McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved

Section 2Section 2

ENTERPRISE ENTERPRISE SYSTEMSSYSTEMS

ENTERPRISE ENTERPRISE SYSTEMSSYSTEMS

McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved

SECTION 2.2SECTION 2.2

ENTERPRISE SYSTEMS

ENTERPRISE SYSTEMS

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LEARNING OUTCOMES

• Describe the four basic components of supply chain management

• Explain customer relationship management and the benefits it can provide an organization

• Define enterprise resource planning and explain its importance to an organization

• Identify how an organization can use business process reengineering to improve its business

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ENTERPRISE SYSTEMS

• Organizations can undertake high-profile strategic initiatives including:– Supply chain management (SCM)– Customer relationship management (CRM)– Enterprise resource planning (ERP)– Business process reengineering (BPR)

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SUPPLY CHAIN MANAGEMENT

• Supply Chain Management (SCM) – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability

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SUPPLY CHAIN MANAGEMENT

• Four basic components of supply chain management include:

1. Supply chain strategy – strategy for managing all resources to meet customer demand

2. Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.

3. Supply chain operation – schedule for production activities

4. Supply chain logistics – product delivery process

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SUPPLY CHAIN MANAGEMENT

• Wal-Mart and Procter & Gamble (P&G) SCM

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SUPPLY CHAIN MANAGEMENT

• Effective and efficient SCM systems can enable an organization to:– Decrease the power of its buyers– Increase its own supplier power– Increase switching costs to reduce the threat of

substitute products or services– Create entry barriers thereby reducing the threat

of new entrants– Increase efficiencies while seeking a competitive

advantage through cost leadership

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SUPPLY CHAIN MANAGEMENT

• Effective and efficient SCM systems effect on Porter’s Five Forces

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CUSTOMER RELATIONSHIP

MANAGEMENT • Customer relationship management

(CRM) – involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitability

• Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems

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CUSTOMER RELATIONSHIP MANAGEMENT

• CRM is not just technology, but a strategy, process, and business goal that an organization must embrace on an enterprisewide level

• CRM can enable an organization to:– Identify types of customers– Design individual customer marketing campaigns – Treat each customer as an individual– Understand customer buying behaviors

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CUSTOMER RELATIONSHIP MANAGEMENT

• CRM overview

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ENTERPRISE RESOURCE PLANNING

• Enterprise resource planning (ERP) – integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprisewide information on all business operations

• Keywords in ERP are “enterprise” & “integration of data”

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ERP SOFTWARE

• ERP functions offered by all ERP vendors include:– Finance, accounting, sales, marketing, human

resources, operations, and logistics

• ERP vendors differentiate themselves by offering unique components including:– CRM, SCM, and BI

• According to Gartner, the average failure rate for an ERP project is 66 percent

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Finding The Right ERP Solution

• Successful ERP projects share 3 attributes1. Overall fit

• Off the rack• Off the rack and tailored to fit• Custom made

2. Proper business analysis• Successful companies spend up to 10 percent of the

project budget on a business analysis

3. Solid implementation plans• A plan is needed to monitor the quality, objectives,

and timelines

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BUSINESS PROCESS REENGINEERING

• Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

• Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises– The purpose of BPR is to make all business

processes best-in-class

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BUSINESS PROCESS REENGINEERING

• Reengineering the Corporation – by Michael Hammer and James Champy - recommends seven BPR principles

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Finding Opportunity Using BPR

• A company can improve the way it travels the road by moving from foot to horse and then horse to car

• BPR looks at taking a different path, such as an airplane which ignore the road completely

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Finding Opportunity Using BPR

• Progressive Insurance mobile claims process

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Finding Opportunity Using BPR

• Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

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OPENING CASE QUESTIONSRevving Up Sales at Harley-Davidson

4. Evaluate the HOG CRM strategy and recommend an additional benefit Harley-Davidson could provide to its HOG members to increase customer satisfaction

5. Describe how Harley-Davidson’s SCM system, Manugistics, could improve its business operations

6. Provide an illustration of Harley-Davidson’s SCM system including all upstream and downstream participants

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CLOSING CASE ONEConsolidating Touchpoints for Saab

1. How has implementing a CRM system enabled Saab to gain a competitive advantage?

2. Estimate the potential impact to Saab’s business if it had not implemented a CRM system

3. What additional benefits could Saab receive from implementing a supply chain management system?

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CLOSING CASE ONEConsolidating Touchpoints for Saab

4. Model Saab’s supply chain

5. How is Saab’s CRM implementation going to influence its SCM practices?

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CLOSING CASE TWOMade-to-Order Businesses

1. What role does supply chain management and customer relationship management play in a mass customization business strategy?

2. How can Lands’ End use its CRM system to improve its business?

3. How can Nike use a CRM system to improve its customer relations?

4. Why is Nike’s supply chain management system critical to its Nike iD order fulfillment process?

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CLOSING CASE THREEDelta Airlines Plays Catch-Up

1. What business risks would Delta be taking if it decided not to catch up with industry leaders in using IT to gain a competitive advantage?

2. What competitive advantages can an airline gain by using DSS and EIS?

3. What other industries could potentially benefit from the use of yield management systems?

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CLOSING CASE THREEDelta Airlines Plays Catch-Up

4. How can American and United use customer information to gain a competitive?

5. What types of metrics would Delta executives want to see in a digital dashboard?

6. How could Delta use supply chain management to improve its operations?