OMSAN LOJİSTİK CRM: Customer Relationship Management

OMSAN LOJİSTİK

CRM: Customer Relationship Management

Objectives

• CRM is a strategy…

• CRM & SCM are the company’s DNA

• Collaboration is the key to a leadership management based in customer satisfaction and loyalty

Getting Ready…

• Strategy

• CRM

• Logistics

• Collaboration

Strategy

• 70’s & 80’s: strategy hot but difficult– Focus on Japanese implementation success

• Exercise in best practices, not strategy

• 90’s: Change, speed, being dynamic, reinventing business as e-business

• Strategy is considered rigid and inflexible

• Wal-Mart, Dell and Intel prove that strategies work - even in times of rapid business and technological change

“…a plan or method to achieve a specific objective”

CRM

…is a comprehensive strategic approach to providing seamless coordination between sales, customer service, marketing, field support and other customer-touching functions for the purpose of creating competitive advantage through relationships with the customers you choose to serve.

CRM Is A Strategy

• Began as Sales Force Automation in early 90’s• Is an organic process by which organizations

become customer-centric– New strategies - > redesigned functions - >

reengineered work processes - > supporting technology

– Can’t change how we interact with customers without changing internally focused organizational values and structures

CRM Is Difficult

• CRM isn’t cheap, easy or optional

• Means the dissolution of departmental silos

• Requires long-term effort

• Attitudes / behaviors of CEOs / senior management are some of the reasons CRM is difficult

#1 CRM Decision

• Who are your key customers?• What is their current value and strategic

value?– Clearly defined customer profitability / value– Definition communicated to the customer– Gaps in the current relationship identified– Goals and timelines set with that customer– If can’t resolve, mutually agree to no longer work

together

• “Hire” the right customers from the beginning

Customers are not all equal.Treat different customers differently.

G2000 Enterprises: Y2000 CRM

• Stovepiped approach

• Little thought to CRM ecosystem or front-office process integration

• Single function / channel deployments

Source: Steven Bonadio, Application Delivery Strategies, META Group

G2000 Enterprises: Y2000/01 CRM

• Automation / integration of individual, intra-enterprise customer-facing processes with back-office / supply chain functions – Demonstrable ROI– Efficient customer-focused fulfillment required


G2000 Enterprises: Y2002 CRM

• Proliferation of multi-process, cross-functional front- to back-office supply chain integration efforts across multiple channels– Growing use of CRM, SCM and ERM

application suites / architectures– Maturing EAI frameworks and XML-based

messaging standards


G2000 Enterprises: Y2003/04 CRM

• Demand fulfillment ‘norm’ of downstream supply-driven push is replaced by upstream demand-driven pull– Vendor consolidation/solution expansion– Collaborative supply chain network evolution– CRM infusion within G2000 organizations

• Competitive advantage: Map existing CRM activities in marketing, sales and service to companion back-office/supply-chain functions


CRM + ERM + SCM

“Organizations can no longer afford to view customer relationship management (CRM), enterprise resource management (ERM), and supply chain management (SCM) initiatives as separate. Synchronizing front-office, back-office, and supply chain activities is critical to attracting/retaining customers, fulfilling demand, and improving cycle times.”


Effective Fulfillment = Loyal Customers

• Make it easier to do business with you and more difficult to go elsewhere

• Create learning relationships– Identify the customer immediately– Act on information gathered previously– With each interaction, ask for feedback and ‘reward’

the customer– As move along the learning curve, the customer gets

a product they can’t get anywhere else because they helped create it

Value of Customer Loyalty

• Tangible– 5% increase in customer retention can boost profits

25% to 125%– Shorter customer relationships = lost profits

• 4 to 7 x more to replace a lost customer• “Old” customers buy more

• Intangible– Image, references and additional work– Challenging projects increase internal skills and

knowledge

Logistics

Right Channel

Right Customer

Right Product

Right Price

Right Time

Right Docs…management of the flow of materials from the point of origin to the point of consumption to meet customers’ needs

Collaboration

• Formal structure

• Exchange of proprietary information

• Direct access and processing

• ‘Real-time’

• Visibility

• Impact of the Internet

…the act of working together; to cooperate…

CRM + Logistics + Collaboration

A comprehensive, cooperative strategy encompassing all links in a supply chain - - designed to provide the seamless flow of materials from the point of origin to the point of consumption - - the success of which creates competitive advantage for the suppliers.

