Built around thousands of predefined business processes that
reflect best practices

Finance/accounting cash management, tax accounting, etc

Human resources Personnel administration, payroll, etc

Manufacturing/produ Purchasing, shipping, etc

ction

Sales/marketing Order processing, billing, sales

planning, etc
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems
Enterprise Software

To implement, firms:
Select functions of system they wish to use
Its called scoping
Map business processes to software processes
Can rewrite some of the software to support the business processes
In other words, rework the process. When we change the
process we must re-code it
The challenge is that if you change one code here, the whole
system changes (something might not work); chance of error
increases, the cost increases, time of implementation increases
general: dont change more than 5% of processes
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Systems

Business Value of Enterprise Software

A more uniform organization
If I implement the software, my software is similar to my competitors
Seamless operation everywhere
More efficient operations and customer-driven business processes
Best practices: the processes are tested over and over again and
are used in the best organizations in the industry
Firm-wide information for improved decision making
Everyone can see the information posted and thus they can make
good decision from every aspect of the organization
Helps firms respond rapidly to customer requests for information or
products
Enables senior management to easily find out at any moment how a
particular organizational unit is performing, determine which products
are most or least profitable and calculate the costs of the company as a
whole
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

The supply chain

A network of organizations and business processes
for procuring raw materials, transforming these
materials into intermediate and finished products, and
distributing the finished products to customers.
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

Information Systems and Supply Chain Management

Inefficiencies cut into a companys operating costs (25%)
Caused by inaccurate or untimely information

Just-in-time strategy:
Components arrive as they are needed
Finished goods shipped after leaving assembly line
Safety stock
Buffer for lack of flexibility in supply chain
Bullwhip effect
Information about product demand gets distorted as it passes
from one entity to next across supply chain
Is tamed by reducing uncertainties about demand and supply
when all members of the supply chain have accurate and up-to-
date information
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

Supply Chain Management Software

Supply chain planning systems
Model existing supply chain
Demand planning: determines how much product a business needs to make to satisfy
all of its customers demands (one of the most important and complex functions)
Optimize sourcing, manufacturing plans
Establish inventory levels
Identifying transportation modes
Supply chain execution systems
Manage flow of products through distribution centers and warehouses to ensure that
products are delivered to the right locations in the most efficient manner
Track the physical status of goods, the management of materials, warehouse and
transportation operations, and financial information involving all parties
Help them execute the supply chain steps
https://www.youtube.com/watch?v=tZKmIWOVHU0
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

Global Supply Chains and the Internet

Before Internet, supply chain coordination hampered by
difficulties of using dissimilar internal supply chain systems
Enterprise systems supply some integration of internal supply
chain processes but not designed to deal with external supply
chain processes
Performance standards may very from nation to nation and SCM
may need to reflect foreign government regulations and cultural
differences
Globalization encourage outsourcing warehouse and
transportation management, and related operations to 3rd party
logistics providers
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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Demand-Driven Supply Chains: From Push to Pull Manufacturing

and Efficient Customer Response

Earlier SCM systems were driven by a push-based model

(known as build-to-stock)

Push-based model: production master schedules are based on

forecasts or best guesses of demand for products, and
products are pushed to customers

Pull-based model: demand-driven or build-to-order, actual

customer order or purchases trigger events in the supply chain

Internet and internet technology make it possible to move from

sequential supply chains, where information flows in many
directions simultaneously among members of a supply chain
network

Copyright 2013 Pearson Canada Inc. 9-18

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Supply Chain Management Systems

Business Value of Supply Chain Management

Systems
Match supply to demand
Reduce inventory levels
Improve delivery service
Speed product time to market
Use assets more effectively
Reduced supply chain costs
Increased sales
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

What is Customer Relationship Management?

CRM systems
Capture and integrate customer data from across the
organization
Consolidate the data
Analyze the data
Distribute the results to various systems and customer
touch points across the enterprise
Touch Point (contact point): a method of interaction with
the customer, such as telephone, e-mail, customer service
desk, conventional mail, Facebook etc.
It can cost 6 more times to acquire a new customer than to
sell to an existing customer
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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

CRM Software

More comprehensive packages have modules for:

Partner relationship management (PRM): collaboration between a company
and its selling partners. Provides the company and its selling partners with
the ability to trade information and distribute leads and data about
customers, integrating lead generations, pricing, promotions, order
configurations, and availability

Employee relationship management (ERM): employees issues that are

closely associated to CRM setting objectives, employee performance
management, performance-based compensation and employee training
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

CRM Software

Most packages have modules for

Sales force automation (SFA): Sales prospect and contact information, and sales
quote generation capabilities

Increase their productivity by focusing sales efforts on the most profitable

customers

Assembles information about a certain customers past purchases to help

the salesperson make personalized recommendation

Customer service: Assigning and managing customer service requests; Web-

based self-service capabilities

Improved access to consistent and accurate customer information helps

call centers handle more calls per day and decrease the duration of each
call

Marketing: Capturing prospect and customer data, scheduling and tracking

direct-marketing mailings or e-mail

Cross-selling: action or practice of selling an additional product or service to an

existing customer
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

Operational and Analytical CRM

Operational CRM
Customer-facing applications such as call centre and
customer service support
Analytical CRM
Based on data warehouses that consolidate the data for data
analysis
Analyze customer data generated by operational CRM
applications to provide information for improving business
performance
Customer lifetime value (CLTV): relationship between the
revenue produced by a specific customer, the expenses
incurred in acquiring and servicing that customer, and the
expected life of the relationship between the customer and the
company
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Customer Relationship Management Systems

Business Value of Customer Relationship Management

Systems

Churn rate:
Number of customers who stop using or
purchasing products or services from a company.
Indicator of growth or decline of firms customer
base
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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Applications: New Opportunities and Challenges

Enterprise Application Challenges

Highly expensive to purchase and implement
enterprise applications
Requires fundamental changes
Technology changes
Business processes changes
Organizational changes
Switching costs: once you adopt an enterprise application
from a single vendor, such as SAP, it is very costly to switch
vendors, and the firm becomes dependent on the vendor to
upgrade its product and maintain the installation
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Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Applications: New Opportunities and Challenges

Next generation enterprise applications

Enterprise solutions / suites:
Replacing stand-alone enterprise, CRM, SCM
systems
Make these applications more flexible, Web-
enabled, integrated with other systems

Open-source and on-demand applications, as well as

more functionally available on mobile platforms
SaaS Software as a Service
https://www.youtube.com/watch?v=zqABiwIjqPU
 Management Information Systems
Chapter 9 Enterprise Applications to Manage Supply Chains and Respond to Customers

Enterprise Applications: New Opportunities and Challenges

Next generation enterprise applications

Social CRM and Business Intelligence

Social CRM tools enable a business to connect

customer conversations and relationships from
social networking sites to CRM processes

Vendors have added business intelligence features

to help managers obtain more meaningful
information from the massive amounts of data
generated by these systems

https://www.youtube.com/watch?v=0VgReYKrYfw