Chapter 9 - Chapter 9: Achieving Opera2onal Excellence and...

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Unformatted text preview: Chapter 9: Achieving Opera2onal Excellence and Customer In2macy: Enterprise Applica2ons Learning Objec2ves •  Evaluate how enterprise systems help businesses achieve opera2onal excellence •  Describe how supply chain management systems coordinate planning, produc2on, and logis2cs with suppliers •  Explain how customer rela2onship management systems help firms achieve customer in2macy •  Iden2fy the challenges posed by enterprise applica2ons Produced by Dr. Brian Janz 1 Enterprise Systems •  a.k.a. enterprise resource planning (ERP) systems •  Suite of integrated soLware modules and a common central database – Informa2on entered in one process is immediately available for other processes •  Collects data from many divisions of firm for use in nearly all of firm’s internal business ac2vi2es How Enterprise Systems Work Produced by Dr. Brian Janz 2 Business Value of Enterprise Systems •  Increase opera2onal efficiency •  Provide firm‐wide informa2on to support decision making •  Enable rapid responses to customer requests for informa2on or products •  Include analy2cal tools to evaluate overall organiza2onal performance Enterprise Systems SoLware •  Built around thousands of predefined business processes that reflect best prac2ces –  Finance/accoun2ng: General ledger, accounts payable, etc. –  Human resources: Personnel administra2on, payroll, etc. –  Manufacturing/produc2on: Purchasing, shipping, etc. –  Sales/marke2ng: Order processing, billing, sales planning, etc. •  To implement, firms: –  Select func2ons of system they wish to use –  Map business processes to soLware processes •  Managerial debate: should organiza2ons map their processes to the ERP system, or vice versa? Produced by Dr. Brian Janz 3 Chapter 9: Achieving Opera2onal Excellence and Customer In2macy: Enterprise Applica2ons Part 2: Supply Chains and Supply Chain Systems The Supply Chain •  Network of organiza2ons and processes for: –  Procuring raw materials –  Transforming them into products –  Distribu2ng the products •  Upstream supply chain: –  Firm’s suppliers, suppliers’ suppliers, processes for managing rela2onships with them •  Downstream supply chain: –  Organiza2ons and processes responsible for delivering products to customers Produced by Dr. Brian Janz 4 Nike’s Supply Chain Why Informa2on and Supply Chain Management? •  Inefficiencies cut into a company’s opera2ng costs –  Can waste up to 25% of opera2ng expenses •  Just‐in‐2me strategy: –  Components arrive as they are needed –  Finished goods shipped aLer leaving assembly line •  Safety stock –  Buffer for lack of flexibility in supply chain •  Bullwhip effect –  Informa2on about product demand gets distorted as it passes from one en2ty to next across supply chain Produced by Dr. Brian Janz 5 The Bullwhip Effect Supply Chain Management Systems •  Supply chain planning systems – Model exis2ng supply chain – Demand planning – Op2mize sourcing, manufacturing plans – Establish inventory levels – Iden2fying transporta2on modes •  Supply chain execu2on systems – Manage flow of products through distribu2on centers and warehouses Produced by Dr. Brian Janz 6 Global Supply Chains and the Internet •  Before the Internet, supply chain coordina2on was hampered by difficul2es of using disparate internal supply chain systems (if they existed) •  Enterprise systems supply some integra2on of internal supply chain processes but not designed to deal with external supply chain processes •  Intranets and Extranets –  Intranets: To improve coordina2on among internal supply chain processes –  Extranets: To coordinate supply chain processes shared with their business partners Intranets and Extranets for Supply Chain Management Produced by Dr. Brian Janz 7 Global Supply Chain Issues •  Global supply chains typically span greater geographic distances and 2me differences •  More complex pricing issues (local taxes, transporta2on, etc.) •  Foreign government regula2ons •  Internet helps companies manage many aspects of global supply chains – Sourcing, transporta2on, communica2ons, interna2onal finance Push‐ Versus Pull‐Based Supply Chain Models Produced by Dr. Brian Janz 8 Demand‐Driven Supply Chains •  Push‐based model (build‐to‐stock) –  Schedules based on best guesses of demand –  Customer orders trigger events in supply chain •  Pull‐based model (demand‐driven) •  Sequen2al supply chains •  Concurrent supply chains –  Informa2on and materials flow sequen2ally from company to company –  Informa2on flows in many direc2ons simultaneously among members of a supply chain network The Future Internet‐Driven Supply Chain Produced by Dr. Brian Janz 9 Business Value of Supply Chain Management Systems •  Match supply to demand •  Reduce inventory levels •  Improve delivery service •  Speed product 2me to market •  Use assets more effec2vely •  Reduced supply chain costs •  Increased sales Chapter 9: Achieving Opera2onal Excellence and Customer In2macy: Enterprise Applica2ons Part 3: Customer Rela2onship Management and CRM Systems Produced by Dr. Brian Janz 10 What Is Customer Rela2onship Management? •  Knowing the customer –  In large businesses, too many customers and too many ways customers interact with firm •  Customer rela2onship management (CRM) systems –  Capture and integrate customer data from all over the organiza2on –  Consolidate and analyze customer data –  Distribute customer informa2on to various systems and customer touch points across enterprise –  Provide single enterprise view of customers Customer Rela2onship Management (CRM) Produced by Dr. Brian Janz 11 CRM SoLware Capabili2es Types of CRM Systems •  Opera2onal CRM: –  Customer‐facing applica2ons such as sales force automa2on, call center and customer service support, and marke2ng automa2on •  Analy2cal CRM: –  Analyze customer data output from opera2onal CRM applica2ons –  Based on data warehouses populated by opera2onal CRM systems and customer touch points –  Customer life2me value (CLTV) Produced by Dr. Brian Janz 12 Analy2cal CRM Data Warehouse Business Value of Customer Rela2onship Management •  Increased customer sa2sfac2on •  Reduced direct‐marke2ng costs •  More effec2ve marke2ng •  Lower costs for customer acquisi2on/reten2on •  Increased sales revenue •  Reduced churn rate –  Churn rate: •  Number of customers who stop using or purchasing products or services from a company. •  Indicator of growth or decline of firm’s customer base Produced by Dr. Brian Janz 13 Wrap‐Up: Enterprise Applica2on Challenges •  Highly expensive to purchase and implement enterprise applica2ons – total cost may be 4 to 5 2mes the price of soLware •  Requires fundamental changes   Technology changes –  Business processes changes –  Organiza2onal changes •  Incurs switching costs, dependence on soLware vendors •  Requires data standardiza2on, management, cleansing Produced by Dr. Brian Janz 14 ...
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This note was uploaded on 02/24/2011 for the course MIS 7650 taught by Professor Janz during the Spring '11 term at U. Memphis.

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