1. Other Enterprise Systems Customer Relationship Management & Supply Chain Management

2. 2 What is a Supply Chain? The flow of materials, information, money and services from raw material suppliers, through factories and warehouses, to the end customers Supply chains exist within businesses and across businesses A network of facilities for procuring materials, transforming raw materials into finished products,' and distributing finished produce to customers.

3. 3 Structure & Components of Supply Chains Material flows The physical products, raw materials, supplies and so forth that flow along the chain. Reverse flows – returned products, recycled products and disposal of materials or products. Information flows All data related to demand, shipments, orders, returns and schedules as well as changes in any of these data. Financial flows all transfers of money, payments and credit-related data.

4. 4 Structure & Components of Supply Chains A supply chain involves three segments: Upstream, where sourcing or procurement from external suppliers occurs; Internal, where packaging, assembly or manufacturing takes place; Downstream, where distribution takes place, frequently by external distributors. Tiers of suppliers Suppliers may have one or more subsuppliers, and the subsupplier may have its own subsupplier(s) and so on.

5. Supply Chain Management: Objectives and results of poor management An efficient supply chain ensures… The right products The right place The right time In the proper quantity At an acceptable cost Results associated with poor supply chain management High inventory costs: Excessive product Poor customer service – not delivering products or services when and where the customers need them. Poor quality product: mismatch between requirement and product delivered Poor planning capabilities Increased cost associated with tracking/managing supply chain 5

6. 6 Typical supply chain challenges Supply chains involve diverse organisations This span from small to very large organisations Introduces diversity of processes and IT systems Increasingly supply chains are international or global and this introduces Cultural differences Localisation (language, currency etc) Economic and Political Differences Legal issues (related to customs, logistics/port, trade restrictions) Cross-border data transfer which refers to the flow of corporate data across nations’ borders.

7. Examples of modern supply chain challenges Tracking farm of origin of food produce The consumer may be based in Europe, the producer based in Africa or South America Processing of returned product Products have to be returned through the supply chain to the manufacturing facility Heavily seasonal/unpredictable demand E.g. Christmas toy demand, weather impacted products (such as fruit), new product launches (iPhone etc) 7

8. 8 Typical supply Chain failures Problems stem mainly from two sources: Uncertainties due to demand forecast, delivery times, quality problems in materials and parts that can create production delays; The need to coordinate several activities, internal units and business partners. Supply chains are often chaotic systems: small changes amplify to become major problems An issue in one part of the supply chain will lead to problems further down the supply chain The downstream problems will in turn lead to secondary problems

9. 9 Supply Chain Management Systems Supply chain management (SCM) The function of planning, organising and optimising the supply chain’s activities. A supply chain management system A cross-functional inter-enterprise system To help support and manage the links between a company’s key business processes And those of its suppliers, customers & business partners SCM systems implement process change and change roles of participant organisations Challenges similar to those face in ERP - but across multiple organisations

10. 10 Role of SCM Supply chain management (SCM) provides capabilities at all levels of enterprise systems pyramid.

11. 11 SCM Architecture: Integration Supplier Inventory Distributor Inventory Manufacturer Customer Market research data scheduling information Engineering and design data Order flow and cash flow Ideas and design to satisfy end customer Material flow Credit flow SCM systems must support data flows across multiple systems and organisational boundaries The data is integrated into a data warehouse and then distributed to other points in the supply chain using pub/sub or point-to-point messaging

12. 12 SCM Architecture: Consolidation Using the data warehouse, functionality to support operational execution of the supply chain activities and planning of future requirements is implemented in new business logic Market research data scheduling information Engineering and design data Order flow and cash flow Ideas and design to satisfy end customer Material flow Credit flow Planning Operational execution

13. 13 SCM business benefits and blockers Visibility Enhanced visibility - trading partners have the info needed for planning (win/win) Collaboration with Suppliers When supplies run low, replenish message to supplier who sends goods directly to shelves bypassing warehousing costs Trust Between trading partners is NOT the norm Zero-sum game, like politics, Resistance Competition from traditional communication media, hunches, human to human interaction Planning was naïve Sales force inertia Cost of implementing the system Participants need to determine who pays

14. Trust and resistance Fully implemented SCM systems require high degrees of transparency between the supply chain participants And SCM is similar to ERP in impact on organisation – and face similar issues related to organisational readiness Often moves negotiation away from price and towards cost i.e. The buyer has visibility of the sellers’ costs and the price is based on an agreed profit margin – not supply/demand dynamics This means SCM systems are often most successful where the supply chain has a dominant participant who can force co-operation from other participants and pay for the system E.g. Tesco, Walmart, large car manufacturers 14

