Chapter 9
Achieving Operational
Excellence and
Customer Intimacy:
Enterprise
Applications
Enterprise and Business Process
Integration
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.
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.
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 Problem: Uncontrollable supply chain, outdated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.
9.4
© 2007 by Prentice Hall
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.
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
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.
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
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)






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





9.9
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)
© 2007 by Prentice Hall
Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Supply Chain Management Systems
THE BULLWHIP EFFECT
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
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
SCM Applications (Systems)
The primary goal of all supply chain management systems is to
automate flow of information between company and supply
chain partners.
Two major types:
Supply chain planning systems: Generate demand forecasts for a
product (demand planning) and help develop sourcing and
manufacturing plans for that product.
Supply chain execution systems: Track the physical status of
goods, the management of materials, warehouse and
transportation operations, and financial information involving all
parties.
9.12
© 2007 by Prentice Hall
Supply Chain Planning and Execution
Systems (Examples)
9.13
© 2007 by Prentice Hall
Intranets and Extranets Play a
Major Role in SCM
Ovals represent extranet
users.
9.14
Figure 11-6
© 2007 by Prentice Hall
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.
Push Vs Pull Model
9.16
© 2007 by Prentice Hall
Internet Driven Supply Chain
Digital Logic Nervous System
9.17
© 2007 by Prentice Hall
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
Management Information Systems
Chapter 9 Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
Customer Relationship Management Systems
• What is customer relationship management
• Customer relationship management software
• Sales force automation (SFA)
• Customer service
• Marketing
• Operational and analytical CRM
• Business value of customer relationship management
sytems
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
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.
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