1 © 2007 by Prentice Hall 9 Chapter Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise and Business Process Integration

1 © 2007 by Prentice Hall

99ChapterChapter

Achieving Operational Achieving Operational Excellence and Excellence and

Customer Intimacy: Customer Intimacy: Enterprise Enterprise

ApplicationsApplicationsEnterprise and Business Process Enterprise and Business Process

IntegrationIntegration

Achieving Operational Achieving Operational Excellence and Excellence and

Customer Intimacy: Customer Intimacy: Enterprise Enterprise

ApplicationsApplicationsEnterprise and Business Process Enterprise and Business Process

IntegrationIntegration


LEARNING OBJECTIVES

Management Information SystemsManagement Information SystemsChapter 9 Achieving Operational Excellence and Customer Intimacy: Chapter 9 Achieving Operational Excellence and Customer Intimacy:

Enterprise ApplicationsEnterprise Applications

• 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.


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.


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• Problem: Uncontrollable supply chain, outdated systems.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.




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.




How Enterprise Systems WorkHow Enterprise Systems Work

Figure 9-1

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.

Enterprise Systems




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.




Nike’s Supply ChainNike’s Supply Chain

Figure 9-2

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.








Information and Supply Chain • Inefficiencies – caused by inaccurate or untimely information (25% Operating

costs)– Parts shortage– Underutilized plant capacity– Excessive inventory– Transportation 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– 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)

•


Nike’s Supply ChainNike’s Supply Chain

Figure 9-2

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.








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





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, E-Business.


Push Vs Pull Model


Internet Driven Supply ChainDigital Logic Nervous System





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


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.




• Customer relationship management software

• Sales force automation (SFA)

• Customer service

• Marketing

• Operational and analytical CRM

• Business value of customer relationship management


Customer Relationship Management (CRM)Customer Relationship Management (CRM)

Figure 9-7

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.




• 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.

IHOP Cooks Customer Data to Order



Customer Relationship Management Systems


Enterprise Applications: New Opportunities and Challenges

• Enterprise application challenges

• Extending enterprise software• Service platforms

• Security outsourcing




7722ChapterChapter

ELECTRONIC ELECTRONIC BUSINESS SYSTEMBUSINESS SYSTEM

ELECTRONIC ELECTRONIC BUSINESS SYSTEMBUSINESS SYSTEM

22 © 2007 by Prentice HallChapter 7 Electronic Business Systems 22

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

23 © 2007 by Prentice HallChapter 7 Electronic Business Systems

Cross-Functional Systems

• Cross the boundaries of traditional business functions – Used to reengineer and improve vital business

processes all across the enterprise


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– Customers– Suppliers– Partners– Employees

• 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– Customers– Suppliers– Partners– Employees


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



• Supply Chain Management (SCM)– Focuses on developing the most efficient and effective

sourcing and procurement processes


Enterprise Application Integration

• EAI software connects cross-functional systems• Serves as middleware to provide

– Data conversion

– Communication between systems

– Access to system interfaces


How EAI Works


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 real-

time system that captures transactions immediately


Transaction Processing Systems


The Transaction Processing Cycle


Enterprise Collaboration Systems (ECS)

• EC systems are cross-functional information systems that enhance team and workgroup– Communication

– Coordination

– Collaboration

• Systems may include– Networked PC workstations

– Servers

– Databases

– Groupware and application packages


ECS Tools


Functional Business Systems

• A variety of types of information systems that support the business functions of– Marketing– Accounting– Finance– Operations management– Human resource management


IT in Business


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


• 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.


Marketing Information Systems


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


Targeted Marketing

• An advertising and promotion management concept with five targeting components


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


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


Manufacturing Information Systems

• Supports the production/operations functions

– Includes all activities concerned with planning and control of the processes producing goods or services


Computer-Integrated Manufacturing


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


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


• Robotics- technology of building and using machines (robots) with computer intelligence and computer controlled human like capabilities


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


HRM Systems


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


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


Employee Self-Service• Intranet applications can allow employees to

– View benefits– Enter travel and expense reports– Verify employment and salary information– Access and update personal information– Enter time-sensitive data


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


• Typically consists of– Order processing– Inventory control– Accounts receivable– Accounts payable– Payroll– General ledger systems


Accounting Information Systems


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


Financial Management System Example

Documents

1 © 2007 by Prentice Hall 9 Chapter Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise and Business Process Integration