15. 15 Customer Relationship Management Move from a ‘transactional’ model of marketing to a ‘relationship’ model An enterprise wide effort to acquire and retain customers. Includes a one-to-one relationship between a customer and a seller. One simple idea “Treat different customers differently”. Helps keep profitable customers and maximizes lifetime revenue from them. Identify/acquire/retain most profitable prospects 20/80 rule (20% customers generate 80% revenues) Acquisition is far more expensive that retention. Integrating information from sales, customer service, marketing and any other service points Also known as touch points – where the customer interacts with the organisation

16. 16 CRM cycle CRM is a continuous process of optimising interactions with the customer and seeking new opportunities to increase sales © HP This CRM cycle consists of 4 stages Identify customer Analyse and differentiate customer behaviour to identify propensity to buy specific products. Customise customer plan to optimise revenue Customise customer touchpoints to optimise revenue.

17. 17 Customer Relationship Management (CRM): Technical requirements A cross-functional enterprise system that integrates and automates many of the processes in sales, marketing & customer service that interact with customers (Customer touchpoints) Customer touch point is any method of interaction with a customer, such as telephone, e-mail, a customer service or help desk, conventional mail, Web site and store. These processes may be in functional/departmental systems Therefore, CRM is similar to ERP in impact on organisation – and face similar issues related to organisational readiness Create a framework of software & databases that integrate these processes with the rest of the company’s processes Additional integration and business logic required Provides analytic capabilities to optimise the customer relationship across all touchpoints

18. 18 CRM architecture To implement the CRM cycle requires a combination of Execution steps: Using new business logic (e.g. data mining, marketing planning Propagation steps: Results are propagated to functional systems for execution (e.g. complete a sales campaign, upgrade call centre service etc) © HP

19. CRM challenges Data model integration and synchronisation CRM gathers customer touchpoint data into a single system for analysis CRM should ensure consistency of the data across the systems On-going data synchronisation and propagation CRM must ensure that data remains synchronised through on-going customer change (e.g. Change of address) Outputs from analysis/planning must be propagated back into individual functional/departmental systems Note: If a ‘global’ ERP has already been implemented, CRM can be more easily implemented over the ERP Data integration stage and data synchronisation should already be in place in the ERP 19

20. CRM Architecture: Integration Existing Functional systems Shared customer and Touch point Data (e.g. customer records, Profiling, contact history, purchase history) Call centre Data mart Sales systemMarketing Existing integration points New integration points for Data collection and propagation Integration layer supports integration between data mart and the existing functional systems

21. CRM Architecture: Consolidation Shared customer and Touch point Data (e.g. customer records, Profiling, contact history, purchase history) Data mart New integration points for Data collection and propagation New functional is built using the data mart Can replace functional existing in some or all of the functional systems (e.g. A new customer support system which provides more information about the customer) Can be entirely new functionality (e.g. Retention and loyalty programme) Direct MarketingAccount management Retention and Loyalty Programmes Sales Force AutomationCustomer Support

22. 22 Examples of CRM Functional Modules Contract and Account Management Helps sales, marketing & service professionals Capture & track data about past/planned contacts with customers/prospects Sales Force Automation Provides sales reps with software tools & data they need to support & manage sales activities Cross-selling is trying to sell a customer of one product with a related product Up-selling is trying to sell customer a better product than they are currently seeking

23. 23 Direct Marketing Help marketing professionals accomplish direct marketing campaigns by tasks such as Qualifying leads for targeted marketing & scheduling & tracking direct marketing mailings Retention and Loyalty Programs Try to help a company identify, reward, & market to their most loyal and profitable customers Data mining tools & analytical software Customer data warehouse Examples of CRM Functional Modules

24. 24 Customer Service and Support Provides sales reps with software tools & database access to customer database shared by sales & marketing professions Helps create, assign and manage requests for service Call center software routes calls to customer support agents based upon their skills and type of call Help desk software provides relevant service data & suggestions for resolving problems for customer service reps helping customers with problems Examples of CRM Functional Modules

25. 25 An example of technology used to implement CRM N-tier architecture Database server hosting data warehouse Application logic servers with process models (multiple servers, distributed ) Integration server to integrate with external applications Web/Internet server Presentation level Browsers Mobile phones © Sage

26. 26 CRM Benefits and risks Benefits Single view of customer data Immediate availability of real-time information Better knowledge of customers Better understanding of customer needs Knowledge retention improved Risks Difficult and expensive implementation due to Integration challenges Business change required Scalability an issue due to the potential scale of data available No guarantee on effectiveness Can be hard to prove that CRM works because CRM cannot be separated from everyday operations to assess impact