CHAPTER EIGHT
Enterprise applications
Introduction
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Supply Chain Management (SCM)
Customer Relationship Management
(CRM)
Enterprise Resource Planning (ERP)
SCM / OM
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The two disciplines are hopelessly
interconnected
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Your book talks about them separately
but I’ll talk about them together
Operations Management
(transformation – making things)
Supply Chain Management
(movement of things)
Operations Management (Terms 1)
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Operations management (OM) - the
management of systems or processes that
convert or transform resources (inputs) into
goods and services (outputs)
Production is a subset of OM
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Production - is the creation of goods using the
factors of production (making things from raw
materials with machines)
Production management - describes all the
activities managers do to help companies create
goods
Operations Management (Terms 2)
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Value-added - the term used to describe
the difference between the cost of inputs
and the value of outputs
Materials requirement planning (MRP)
systems
 Make sure raw materials are available for
the manufacturing process
Supply chain – All parties and processes
involved in procurement of raw materials
and the distribution of finished goods
Operations Management (Terms 3)
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Transportation planning systems
track and analyze the movement of
goods (raw materials, work in
progress, finished goods)
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JC Penney
Distribution management systems
manage goods to distribution
centers and to retail outlets
These systems are tightly coupled
The IT Role in SCM / OM
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IT provides the systems
(transactional, MIS, DSS, GIS, GPS,
wireless) to make all of this work in
real time or near real time)
OM Business Tasks
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Forecasting
Capacity planning
Locating facilities
Scheduling (and synchronizing)
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Raw materials, production, distribution
Managing inventory
Quality assurance
SCM / OM Components (Steps)
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Plan
Source (we buy goods used in the means
of production)
Make (we transform raw materials into
finished goods)
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And the time it takes to transform resources
(production) or move resources (distribution)
Deliver (We get them where they are
going)
Return (Defective / unwanted goods come
back to us)
Supply Chain (Illustration)
SCM Strategic Goals (Plan)
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The strategic portion of SCM
Set up a system for managing the
entire supply chain
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Partners
SCM monitoring
Wal-Mart and others
 Location of distribution centers
UPS package flow systems
 Minimize trucks and transportation distances
OM Strategic Goals (Plan)
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Lower costs for commoditized items
Improve product or process quality
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MINI, Lays Example
Optimize delivery speed
Flexibility in process conversion
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MINI example
SCM Components (Source)
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Find suppliers
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Establish trading protocols
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Boeing and the 787
Wal-Mart
EDI
Establish pricing metrics
Determine what resources will be needed
When resources will be needed
Where resources will be needed
SCM Components (Make)
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Schedule production
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Just-in-time inventory management
We produce assemblies and finished
goods
Account for production downtime
Measure production output
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Account for production variances
against expected values
SCM Components(Make)
SCM Components (Make)
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Review the Mini video
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Discuss assembly processes
SCM Components (Deliver)
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The logistics component
Implementation of effective
transportation and distribution
systems
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Outsource warehousing
Location of distribution centers
Selection of transportation
companies
Discuss Wal-Mart video
SCM Components (Return)
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We use the term reverse logistics
The system whereby customer can
return good they don’t want
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Particularly important in the ecommerce world
Technology and SCM
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EDI allows automated transaction
processing
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Purchasing / fulfillment / payment
systems
Decision-support systems to
optimize routing and transportation
Cross-functional systems to
integrate finance / sales /
accounting / etc…
SCM Success Metrics
Quality Systems
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Six sigma – reduce defects to 3.4
per million opportunities
ISO 9000 – Quality assurance
standards
IS 14000 – Environmental best
practices
CMMI – develop best practices
CRM (Introduction)
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CRM goals
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Customer has a complete view of the
organization
Organization has a complete view of
the customer
CRM (Illustration)
CRM Strategy
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It’s more than a software
application – it’s a business strategy
Harrah’s
Walgreens
Brokerages
The list is endless
Business Value of CRM
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You know your customer
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Purchase activity
Recency
 Frequency
 Monetary value
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Your customer knows you
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American Express
CRM Benefits / Goals
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Provide better customer service
Make call centers more efficient
Cross sell products more effectively
Help sales staff close deals faster
Simplify marketing and sales
processes
Discover new customers
Increase customer revenues
Evolution of CRM
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We began with basic reporting
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Who bought what
We began to analyze the core data
to identify customer habits
We now use predictive technologies
to assess future customer behavior
CRM Examples
IT and CRM
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Marketing
Sales and operations
Customer service
CRM Marketing
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List generation for existing and
future customers
Managing and measuring the
effectiveness of marketing
campaigns
Cross-selling and up-selling
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Amazon.com
Lands End
CRM Sales and Operations
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Sales force automation
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Generate prospects (leads) and
manage them
Sales Management and contact
management systems
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Salesforce.com
Siebel
The Sales Process
CRM and Customer Service
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Call centers
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Use CRM software to solve common
questions
Increase single call solutions
The risks of outsourcing and off shoring
Keyword detection
Automatic call routing
Wait time calculations
CRM and Customer Service
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Web-based self service
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Improve customer satisfaction and
reduce costs through decreased call
center use
Click to talk technology
Examples
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Harrah’s TotalRewards online
FedEx and UPS package tracking
CRM and Call Scripting
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Benefits
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Track and solve common problems
Presents uniform outputs to the
customer
Risks
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Does not always account for ‘savvy’
customers
Is it plugged in?
