Introduction to Information Technology
Turban, Rainer and Potter
John Wiley & Sons, Inc.
Copyright 2005
Chapter 8
Enterprise Systems:
From Supply Chains to
EPR to CRM
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Chapter Outline
Essentials of enterprise systems and supply
chains
Supply chain problems and solutions
Computerized enterprise systems: MPR,
MRPII, SCM, and software integration
Enterprise resource planning and supply
chain management
CRM and its support by IT
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Learning Objectives
Understand essentials of enterprise systems and
computerized supply chain management.
Describe the various types of supply chains
Describe the problems of managing supply chains
and some innovative solutions.
Describe the major types of software that support
activities along the supply chain
Describe the need for integrated software and
how ERP does it
Describe CRM and its support by IT.
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8.1 Essentials of Enterprise Systems
and Supply Chains
Enterprise systems: System or process that involve the
entire enterprise or major portions of it.
Enterprise resource planning (ERP): supports the internal
SC
Extended EPR: supports business partners as well
Customer relationship management (CRM): provides
customer care.
Partner relationship management (PRM): is designed to
provide care to business partners.
Decision support systems (DSSs): support decision
making throughout the enterprise.
Knowledge management (KM) systems: support
knowledge creation, storage, maintenance and
distribution.
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Definitions
Supply chain: The flow of materials,
information, money, and services from raw
material suppliers, through factories and
warehouses to the end customer; includes
the organizations and processes involved.
Supply chain management (SCM): The
planning, organizing and coordinating of all
supply chain’s activities.
E-supply chain: A supply chain that is
managed electronically usually with Webbased software.
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The Flows in the Supply Chain
Materials flows: These are all physical products, raw
materials, supplies, and so forth, that flow along the
chain. The concept of materials flows include reverse
flows-returned products, recycled products and
disposal of materials or products.
Information flows: All data related to demand,
shipments, orders, returns, and schedules.
Financial flows: All transfers of money, payments,
credit card information and authorization, payment
schedules, e-payments and credit related data.
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The Structure and Components of Supply Chains
The supply chain involves three segment:
Upstream, where sourcing or procurement from
external suppliers occur
Internal, where packaging, assembly, or
manufacturing take place
Downstream, where distribution or dispersal take
place, frequently by external distributors
Supply chain also include the movement of a
product or a service and the organizations and
individuals involved, are part of the chain as well.
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An Automotive Supply Chain
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Types of Supply Chains
Integrated make-to-stock,
Continuous replenishment,
Build-to-order, and
Channel assembly.
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8.2 Supply Chain Problems and
Solutions
Problems along the supply chain from two sources:
Uncertainties
Need to coordinate several activities, internal units
and business partners
A major source of supply chain Uncertainties is the
demand forecast. The actual demand may be
influenced by several activities such as competition,
prices, weather conditions, technological
developments, customers’ general confidence,
delivery times and more.
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Bullwhip Effect
Erratic shifts in orders up and down the
supply chain. It is related to properly setting
inventory levels in various parts of the supply
chain
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Solution to Supply Chain Problems
Vertical integration: the upstream part of the
supply chain with the internal part, typically
by purchasing up- steam suppliers, in order to
ensure availability of supplier .
Using inventories: The most common solution
used by companies to solve supply chain
problems is building inventories as an
“insurance“ against supply chain
uncertainties.
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Solutions to SC Problems cont…
Information sharing: sharing information
along the supply chain can improve demand
forecasts. Such sharing can be facilitated by
EDI, extranets, and groupware technologies.
Vendor-managed inventory (VMI): allowing
suppliers to monitor, the inventory levels of
their products in the retailors’ stores and to
replenish inventory when needed.
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Solutions to SC Problems cont…
Changing a linear SC to a Hub: In linear supply
chains, information is processed in a sequence ,
which slows down its flow. One solution is to change
the linear chain into hub. Each partner in the supply
chain can directly access the images in the data bank
Supply chain collaboration:. Proper supply chain and
inventory management requires coordination of all
different activities and links of the supply chain.
