chapter 9 & 10 customer relationship management supply chain management

CHAPTER 9 & 10

Customer Relationship ManagementSupply Chain Management

OUTLINE

Customer Relationship Management (CRM) Definition Operational CRM Analytical CRM

Supply Chain Management (SCM) Supply Chains IT Support for Supply Chain Management

Interorganizational Systems (IOS)

Figure 2.2

From Neighborhood Stores…….

Personal

To Today…..

Impersonal

Giant mallsThe Web

Mobile population

Customer Touch Points

CUSTOMER

SmartPhone

Web Computer Physical Store

SalesRepresentative

CustomerService

ServiceCenter

Email Direct Mail

Field Service Technician

Customer Relationship Management: Motivations

It costs six times more to sell to a new customer than to sell to an existing one.

A typical dissatisfied customer will tell 8-10 people.

By increasing the customer retention rate by 5%, profits could increase by 85%.

70% of complaining customers will remain loyal if their problem is solved

Principles of CRM

A customer-centered organizational strategy

“Treat different customers differently” Keep profitable customers and

maximize lifetime revenue from them

Components of a CRM System

• Sales• Marketing• Customer Service and

Support• Campaign Management

Customer-facing Applications

• Search and Comparison• Customized Products• Technical Information• Personalized Web Pages• FAQ• E-mail / Auto Response• Loyalty Programs

Customer-touching Applications

• Data Mining• Decision Support• Business Intelligence• OLAP

CustomerData

Warehouse

Customer-Facing Applications

Customer service and support

Sales force automation

Marketing

Campaign management

Customer-Touching Applications

Search and comparison capabilities

Technical and other information and services

Customized products and services

Loyalty programs

Supply Chain Management (SCM)

Generic Supply Chain

Problems Along the Supply Chain

Longer product development cycle

Poor quality product Poor customer service High inventory costs Loss of revenues

Demand Fluctuations Lead to the Bullwhip Effect

OrderQuantity

Time

Customer Sales

OrderQuantity

Time

Retail OrdersTo Wholesaler

OrderQuantity

Time

WholesalerOrders to

Manufacturer

OrderQuantity

Time

ManufacturerOrders toSupplier

SCM: The Push Model (Made-to-Stock)

Forecast

Mass production

Salesperson

Happy customer

SCM: The Pull Model (Made-to-Order)

Dell customer orderDell factory

Dell customer

Solutions to Supply Chain Problems

Removing excess inventory to expose hidden problems Just-in-time inventory (Toyota Production

System) Information sharing

Vendor-managed inventory (e.g., P&G)

IT Support for SCM: 1. Electronic Data Interchange (EDI)

IT Support for SCM: 2. Extranets

The main goal of extranets is to foster collaboration between business partners.

An extranet is open to selected B2B suppliers, customers and other business partners.

The Structure of an Extranet

Types of Extranets

A company and its dealers, customers or suppliers

An industry’s extranet

Joint ventures and other business partnerships