CRM + Logistics + Collaboration

Right Channel

Right Customer

Right Product

Right Price

Right Time

Right Docs

New Ways to Collaborate

• Collaborative Business Communities– Old: Suppliers - > Manufacturers - > Distributors

- > Customers - > Consumers– New: Value network - > End-User– Challenges: Support infrastructure, leadership

roles, technology, trust, change…a new paradigm

– Benefits: • Better visibility• Increased velocity• Reduced impact of variability

New Ways to Collaborate

• Merge-in-transit– 3rd party adds value to product between its

origin and its ultimate destination– Objective: Reduce cost of getting products to

customers• Suppliers ship to consolidation or merge point where

order is held; ships as single order when complete

– Examples• Cisco and Fed-Ex (in beta test)• GroceryWorks.com

Return on Your Investment

• Financial Performance Measures

• Productivity Performance Measures

• Quality Performance Measures

• Response Time Performance Measures

• Return on Customer Loyalty

Future Considerations / Next Steps

• Evaluate / develop CRM / Logistics strategies• Assess current state of business processes and

do gap analysis• Develop business case and metrics• Evaluate CRM / Collaboration technology

options• Implement Web-based B2B or B2C scenarios

– Personalization– One-to-one marketing

Service levels and logistics costs will differentiate trading communities

Manufacturer Distribution

Manufacturer Distributor

100% Fulfillment -Multiple Ordering/Shipping Points

Manufacturer Distributor

Dynamic Pricing Driven ByDynamic Demand

Price per Ton

0%

Cap

acit

y %

100%

Revenue 1

R2

R5R6

R7

R3R4

Dynamic Prices

Demand Management:Processes & Activities

Logistics System Planning

/M/ apping

/A/ ssessment

/B/ alancing

/O/ ptimization

/R/ econfiguration

/B/alancing of Logistics Systems

Trade-off management among logistics agents and processes

System Balancing: Two Types of Activities

• Execution• (ALL logistics systems perform these activities

intuitively or in a planned manner)

• Planning• (Deliberate activities within the logistics system with the goal

to change the system’s conditions and achieve a specific result!)

Demand Management

Fulfillment Management

Sourcing Management

Logistics Planning System

Use the Past to Understand the Future

L og is tic s P lan n in g S ys tem

G en era te D atan , n + 1 , n + 2 ,

E xecu te S tra teg y

V a lid a teP erfo rm an ce M easu res

S im u la te R ea l D a tan -1

M od e l

MODELING

Interacting VariablesDirection of Interaction

What has changed…

• Today ….

• Real Data to Prove us right or wrong

• Mistakes are more expensive and riskier

• Execution strategies are so complex you can’t afford mistakes

• Computation power unknown to logistics management

Surprise or Control

• Inductive Thinking• Plan the steps to

achieve a desired result

• Sequential • Uncertain results • Surprise• Linearity

• Deductive Thinking• Determine the

desired result• Go backwards to

understand the causes of the desired result

• Non-sequential• Control• Circularity

Demand Management

Factors Driving Logistics Change

• Shortening of product life cycles

• New product proliferation

• Power shift in the distribution channels

• Customer service as a competitive force

• Technology

• Global competition

• Cost reduction and profitability focus

Customer Service Decisions

• What Level of Service Should We Provide?– Levels constraint: A firm’s logistics system– Combine with logistics activities to provide

time and place utility; the end-result of business logistics

– Augmented product feature that adds value to the buyer

Customer Service Definition

• Three views– As an activity– As performance measurement– As a corporate philosophy

• Customer service – brand loyalty market share relationships

Measurements

• Time: Order Cycle Time (seller) Lead Times (Buyer)

• Dependability

• Communications

• Convenience

Trends in Customer Service

• The customer defines the standards

• Vendor can influence the customer

• Multidimensional

• Dynamics

• Information focus rather than inventory

• Measurable aspect

Features of a Customer Service Policy

• Unique

• Segmented

• Formal

• Proactive

• Extrapolated

Who’s the “A” Customer For…?

