Chapter 9
Achieving Operational
Excellence and
Customer Intimacy:
Enterprise
Applications
Enterprise and Business Process
Integration
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
LEARNING OBJECTIVES
• Demonstrate how enterprise systems achieve
operational excellence by integrating and
coordinating diverse functions and business
processes in the firm.
• Demonstrate how supply chain management systems
coordinate planning, production, and logistics with
suppliers.
• Demonstrate how customer relationship management
systems achieve customer intimacy by integrating all
customer information and making it available
throughout the firm.
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
LEARNING OBJECTIVES (cont’d)
• Assess the challenges posed by enterprise
applications.
• Describe how enterprise applications can be used in
platforms for new cross-functional services.
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Whirlpool Fixes Its Supply Chain
• Problem: Uncontrollable supply chain, outdated
systems.
• Solutions: Eliminate manual procedures and
implement supply chain software suite to allocate
inventory more accurately and forecast demand.
• i2 Technologies forecasting software and SAP ERP
software reduce inventory and increase sales.
• Demonstrates IT’s role in coordinating supply
chains.
• Illustrates digital technology as part of a solution
that can benefit both a firm and its customers.
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Enterprise Systems
• What are enterprise systems?
• Consulting Firms
• Enterprise software – Builds industry expertise working with many
clients
• Best practices
• SAP-R3, Oracle (Peoplesoft), Microsoft (Dynamics Software
Systems
• Business value of enterprise systems – increased operational
efficiency and firm-wide information to help managers make better
decisions.
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Enterprise Systems
How Enterprise Systems Work
Enterprise 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.
Figure 9-1
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
•
The supply chain – network of organizations and business processes
for:
- Procuring raw materials,
- Transforming them into intermediate & finished product, and
- Distributing to customers
•
Information and Supply Chain (Flow of Information)
• Upstream – portion of supply chain that includes company’s
suppliers, the suppliers’ suppliers, and the processes for managing
relationships.
• Downstream – organizations and processes for distributing and
delivering products to the final customer.
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
Nike’s Supply Chain
This 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.
Figure 9-2
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
Information and Supply Chain
• Inefficiencies – caused by inaccurate or untimely information (25% Operating
costs)
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–
•
•
Just-in-time strategy – components would arrive when needed, finished goods
would be shipped as they left assembly line (excess inventory is expensive, low fill
rates are also costly – order cancellation)
Uncertainties – events cannot be foreseen
–
–
–
–
•
Parts shortage
Underutilized plant capacity
Excessive inventory
Transportation Costs
Product demand
Late shipments from suppliers
Defective parts or raw materials
Production Process Breakdown
Bullwhip Effect – information about demand gets distorted along the supply chain
(stockpile inventory)
•
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
Nike’s Supply Chain
This 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.
Figure 9-2
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
Supply Chain Management Applications – enable firms to generate demand
forecasts for a product and develop sourcing and manufacturing plans for the
product. Companies can make better operating decisions (e.g How much of a
specific product to manufacture in a given time, determine inventory levels of
raw and intermediate as well as finished products, transportation mode for
delivery).
Impact of last minute order (cancellation, modification, upscaling), Job
Scheduling, delivery reschedule (adjustments to production and distribution)
Demand Planning – determines how much product a business needs to make to
satisfy all of its customers’ demands
Supply Chain Execution Systems – manage flow of products through
distribution centers and warehouses to ensure that products are delivered to the
right locations in the most efficient manner. They track the physical status of
goods, the management of materials, warehouse and transportation operations,
and financial information involving all parties
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
Supply chain management and the Internet
– Demand-driven supply chains: From push to pull
manufacturing and efficient customer response
– Intranet and extranet
Supply Chain Models
- Push-based Model – (build to stock) –
- Pull-based Model – (demand driven or build
to order) Customer triggers supply chain, EBusiness.
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Push Vs Pull Model
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Internet Driven Supply Chain
Digital Logic Nervous System
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
Business value of supply chain management
systems
- Streamline Internal and External Supply Chain Processes
- Provide Management with more accurate information about what to produce,
store and move.
- Companies match supply to demand
- Reduce Inventory Levels
- Improve delivery
- Speed product time to market
- Uses assets more effectively
- Helps increase sales
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Customer Relationship Management Systems
• What is customer relationship management
• Knowing who your customers are?, how to contact
them?, what kind of products and services they
like?, how much money they spend on your
company?
• TOUCH POINTS-also known as contact points
• Well designed CRM provide a single enterprise
view of customers that is useful for improving both
sales and customer service.
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• Customer relationship management software
• Sales force automation (SFA)
• Customer service
• Marketing
• Operational and analytical CRM
• Business value of customer relationship
management
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Customer Relationship Management (CRM)
CRM 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.
Figure 9-7
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Customer Relationship Management Systems
IHOP Cooks Customer Data to Order
• Read the Interactive Session: Technology, and then
discuss the following questions:
• How does knowledge of customers impact IHOP’s business
performance?
• Why did IHOP have trouble getting to know its customers?
• How has the company chosen to improve its knowledge of
customers? Analyze the management, organization, and
technology dimensions of the solution.
• Did IHOP choose the best solution? Explain your answer.
