8.1 © 2007 by prentice hall 5 chapter achieving operational excellence and customer intimacy:...

8.1 © 2007 by Prentice Hall

5Chapter

Achieving Operational Achieving Operational Excellence and Customer Excellence and Customer

Intimacy: Enterprise Intimacy: Enterprise ApplicationsApplications

Achieving Operational Achieving Operational Excellence and Customer Excellence and Customer

Intimacy: Enterprise Intimacy: Enterprise ApplicationsApplications


Enterprise SystemsEnterprise Systems

Systems That Span the Enterprise

Essentials of Business Information SystemsEssentials of Business Information SystemsChapter 2 E-Business: How Businesses Use Information SystemsChapter 2 E-Business: How Businesses Use Information Systems

Figure 2-15Enterprise systems integrate the key business processes of an entire firm into a single software system that enables information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may include transactions with customers and vendors.


Enterprise ApplicationsEnterprise Applications



• Enterprise applications are systems that span functional areas and automate processes for multiple business functions and organizational areas; they include:

1. Enterprise systems

2. Supply chain management systems

3. Customer relationship management systems

4. Knowledge management systems


Enterprise Application ArchitectureEnterprise Application Architecture



Figure 2-14Enterprise applications automate processes that span multiple business functions and organizational levels and may extend outside the organization.


• Integrate data from key business processes into single system

• Speed communication of information throughout firm

• Enable greater flexibility in responding to customer requests, greater accuracy in order fulfillment

• Enable managers of large firms to assemble overall view of operations

• Alcoa used ERP to eliminate redundancies and inefficiencies in its disparate systems

Enterprise Systems Enterprise Systems




Enterprise Systems

• Enterprise Systems

• Aka enterprise resource planning (ERP) systems

• Suite of integrated software modules and a common central database

• Collects data from many divisions of firm for use in nearly all of firm’s internal business activities

• Information entered in one process is immediately available for other processes

Essentials of Business Information SystemsEssentials of Business Information SystemsChapter 5 Achieving Operational Excellence and CustomerChapter 5 Achieving Operational Excellence and Customer

Intimacy: Enterprise ApplicationsIntimacy: Enterprise Applications


Enterprise Systems

• Enterprise Software

• The software helps the organization automate many of the steps in the best practices instead of having to do everything manually. And best of all, the software will help employees remember all of the necessary steps in a process and provide the data to all who need it.

• Examples

. Finance/accounting: General ledger, accounts payable, etc.

• Human resources: Personnel administration, payroll, etc.

• Manufacturing/production: Purchasing, shipping, etc.

• Sales/marketing: Order processing, billing, sales planning.




Enterprise Systems

• Business Value of Enterprise Systems

• Increase operational efficiency

• Provide firm wide information to support decision making

• Enable rapid responses to customer requests for information or products

• Include analytical tools to evaluate overall organizational performance




Enterprise Systems



Figure 8-1Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise

How Enterprise Systems WorkHow Enterprise Systems Work




The Supply ChainThe Supply Chain• Network of organizations and processes for:

• Purchase raw materials

• Transforming them into products

• Distributing the products

• Upstream supply chain:

• Firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them

• Downstream supply chain:

• Organizations and processes responsible for delivering products to customers

Supply Chain Management Systems




Nike’s Supply ChainNike’s Supply Chain


Figure 8-2This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles.


Supply Chain Management ApplicationsSupply Chain Management Applications

• Supply chain systems enable firms to• Generate demand forecasts

• Develop sourcing and manufacturing plans

• Share information about changes and faster so work can be better

coordinated

• Manage the flow of products through distribution centres and

warehouses by

• Coordinate activities with supply chain partners

• Simplification Handle complex interdependencies among various

supply chain processes

• Allow users to balance the costs of transportation and delivery





Global Supply Chains and the InternetGlobal Supply Chains and the Internet• Suppliers can log on to a company’s extranet site and

review next week’s production schedule. The supplier can ensure enough production supplies are delivered to a manufacturer without over- or under-extending itself. Changes to the production schedule can be communicated easier to suppliers through Internet-enabled applications.

• Intranets and Extranets

• Intranets: To improve coordination among internal supply chain processes

• Extranets: To improve coordinate supply chain processes shared with their business partners







Intranets and Extranets for Supply Chain ManagementIntranets and Extranets for Supply Chain Management


Figure 8-4Intranets integrate information from isolated business processes within the firm to help manage its internal supply chain. Access to these private intranets can also be extended to authorized suppliers, distributors, logistics services, and, sometimes, to retail customers to improve coordination of external supply chain processes.


Global Supply Chains and the InternetGlobal Supply Chains and the Internet

• Global supply chain issues

• Global supply chains typically span greater geographic distances and time differences

• More complex pricing issues (local taxes, transportation, etc.)

