Chapter 09 Laudon

7/31/2019 Chapter 09 Laudon

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Chapter 09

Enterprise Applications


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What Are Enterprise Systems?

ENTERPRISE SYSTEMS

Enterprise System Architecture


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How Enterprise Systems Work

Enterprise system also known as Enterprise Resource

Planning (ERP) systems

Interdependent software modules with a common central

database that support basic internal business processes for

finance and accounting, human resources, manufacturing

and production, and sales and marketing.

Enables data to be used by multiple functions and business

processes for precise organizational coordination and

control.

Enterprise Systems:


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Enterprise Systems:

ERP are based on a suite of integrated software modules and

a common central database. The database collects data from

many different divisions.

When new information is entered by one process or

department, the information is made immediately available to

other business process.


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A more uniform organization

More efficient operations and customer-driven business

processes . It helps firm to respond rapidly to customer

requests for products or information.

Firm wide information for improved decision making Enterprise system allow senior managers to easily find out

at any moment how a particular organization unit is

performing, determine which product is most or least

profitable, or calculate costs for the company as a whole.

Thats the way how managers can make better decision

making by using better decision making.

Business Value of Enterprise Systems


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SUPPLY CHAIN MANAGEMENT SYSTEMS

Network of organizations and business processes for

procuring raw materials, transforming into products, and

distributing them to customers

Materials, information, and payments flow through the

supply chain in both directions.

The Supply Chain


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Supply chain: (characteristics)

Goods or product start as raw materials.

Transforming these materials into intermediate andfinished products to customer.

The finished products are shipped to distribution centersand from there to retailers and customers.

Returned items flow in reverse direction from the buyerback to the seller.

The upstream portion of the supply chain includes thecompany suppliers, the suppliers suppliers, and theprocess of managing relationship with them.

The downstream portion consists of organizations andprocess for distributing and developing products to finalcustomers.


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Coordination of business processes to speed information,

product, and fund flows up and down a supply chain to

reduce time, redundant effort, and inventory costs

Supply chain management:


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A Supply Chain


Figure 9-3


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Plan: Balancing demand and supply to meet sourcing,production, and delivery requirements

Source: Procurement of goods and services needed to create

a product or service

Make: Processes that transform a product into a finishedstate

Deliver: Processes to manage order transportation and

distribution

Return: Processes associated with product returns and post

delivery customer support

Logistics: Planning and control of all factors that have an

impact on the supply chain

Supply Chain Processes

SCOR (Supply Chain Operations Reference Model) identifies five

major supply chain processes:


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Supply Chain Processes (Continued)

Figure 9-4

Key Supply Chain Management Processes


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Scheduling system for minimizing inventory by having

components arrive exactly at the moment they are needed and

finished goods shipped as soon as they leave the assembly line.

If a manufacturer had perfect information about exactly how

many units of product customer wanted, when they want them,and when they could be produced, it would be possible to

implement a highly efficient just in time strategy.

Just-in-time strategy :

Information and Supply Chain Management

Inaccurate or untimely information causes inefficiencies in supply

chain, such as shortages, excessive inventory


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Safety stock

To satisfy customer , manufacturer often deal withuncertainties and unforeseen events by keeping more

materials or products in inventory than what they think they

may actually need.

The safety stocks act as a buffer for the lack of flexibility in the

supply chain.

Bullwhip effect:

Distortion of information about the demand for a product as itpasses from one entity to the next across the supply chain


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The Bullwhip Effect


Figure 9-5


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Supply chain management systems:

Automate flow of information between company and supplychain partners

Supply Chain Management Applications

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:

Manage the flow of products through distribution centersand warehouses to ensure that products are delivered to the

right locations in the most efficient manner .


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Metrics for measuring supply chain performance:

Supply Chain Performance Measurement

Fill rate (the ability to fill orders by the due date)

Average time from order to delivery

The number of days of supply in inventory

Forecast accuracy

The cycle time for sourcing and making a product


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Supply Chain Management and the Internet

Intranets and Extranets for Supply Chain Management

Figure 9-6


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Global supply chain and Internet

Enterprise system only supply some integration of

internal supply chain process but they are not

designed to deal with external supply chain process.

Firms use intranet to improve coordination amongtheir internal supply chain process, they use extranet

to coordinate supply chain process shared with their

business partners.


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Global supply chain and Internet

Global supply chain typically span greater geographic

distances and time differences than domestic supply

chain and have participants from different countries.

Factors affect Global supply chain:

1. Purchase price of goods2. Transportation cost

3. Inventory

4. Local taxes or fees5. Government regulation and culture


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Internet-based supply chain management applications:

Provide standard set of tools

Facilitate global supply chains

Reduce costs

Enable efficient customer response

Allow concurrent supply chains


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Push-based model:

Production master schedules are based on forecasts of

demand for products, and products are pushed to

customers. Earlier SCM systems were driven by a push based

model.Pull-based model:

Supply chain driven by actual customer orders or purchases

and build to order system. Transaction to produce or deliveronly what customers have ordered.


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Push- versus Pull-Based Supply Chain Models


Figure 9-7


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Business Value of Supply Chain Management Systems

Improved customer service and responsiveness

Companies match supply and demand.

Reduce inventory levels

Cost reduction and sales increase

Improve delivery services.

Speed product time to market.

Cash utilization as well as asset utilization effectively.


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Why Customer Relationship management

Necessary?

