Achieving Operational Excellence

Enterprise Applications

Business Information Systems

Laudon & Laudon

Ch.8 (P.266)

Enterprise systems

• What Are Enterprise Systems?– Based on integrated software modules and a

common central database help companies integrate information from many different parts of business, forge closer ties with customers and coordinates firms activities with suppliers.

• Business Value of Enterprise Systems– Increase operational efficiency– Support decision making and rapid responses to

customer requests– Include analytical tools to evaluate overall

performance

How Enterprise Systems WorkHow Enterprise Systems Work

The Supply ChainThe Supply Chain

• A network of organizations and processes for procuring raw materials, transforming them into products, and 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

Nike’s Supply ChainNike’s Supply Chain

Information and Supply Chain Information and Supply Chain ManagementManagement

• Inefficiencies ( parts shortage, underutilized plant capacity, excessive inventory, transportation costs)

• Perfect Information Just-in-time strategy• Uncertainties Buffer Safety stock• Bullwhip effect: information about the

demand for a product gets distorted as it pass from one entity to the next across the supply chain.

Supply Chain Management Supply Chain Management ApplicationsApplications

• Supply chain planning systems– Enable the firm to model its existing supply chain, generate

demand forecasts for products and provide optimal sourcing and manufacturing plans. Ex. Establishing inventory level for raw material, where to store finished goods, how much to produce in a given time.

• Supply chain execution systems: – manage the flow of products through distribution centers

and warehouses, Track the physical status of goods, management of material , warehouse and transportation operations.

– Software vendors: SAP, Oracle-PeopleSoft

Supply Chain Management and Supply Chain Management and the Internetthe Internet

• Intranets: To improve coordination among their internal supply chain processes

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

• Demand-driven supply chains– Push-based model– Pull-based model

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

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

Business Value of Supply Chain Business Value of Supply Chain Management SystemsManagement Systems

• 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

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

• Capture and integrate customer data from all over the organization, consolidate date, analyze the data and distribute the results to various systems.– Knowing the customer– Touch points– Customize the offering more precisely by

answering the questions.• Who are our loyal customers?• Customers’ lifetime value?• Who are our most profitable customers?• What do these profitable customers want to buy?

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

CRM systems range from niche tools that perform limited functions such as personalizing Web sites for specific customers, to large scale enterprise applications that interact with customers analyze them and link the information to other enterprise applications such as supply chain management.

CRM SoftwareCRM Software

• CRM packages are available with a wide spectrum of functions– Partner relationship management (PRM) uses many of the same data, tools and systems as

customer relationship management to enhance collaboration between a company and its selling partners

– Employee relationship management (ERM) Deals with employee issues that are closely related to CRM,

such as setting objectives, employee performance management, employee training

– Sales force automation (SFA) Help sales staff increase their productivity by focusing sales

efforts on the most profitable customers, it provides sales prospect , contact information, and product information.

It can assemble information about a particular customer’s past purchase to help the salesperson make personalized recommendations.

– Customer service: provide information and tools to increase the efficiency of call

centers, help desks and customer support staff.

– Marketing:

it directs marketing campaigns by providing capabilities for capturing prospect and customer data, for providing product and service information, for qualifying leads for targeted marketing.

Operational and Analytical CRMOperational and Analytical CRM

• Operational: customer-facing applications such as sales force automation,

call center and customer service support, and marketing automation

• Analytical: applications that 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): is based on the relationship

between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer and the expected life of that relationship.

Business Value of Customer Business Value of Customer Relationship ManagementRelationship Management

• Business benefits:– Increased customer satisfaction– Reduced direct-marketing costs– More effective marketing– Lower costs for customer

acquisition/retention– Increased sales revenue

• Churn rate: measures the number of customers who stop using or purchasing products or services from a company.

Challenges and OpportunitiesChallenges and Opportunities

• Technology changes

• Business process changes

• Organizational changes

• Switching costs

• Data management