2 CHAPTER 8: LEARNING OUTCOMES Explain integrations and the role they play in connecting a corporation.Describe supply chain management and its role in supporting business operations.Identify the benefits and challenges of SCM along with its future.Describe customer relationship management and its role in supporting business operations.Identify the benefits and challenges of CRM along with its future.Describe enterprise resource management and its role in supporting business operations.Identify the benefits and challenges of ERP along with the future of the connected corporation.
3 BUILDING A CONNECTED CORPORATION THROUGH INTEGRATIONS Integration—Allows separate systems to communicate directly with each other, eliminating the need for manual entry into multiple systemsIntegration ToolsEnterprise System—Provide enterprisewide support and data access for a firm’s operations and business processesEnterprise Application Integration (EAI)—Connects the plans, methods, and tools aimed at integrating separate enterprise systemsMiddleware—Several different types of software that sit between and provide connectivity for two or more software applicationsEnterprise Application Integration Middleware—Packs commonly used applications together, reducing the time needed to integrate applications from multiple vendors
4 SUPPLY CHAIN MANAGEMENT Supply Chain Management (SCM)—The management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and profitabilityThe supply chain has three main links:Materials flow from suppliers and their “upstream” suppliers at all levels.Transformation of materials into semifinished and finished products through the organization’s own production process.Distribution of products to customers and their “downstream” customers at all levels.
5 THE BENEFITS OF SCM Improved Visibility Supply Chain Visibility—The ability to view all areas up and down the supply chain in real timeSupply Chain Planning System—Uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventorySupply Chain Execution System—Automates the different activities of the supply chainBullwhip Effect—Occurs when distorted product demand information ripples from one partner to the next throughout the supply chain
6 THE BENEFITS OF SCM Increased Profitability Demand Planning System—Generates demand forecasts using statistical tools and forecasting techniques, so companies can respond faster and more effectively to consumer demands through supply chain enhancementsCommon supply chain metrics include:Back orderInventory cycle timeCustomer order cycle timeInventory turnover
7 THE CHALLENGES & FUTURE OF SCM Primary challenges include:Cost—An SCM system can cost millions of dollars for the software and millions more for help implementing the systemComplexity—The move towards globalization is increasing complexity in the supply chainFastest growing SCM components:Collaborative demand planningCollaborative engineeringSelling chain managementSupply chain event management (SCEM)
8 CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management (CRM)—Involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitabilityMany organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems
9 THE BENEFITS OF CRM Evolution of CRM Operational and Analytical CRM CRM Reporting Technology—Help organizations identify their customers across other applicationsCRM Analysis Technologies—Help organization segment their customers into categories such as best and worst customersCRM Predicting Technologies—Help organizations make predictions regarding customer behavior such as which customers are at risk of leavingOperational and Analytical CRMOperational CRM—Supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customersAnalytical CRM—Supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers
10 THE BENEFITS OF CRM Marketing and Operational CRM Three marketing operational CRM technologies:List generatorCampaign management systemCross-selling and up-sellingSales and Operational CRMSales and operational CRM technologies:Sales management CRM systemsContact management CRM systemsOpportunity management CRM systems
11 THE BENEFITS OF CRM Customer Service and Operational CRM Three customer service operational CRM technologies:Contact center (call center)Web-based self-service systemCall scripting systemAnalytical CRMAnalytical CRM relies heavily on data warehousing technologies and business intelligence to glean insights into customer behaviorMeasuring CRM Success
12 THE CHALLENGES & FUTURE OF CRM The customer is always right and now has more power than ever thanks to the Internet.Current trends include:Supplier relationship management (SRM)Partner relationship management (PRM)Employee relationship management (ERM)
13 ENTERPRISE RESOURCE PLANNING Reasons ERP systems are powerful tools:ERP is a logical solution to incompatible applicationsERP addresses global information sharing and reportingERP avoids the pain and expense of fixing legacy systemsCore ERP Component—Traditional components included in most ERP systems and they primarily focus on internal operationsExtended ERP Component—Extra components that meet the organizational needs not covered by the core components and primarily focus on external operations
14 THE BENEFITS OF ERP Core ERP Components Accounting and Finance ERP Component—Manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset managementProduction and Materials Management ERP Component—Handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality controlHuman Resource ERP Component—Tracks employee information including payroll, benefits, compensation, and performance assessment and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities
15 THE BENEFITS OF ERP Extended ERP Components: Measuring ERB Success Business intelligenceCustomer relationship managementSupply chain managementEbusinessMeasuring ERB SuccessThe learning and growth perspective.The internal business process perspective.The customer perspective.The financial perspective.