• Foreign government regulations

• Cultural differences

• Internet helps companies manage many aspects of global supply chains such as Sourcing, transportation, communications, international finance





Global Supply Chains and the InternetGlobal Supply Chains and the Internet

• Supply chain management systems1. Push-based model (build-to-stock)

• Schedules based on best guesses of demand

2. Pull-based model (demand-driven)

• Customer orders trigger events in supply chain

3. Sequential supply chains

• Information and materials flow sequentially from company to company

4. Concurrent supply chains

• Information flows in many directions simultaneously among members of a supply chain network





Push- Versus Pull-Based Supply Chain ModelsPush- Versus Pull-Based Supply Chain Models

Figure 8-5

The difference between push- and pull-based models is summarized by the slogan “Make what we sell, not sell what we make.”





• Match supply to demand

• Reduce inventory levels

• Improve delivery service

• Speed product time to market

• Use assets more effectively

• Reduced supply chain costs lead to increased profitability

• Increased sales

Business Value of Supply Chain Management SystemsBusiness Value of Supply Chain Management Systems





What Is Customer Relationship Management?What Is Customer Relationship Management?

• Knowing the customer• In large businesses, too many customers and too many ways

customers interact with firm

• Customer relationship management (CRM) systems• Capture and integrate customer data from all over the

organization

• Consolidate and analyze customer data

• Distribute customer information to various systems and customer touch points across enterprise

• Provide single enterprise view of customers

Customer Relationship Management Systems




What Is Customer Relationship Management?What Is Customer Relationship Management?

The goals of CRMS are to optimize 1.Increase revenue2.Increase profitability3.Increase customer satisfaction4.Increase customer retention





Customer Relationship Management (CRM)Customer Relationship Management (CRM)

Figure 8-7CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing.





CRM SoftwareCRM Software

• CRM packages range from niche tools to large-scale enterprise applications

1. Partner relationship management (PRM)

• Integrating lead generation, pricing, promotions, order configurations, and availability

• Tools to assess partners’ performances

2. Employee relationship management (ERM)

• E.g. Setting objectives, employee performance management, performance-based compensation, employee training





CRM SoftwareCRM Software3. Sales force automation: allows the sales force to focus on

the most profitable customer. It also reduces the cost per sale for acquiring new customers and retaining old ones.

4. Customer service: gathers information from a variety of sources and makes it available across organizational functions so that data is input only once.

5. Marketing: Allows companies to capturing prospect and customer data, scheduling and tracking direct-marketing mailings or e-mail

.





How CRM Systems Support MarketingHow CRM Systems Support Marketing

Figure 8-8Customer relationship management software provides a single point for users to manage and evaluate marketing campaigns across multiple channels, including e-mail, direct mail, telephone, the Web, and wireless messages.





CRM Software CapabilitiesCRM Software Capabilities

Figure 8-9The major CRM software products support business processes in sales, service, and marketing, integrating customer information from many different sources. Included are support for both the operational and analytical aspects of CRM.





Customer Loyalty Management Process MapCustomer Loyalty Management Process Map

Figure 8-10

This process map shows how a best practice for promoting customer loyalty through customer service would be modeled by customer relationship management software. The CRM software helps firms identify high-value customers for preferential treatment.





• Operational CRM: • Customer-facing applications such as sales force

automation, call center and customer service support, and marketing automation

• Analytical CRM: • Analyze customer data output from operational

CRM applications• Based on data warehouses populated by operational

CRM systems and customer touch points

• Customer lifetime value (CLTV)




Operational and Analytical CRMOperational and Analytical CRM


Business Value of Customer Relationship ManagementBusiness Value of Customer Relationship Management

• Increased customer satisfaction

• Reduced direct-marketing costs

• More effective marketing

• Lower costs for customer acquisition/retention

• Increased sales revenue





Enterprise Application ChallengesEnterprise Application Challenges

• Highly expensive to purchase and implement enterprise applications – total cost may be 4 to 5 times the price of software

• Technology changes

• Business process changes

• Organizational changes

• Switching costs, dependence on software vendors

• Data standardization, management, cleansing

Enterprise Applications: New Opportunities and Challenges




• To bring greater value from enterprise applications

• Enterprise solutions : Make applications more flexible, Web-enabled, integrated with other systems

• Service platform: Integrates multiple applications to deliver a seamless experience for all parties

• Order-to-cash process

• Portal software




Extending Enterprise SoftwareExtending Enterprise Software


Order-to-Cash ServiceOrder-to-Cash Service

Figure 8-12Order-to-cash is a composite process that integrates data from individual enterprise systems and legacy financial applications. The process must be modeled and translated into a software system using application integration tools.





Interactive Session: OrganizationsInteractive Session: OrganizationsInvacare Struggles with Its Enterprise System Invacare Struggles with Its Enterprise System

ImplementationImplementation• Read the Interactive Session and then discuss the

following questions:

• How did problems implementing the Oracle enterprise software affect Invacare’s business performance?

• What people, organization and technology factors affected Invacare’s ERP implementation?

• If you were Invacare’s management, what steps would you have taken to prevent these problems?



Enterprise Systems

8.1 © 2007 by prentice hall 5 chapter achieving operational excellence and customer intimacy:...

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