In a small business it is possible for business ownersand managers to know their customers on apersonal, face to face basis.

But in a large organization operating on ametropolitan, regional, national or even global basis,it is impossible to know the customers.

Well designed CRM system provide a singleenterprise view of customers that is useful forimproving both sales and customer service.


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Why Customer Relationship management

Necessary?

Good CRM can provide us the answers of

What is the value of a particular customer?

Who are our loyal customer? Who is the most profitable customer?


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Customer Relationship management

(Characteristics)

Personalizing web site for specific customer.

It is applicable for large scale enterprise application

that capture myriad interaction with customer.

Analyze them with sophisticated reporting tools.

Link to other enterprise application such as supply

chain or enterprise systems.


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Customer Relationship Management Applications

CRM systems:

Capture and integrate customer data from all over theorganization

Consolidate and analyze the data

Distribute results to various systems and customer touch

points across the enterprise

Touch point:

A method of interaction with a customer, such as telephone,

e-mail, customer service desk, conventional mail, Web site, or

retail store .


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Customer Relationship Management (CRM) Software

Can range from niche tools to large-scale enterprise

applications

Can link to other major enterprise applications, such as supply

chain management

Can include modules for PRM and employee relationship

management (ERM)


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CRM software Module

CRM packages contain modules for partner

relationship management(PRM) and Employee

relationship management (ERM).

Employee relationship management:

Deals with the employee issues that are closelyrelated to CRM, such as setting objectives, employee

performance management, performance based

compensation, and employee training.


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CRM software Module

Partner Relationship Management (PRM):

PRM use many of the same data, tools and systems asCRM to enhance collaboration between a company andits selling partners.

If a company doesn't sell directly to customers but

rather works through distributors, or retailers, PRM helpsthis channels to sell customer directly.

CRM Software Vendors

Major CRM applications software vendors include oracleowned Sieble systems and peoplesoft, SAP,Salesforce.com, Microsoft Dynamics CRM.


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o Sales Force Automation (SFA): Sales force automation

modules in CRM system help sales staff increase their

productivity by focusing sales efforts on the most

profitable customers, those who are good candidates

for sales and services.

o Such CRM software can assemble information about a

particular customer past purchases to help the

salesperson make personalized recommendations.

o It increases each salespersons efficiency in reducing the

cost per sale as well as the cost of acquiring new

customers and retaining old one.

CRM typically provide software and online tools for sales,customer service and marketing. The capabilities are-

Customer Relationship Management (CRM) Software

(Continued)


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Capabilities of CRM software

Customer service: Customer servicemodules in CRM systems

provide information and tools to increase the efficiency of callcenters, help desks, and customer support staff. They havecapabilities for assigning and managing customer servicerequest.

Marketing: CRM system support direct market campaigns byproviding capabilities for capturing prospect and customerdata, for providing product and service information, forqualifying leads for targeted marketing and for scheduling andtracking direct marketing mailings or email.

Cross selling is the marketing of complementary products tocustomers.


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Figure 9-9

CRM Software Capabilities

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS


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Operational and Analytical CRM

Operational CRM:

Customer-facing applications, such as sales force

automation, call center and customer service support, and

marketing automation

Examples: Campaign management, e-marketing, account

and contact management, lead management,

telemarketing, teleselling, e-selling, field sales


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Analytical CRM:

Applications that analyze customer data generated by

operational CRM applications to provide information for

improving business performance

Examples: Develop customer segmentation strategies and

customer profiles; analyze customer or product profitability;

identify trends in sales length cycle; analyze leads generated

and conversion rates


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CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Analytical CRM Data Warehouse

Figure 9-11


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Business Value of Customer Relationship Management Systems

Increased customer satisfaction. More effective marketing and reduced direct marketing

costs.

Lower costs for customer acquisition and retention.

Increased revenue from identifying most profitablecustomers and segments for marketing, cross-selling, up-

selling.

Reduce churn rate: Number of customers who stop using

or purchasing products or services from a company


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The Importance of CRM Performance Measurement

Metrics for CRM may include:

Successful CRM implementations require that financial and

operation goals, and metric for evaluation, are clearly defined at

outset of project.

Cost per lead :

A lead, in a marketing context, is a potential sales contact: anindividual or organization that expresses an interest in your

goods or services.

Cost per sale:

Pricing based on the number of sales transactions your adgenerates. Since users may visit your site several times before

making a purchase, you can use cookies to track their visits from

your landing page to the actual online sale. Also known as cost-

per-acquisition or pay-per-sale.


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Number of repeat customers

Reduction of churn

Sales closing rate

Customer Lifetime Value (CLTV): Difference between revenues

and expenses minus the cost of promotional marketing used

to retain an account

The Importance of CRM Performance Measurement

(Continued)


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Service Platforms and Business Process Management

Service Platform:

Integration of multiple applications from multiple business

functions, business units, or business partners to deliver a

seamless experience for the customer, employee, manager,

or business partner

ENTERPRISE INTEGRATION TRENDS


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Business Process Management:

A methodology for dealing with the organizations need to

change its business processes continually to remain

competitive Portals:

The enterprise information portal (EIP), also known as a

business portal, is a concept for a Web site that serves as a

single gateway to a company's information and knowledge

base for employees and possibly for customers, business

partners, and the general public as well.



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Order-to-Cash Service


Figure 9-12


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Chapter 09 Laudon