• … Sales & marketing?

• … Finance?

• … Purchasing?

• … Distribution center?

• … Transportation?

• … Inventory planning?

Customer Order Management

• What?• Who?• When?• How?• How Much?• Where?• …

Customer Service Policy Template

CRM = Customer Relationship Management. More than a fad

Specialized teams

Proactive service policyInformation dispersion

Performance-based rewards to sales teams

Intelligent Forecasting

Top-Down and Bottom-Up Event Calendars Incorporating Macro-economic and Industry

Indicators Individual Accountability for Forecast Accuracy Seasonality Smoothing Best-Fit Modeling Capture and Measure True Demand Measuring Forecast Accuracy by SKU and

Channel

Forecasting Discouragement

• Repeated forecasting in the supply chain amplifies errors.

• The longer the replenishment lead time the bigger the forecast error.

• Price fluctuations and promotional events cause huge, unpredictable spikes in demand.

• Shortage Gaming: Customers order more than they really need and cancel orders when the shortage is over.

• Unfilled demand is not measured.

Forecasting Principles

• Measure and monitor forecasting accuracy.

• Establish individual accountability for forecasting accuracy.

• Measure true demand:– unsatisfied demand– overstated demand due to shortage

gaming


• Implement information sharing to let everyone know true demand.

• Establish and implement an event calendar to improve accuracy.

• Design organization and control policy to insure quick reaction to forecast errors.


• Use bottom-up forecasting to predict category and overall business forecasts for country, region, and global sales.

• Use top-down forecasting to predict region and country sales for categories and SKUs.

• Incorporate leading/lagging economic and industry indicators in top-down forecasting.


• Rationalize top-down and bottom-up forecasts with human intelligence.

• Stratify SKUs on the basis of demand and demand variability to determine:– forecastability– forecasting model

• Use best-fit model to predict future demand incorporating overall and seasonal trends.


• Reduce replenishment lead times to reduce the overall forecast error.

• The enemy is forecast error and reaction to it - let’s do everything within our control to reduce the forecast error.

• The barriers to forecast accuracy include bias, ignorance, poor data, and denial.

Typical Demand Patterns

Selection of Statistical Tools to Match Demand Behavior

Revenue Management

What’s all about it?

• Solving the dichotomy of inventory and pricing

• Inventory decisions are made at the individual, unitary level

• Pricing decisions are made at the segment, global, multi-purchase level

Revenue Management System

• Capacity management– Fleet utilization

• Pricing– Corporate revenue (consumer’s sensitivity to

price)

• Reservations control– Revenue maximization

Demand Management Principles

• Logistics strategy and customer service aligned with global logistics conditions

• Segmented Logistics Service Policy by Location & Conditions (Expectations)

• Consistent Use of INCOTERMS and Standard International Contracts

• Multilingual/Multicurrency/Multi-time Zone Order Entry Systems & Order Status Communication

Global Customer Service World-Class Principles

• Electronic Commerce / EDIFACT/EFT/ Internet/International Faxing

• Back order, partial orders, pricing and returns policy and procedures segmented by country/customer/SKU

• CS aligned with other GL processes (inventory management, procurement, manufacturing, transportation and warehousing)

• Pricing aligned with Service Policy

3. Global Customer Service World-Class Principles

• Consolidation of all global logistics functions under one umbrella

• Accurate sales forecasting• Vendor partnerships• Proper documentation• Flexibility to deal with special market situations• High knowledge about international finance

options and work with an expert bank in GL

Documents

OMSAN LOJİSTİK CRM: Customer Relationship Management