CHAPTER 11
Customer Relationship Management and
Supply Chain Management
Announcements
Today
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Chapter 11 – CRM and SCM
Project 6 – Solver Case due by midnight
Review Project 7 – Decision Support
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Review of all functions and formulas used
Coming Weeks
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Quiz 3 – Excel Solver
Chapter 12 & Tech Guide 4
Final Exam Review
CHAPTER OUTLINE
11.1 Defining Customer Relationship Management
11.2 Operational CRM Systems
11.3 Analytical CRM Systems
11.4 Other Types of CRM Systems
11.5 Supply Chains
11.6 Supply Chain Management
11.7 IT Support for Supply Chain Management
Chapter Opening Case: The Next Step
in Customer Relationship Management
Source: Maxx-Studio/Shutterstock
Taste
Profiling
Persuasion
Profiling
11.1 Customer Relationship Management
Customer-Focused
&
Customer-Driven
Designed to Achieve:
Customer Intimacy
From Neighborhood Stores…….
© MONKEY BUSINESS-LBR/Age Fotostock America, Inc.
Personal
….To Today
Mobile population
The Web
Giant malls
Impersonal
Why do we need CRM?
 Cost
 Dissatisfied customer impacts
 Increasing the customer retention rate
 Odds of selling to new customers
 Retention of complaining customers
Why do we need CRM?
Value of a customer
Duration of the relationship
Number of relationships (e.g. more than one product)
Profitability of the relationship
GOAL of CRM:
Maximize lifetime
value of a customer
Tenets of CRM
 One-to-one relationship between a customer
and a seller.
 Treat different customers differently.
 Keep profitable customers and maximize
lifetime revenue from them.
Customer Touch Points
Data Consolidation
Accounting
HR
Finance
Customer
Marketing
MIS
Data Consolidation =
360-Degree View of
Customers
Collaborative
CRM
Primary Components of a
CRM Strategy
Customer-facing Applications
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Sales
Marketing
Customer Service and Support
Campaign Management
Customer
Data
Warehouse
Customer-touching Applications
• Search and Comparison
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Customized Products
Technical Information
Personalized Web Pages
FAQ
E-mail / Auto Response
Loyalty Programs
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Data Mining
Decision Support
Business Intelligence
OLAP
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11.2 Operational CRM
Supports the front-office business processes
(i.e. those that directly interact w/customers)
Marketing
List Generator
Campaign Mgmt
Cross Selling /
Up Selling
Sales
Sales Mgmt
Contact Mgmt
Opportunity Mgmt
Customer Service
Contact Center
Web-Based
Self Service
Call Scripting
Two major components:
1.
2.
Customer-facing applications
Customer-touching applications
Operational CRM:
Customer-Facing Applications
Customer service and support
Sales force automation
Marketing
• Cross Selling
• Up Selling
• Bundling
Campaign management
© Mustafa Almir Mahmoud/Age Fotostock America, Inc.
Operational CRM:
Customer-Touching Applications
• Search and comparison capabilities
• Technical and other information
and services
• Customized products and services
Source: © Spencer Grant/PhotoEdit
• Loyalty programs
11.3 Analytical CRM Systems
Analyze customer behavior and perceptions in order to
provide actionable business intelligence.
Customer
Data
Warehouse
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Data Mining
Decision Support
Business Intelligence
OLAP
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11.4 Other Types of Customer
Relationship Management Systems
On-demand CRM
Hosted by an external vendor in the vendor’s data center
Mobile CRM
Interacting directly with customers through mobile
devices
Open-source CRM
Source code openly available to developers and users
Challenges and Future of Customer
Relationship Management Systems
Challenges
• Social Media
Future
• Supplier Relationship Management
• Partner Relationship Management
• Employee Relationships Management
11.5 Supply Chains
The flow of materials, information, money, and services
from raw material suppliers, through factories and
warehouses, to the end consumers.
Components of Supply chain:
The Flows of the Supply Chain
 Material flows
 Information flows
Financial
 Financial flows
Information
Material
11.6 Supply Chain Management
The function of planning, organizing, and
optimizing the various activities performed along
the supply chain
These systems are considered to be a type of
Interorganizational information system (IOS).
Goal of an SCM System:
Reduce problems along supply chain
Push & Pull Models
Problems Along the Supply Chain
 Problems:
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Poor customer service
Poor quality product
High inventory costs
Loss of revenues
The Bullwhip
Effect
Solutions to Supply Chain Problems
 Using inventories:
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Just-in-time inventory
 Information sharing:
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Vendor-managed inventory
11.7 Information Technology Support
for Supply Chain Management
Electronic data interchange (EDI)
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Enables business partners to exchange routing
documents electronically
Example
EDI is accomplished through the use of Extranets
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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
Comparing Purchase Order Fulfillment
Without EDI
Source: Drawn by E. Turban
Comparing Purchase Order Fulfillment
With EDI
Source: Drawn by E. Turban
EDI Benefits
 Minimize data entry errors
 Length of messages are shorter
 Messages are secured
 Reduces cycle time
 Increases productivity
 Enhances customer service
 Minimizes paper usage and storage
EDI Limitations
 Significant initial investment to implement
 Ongoing operating costs are high due to
the use of expensive, private VANs
 Traditional EDI system is inflexible
 Long startup period
 Multiple EDI standards exist