CRM Metrics (Sales)
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Number of prospective customers
Number of new customers
Number of retained customers
Number of open leads
Number of sales calls
Number of proposals
Amount of new revenue
Amount of recurring revenue
CRM Metrics (Service)
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Cases closed same day
Number of cases handled by agent
Number of service calls
Average number of service requests
by type
Average time to resolution
Average number of service calls per
day
CRM Metrics (Marketing)
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Customer retention rates
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Churn rate
Number of responses by marketing
campaign
Number of purchases by marketing
campaign
Revenue generated by marketing
campaign
Analytical CRM Tools
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These are decision support systems
Use for customer personalization
Identify profitable or unprofitable
customers
Treat good customers well
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Harrah’s / American Express
Identify customers that might be
leaving and why
CRM Trends
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Manage supplier relationships
Manage partner relationships
Manage employees
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This is really HR
CRM Failures
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Employees feel threatened and
don’t adopt the tools
The customer becomes just a
number
Web 2.0
ERP (Your Book’s Definition)
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Enterprise resource planning –
integrates all departments and
functions throughout an
organization into a single IT system
(or integrated set of IT systems) so
that employees can make enterprise
wide decisions by viewing enterprise
wide information on all business
operations
ERP (My Definition)
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All of an organization’s business
processes are integrated into a
single system (SCM, CRM,
accounting, finance, manufacturing,
along with specialized function
applicable to specific industries)
ERP (Players)
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SAP has 30+ percent of the market
Oracle / PeopleSoft
IBM
Microsoft Dynamics
ERP (Functions)
ERP (Business Processes)
ERP (Benefits)
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Breaks down or eliminates
information silos
Business processes are performed
more efficiently
All functional systems interact
together
ERP (Risks)
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Failure can be catastrophic
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Hershey
http://www.slideshare.net/ankitm2/erp
-failure-in-hersheys-presentation
This list is endless
Failure is typically caused by
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Poor planning
Not understanding and adapting
business process to the ERP
The Evolution of ERP
Core ERP Components (1)
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Accounting and Finance
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Integrates traditional AR / AP /
inventory / payroll / general ledger
Financial reporting systems
Operates with multiple currencies
Core ERP Components (2)
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Production and materials
management
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Raw materials supply chain
Manufacturing
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Distribution
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You can’t make what you don’t have
You can’t ship what you have not made
Human resources
ERP (Manufacturing and
Production)
Extended Components
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Business intelligence integration
CRM
SCM
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Often considered a core component
Ebusiness
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Also becoming a core component
Procurement (B2B)
Sales (B2C)
Enterprise Application Integration
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Integrate SCM, CRM, ERP business
partners, suppliers, distributers,
resellers, customers typically by
creating SOA middleware
Collaboration Systems
(Introduction)
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Simply put, they help people
(employees / partners / customers)
effectively work together and share
information
Collaboration Systems
(Illustration)
Collaboration Systems (Types)
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Groupware to collaborate
Content management systems are
used as an information repository
Knowledge management
Workflow management
Much of the software performs
many of these tasks
Collaboration Systems
(Groupware)
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Groupware allows us to work
together
Functions
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Calendaring, scheduling, and
conferencing
File sharing and change tracking
Providers
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Lotus Notes
SharePoint
Collaboration Systems
(Content Management)
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Manage
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Information creating
Information storage
Changes to information
Information publishing and acquisition
Collaboration Systems
(Knowledge Management)
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Closely related to content
management
Capture, classify, retrieve, and
share information
It preserves organizational memory
SharePoint
Collaboration Systems (Workflow)
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Workflow describes how work gets
done
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You don’t have the prerequisites for a
class you want to take
You fill out the College of Business
automated add slip form
It’s routed to the department or
advisement center
 An advisor approves or disapproves the
request
 You are notified
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ERP Demo
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Accounting
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Sales and Distribution
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Financial / Managerial
Customers and products
Procurement
Production
Quality management
Warehouse management
HR
SO HOW DO WE DO ALL OF
THIS
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SAP
Oracle Supply chain
IBM
SAP Demo
(Manufacturing Process)
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Bill of Material describes what we
make (a bicycle) and the raw
materials needed to make it
SAP Demo
(Manufacturing Process)
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Routings describe how we make it
SAP Demo
(Manufacturing Process)
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Create a production order
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Which leads us into the ERP
discussion