Successful coordination enables goods to move
smoothly and on time from supplier to manufacturers
to customers, which enables a firm to keep
inventories low and costs down
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Solutions to SC problems cont…
SC Team: A group of tightly integrated
businesses that work together to serve the
customer; each task is done by the member
of the team who is best capable of doing the
task.
Virtual factory:. Collaborative enterprise
application that provides a computerized
model of a factory.
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IT Supported Solutions to SC Problems
Problem Area
Solution
Slow communication
Use wireless devices to find vehicle locations to expedite salespeople’s contact with
headquarters. Use hub supply chain to enable online access to information
Difficult product configuration
Use DSS and intelligent systems for rapid and accurate analysis
Select and coordinate suppliers
Use DSS to determine which suppliers to use, determine how to create strategic
partnerships
Supplier arrive when needed
Use just-in-time approach and collaboration with suppliers.
Handle peak demands
use IT-enable outsource. Use DSS to determine what to outsource and when to buy and
not make
Expedite lead time for buying and
selling
Use e-commerce tools and business intelligence models
Tool many or too few suppliers
Use optimization models to decide and employ e-procurement
Control inventory levels
Manufacture only after order received (online) . Use VMI and web-serviced
Forecast fluctuating demand
Use collaboration (like CPFR) or intelligent system
Expedite flows in the chain
Automate material , information and money flows
suppliers relationships
Improve supplier relationship by using portals, web-based call center, and other CRM and
PRM tools
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8.3 Computerized Enterprise Systems: MRP,
MRPII, SCM, and Software Integration
Material requirement planning (MRP). A
planning model that integrates production,
purchasing and inventory management of
interrelated product.
Manufacturing resource planning (MRP II).
An enhanced planning model that adds labor
requirements and financial planning to MPR.
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8.3 Why system integration?
Sandoe et al.(2001) list the following major
benefits of systems integration:
Tangible benefits
Intangible benefits
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Internal versus external integration
Internal integration refers to integration within
a company between (or among) application,
and/or between application and data bases.
External integration refers to integration of
applications and databases among business
partners.
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8.4 Enterprise Resource Planning and
Supply Chain Management
 Enterprise resource planning (EPR): Software
that integrates the planning, management
and use of all resource in the entire
enterprise.
 SAP R/3 the leading EPR software (form SAP
AG Crop.): a highly integrated package
containing more than 70 business activities
modules.
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Generations of ERP
The first generation of ERP concentrated on
activities within the enterprise that were
routine and repetitive in nature.
The objective of second –generation EPR is
to leverage existing information systems in
order to increase efficiency in handling,
transaction, improve decision making, and
transform ways of doing business into ebusiness.
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8.5 CRM and its Support by IT
Customer relationship management (CRM):
An enterprise wide effort to acquire and retain
customers, often supported by IT.
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Type of CRM
Operational CRM: activities involving
customer services, order management,
invoice /billing and sale/marketing automation
and management .
Analytical CRM: activities that capture, store,
extract , process, interpret, and report
customer data a corporate. user.
Collaboration CRM: deals with all the
necessary communication coordination and
collaboration between vendors and
customers.
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Classification of CRM Application
Customer-facing applications
Customer-touching applications
Customer-centric intelligence applications
Online networking applications
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E-CRM (Electronic CRM)
The use of web brewers, the Internet and
other electronic touchpoints to manage
customer relationships.
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The Scope of E-CRM
Foundational service
Customer-centered services
Value-added services
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Customer Service on the Web
Search and comparison capabilities
Free products and services
Technical and other information and services
Customized products and services
Account or order status tracking
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Other tools for customer service
Personalized Web pages
FAQs
E-mail and automated response
Chat rooms
Call center
Troubleshooting tools
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