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Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Enterprise Applications: New Opportunities and Challenges
• Enterprise application challenges
• Extending enterprise software
• Service platforms
• Security outsourcing
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Chapter 72
ELECTRONIC
BUSINESS SYSTEM
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Enterprise Business Systems
• E-business means using the Internet, other
networks, and IT to support
– Electronic commerce
– Enterprise communications and collaboration
– Web-enabled business processes
• E-commerce is the buying, selling, and
marketing of products, services, and
information over the Internet and other
networks
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Chapter 7 Electronic Business Systems
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Cross-Functional Systems
• Cross the boundaries of traditional business
functions
– Used to reengineer and improve vital business
processes all across the enterprise
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Chapter 7 Electronic Business Systems
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Enterprise Application Architecture
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Enterprise Application Architecture
• Provides a conceptual framework
– Helps visualize the basic components, processes,
and interfaces of major e-business applications
• Focuses on accomplishing fundamental
business processes in concert with
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Customers
Suppliers
Partners
Employees
Chapter 7 Electronic Business Systems
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Enterprise Application Architecture
• Enterprise Resource Planning (ERP)
– Concentrates on the efficiency of internal production,
distribution, and financial processes. ERP is the backbone of
the e-business just like the Windows operating system
• Customer Relationship Management (CRM)
– Focuses on acquiring and retaining profitable customers via
marketing, sales, and services
• Partner Relationship Management (PRM)
– Aims at acquiring and retaining partners who
can enhance the selling and distribution of products and
services
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Enterprise Application Architecture
• Supply Chain Management (SCM)
– Focuses on developing the most efficient and effective
sourcing and procurement processes
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Enterprise Application Integration
• EAI software connects cross-functional systems
• Serves as middleware to provide
– Data conversion
– Communication between systems
– Access to system interfaces
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How EAI Works
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Transaction Processing Systems
• Cross-functional information systems that
process data resulting from the occurrence of
business transactions
– Transactions include sales, purchases, deposits,
withdrawals, refunds, and payments
– Online transaction processing (OLTP) is a realtime system that captures transactions immediately
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Transaction Processing Systems
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The Transaction Processing Cycle
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Enterprise Collaboration Systems (ECS)
• EC systems are cross-functional information systems
that enhance team and workgroup
– Communication
– Coordination
– Collaboration
• Systems may include
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Networked PC workstations
Servers
Databases
Groupware and application packages
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ECS Tools
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Functional Business Systems
• A variety of types of information systems
that support the business functions of
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Marketing
Accounting
Finance
Operations management
Human resource management
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IT in Business
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Marketing Systems
• Marketing systems are concerned with
– Planning, promotion, and sale of existing products
in existing markets
– Development of new products and new markets
– Better attracting and serving present and
potential customers
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• Marketing Information Systems provide information
technologies that support major components of the
marketing functions:
– Internet/intranet websites make an interactive marketing
process possible.
– Targeted marketing is a tool in developing advertising and
promotion strategies for company’s E-commerce websites.
– Sales force automation systems use mobile computing and
Internet technologies to automate many processes.
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Marketing Information Systems
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Interactive Marketing
• Interactive Marketing
– A customer-focused marketing process
– Uses the Internet, intranets, and extranets
– Establishes two-way transactions between a
business and its customers or potential customers
• Goal
– Profitably use networks to attract and keep
customers
– Get customers to help create, purchase, and
improve products and services
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Targeted Marketing
• An advertising and promotion management
concept with five targeting components
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Chapter 7 Electronic Business Systems
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Targeted Marketing Components
• Community: customized ads to appeal to specific
virtual communities
• Content: ads placed on a variety of selected websites,
aimed at a specific audience
• Context: ads placed on web pages that are relevant to
a product or service
• Demographic/Psychographic: web marketing aimed
at specific types or classes of people
• Online behavior: promotions tailored to each visit to
a site by an individual
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Sales Force Automation
• Outfit sales force with notebook computers,
web browsers, and sales contact software
– Connect them to marketing websites and the
company intranet
• Goals
– Increase personal productivity
– Speed up capture and analysis of sales data
– Gain strategic advantage
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Manufacturing Information
Systems
• Supports the production/operations functions
– Includes all activities concerned with planning and
control of the processes producing goods
or services
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Computer-Integrated Manufacturing
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CIM(Computer Integrated Manufacturing ) Objectives
• Simplify production processes, product designs, and factory
organization
• Automate production processes and the
business functions that support them
• Integrate all production and support
processes using
– Networks
– Cross-functional business software
– Other information technologies
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CIM Systems
• Computer-aided manufacturing (CAM)
– Automate the production process
• Manufacturing execution systems (MES)
– Performance monitoring information systems
for factory floor operations
• Process control
– Control ongoing physical processes
• Machine control
– Controls the actions of machines
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• Robotics- technology of building and using
machines (robots) with computer intelligence
and computer controlled human like
capabilities
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Human Resource Management (HRM)
• Information systems designed to support
– Planning to meet personnel needs
– Development of employees to their full potential
– Control of all personnel policies and programs
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HRM Systems
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HRM and the Internet
• Recruiting employees using the corporate
website and commercial recruiting services
• Posting messages in selected Internet
newsgroups
• Communicating with job applicants via e-mail
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HRM and Corporate Intranets
• Corporate intranet uses
– Process common HRM transactions
– Allow around-the-clock HRM services
– Disseminate information faster than through
previous company channels
– Collect information from employees online
– Allow HRM tasks to be performed with little HRM
department intervention
– Training
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Employee Self-Service
• Intranet applications can allow employees to
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View benefits
Enter travel and expense reports
Verify employment and salary information
Access and update personal information
Enter time-sensitive data
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Accounting Information Systems
• The oldest and most widely used information
system in business
– Records and reports business transactions
and economic events
– Produces financial statements
– Forecasts future conditions
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• Typically consists of
– Order processing
– Inventory control
– Accounts receivable
– Accounts payable
– Payroll
– General ledger systems
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Accounting Information Systems
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Financial Management Systems
• Supports business managers and professionals
making decisions concerning
– The financing of a business
– The allocation and control of financial
resources within a business
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Financial Management System Example
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