CHAPTER 9 "Achieving Operational Excellence and Customer Intimacy: Enterprise Applications"
9.1 Enterprise Systems
What Are Enterprise Systems?
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 Software
Enterprise software is
built around thousands of predefined business processes that reflect best
practices.
Business Value of Enterprise Systems
Enterprise systems provide value both by increasing operational
efficiency and by providing firm-wide information to help managers make better
decisions. Enterprise systems help firms respond rapidly to customer requests for
information or products. Enterprise systems provide much valuable information
for improving management decision making.
9.2 Supply Chain Management Systems
The Supply Chain
A firm’s supply chain is a network of organizations and business processes for procuring
raw materials, transforming these materials into intermediate and finished
products, and distributing the finished products to customers.
Information Systems and Supply Chain Management
If a manufacturer had perfect information about exactly how many
units of product customers wanted, when they wanted them, and when they could
be produced, it would be possible to implement a highly efficient just-in-time strategy.
In a supply chain, however, uncertainties arise because many
events cannot be foreseen—uncertain product demand, late shipments from
suppliers, defective parts or raw materials, or production process breakdowns.
One recurring problem in supply chain management is the bullwhip effect,
in which information about the demand for a product gets distorted as it passes
from one entity to the next across the supply chain. The bullwhip is tamed by
reducing uncertainties about demand and supply when all members of the supply
chain have accurate and up-to-date information.
Supply Chain Management Applications
Supply chain planning systems enable the firm to model its existing supply chain, generate
demand forecasts for products, and develop optimal sourcing and
manufacturing plans. One of the most important—and complex—supply chain planning
functions is demand planning, which determines how
much product a business
needs to make to satisfy all of its customers’ demands. Supply chain execution systems manage the flow of products through distribution centers and
warehouses to ensure that products are delivered to the right locations in the
most efficient manner.
Global Supply Chains and The Internet
Global Supply Chain Issues
There are additional complexities and challenges to managing a
global supply chain. Global supply chains typically span greater geographic
distances and time differences than domestic supply chains and have
participants from a number of different countries. Supply chain management may
need to reflect foreign government regulations and cultural differences.
The Internet helps companies manage many aspects of their global
supply chains, including sourcing, transportation, communications, and
international finance. As goods are being sourced, produced, and shipped,
communication is required among retailers, manufacturers, contractors, agents,
and logistics providers.
With e-SPS, all supply chain members communicate through a
Web-based system. If one of Koret’s vendors makes a change in the status of a
product, everyone in the supply chain sees the change.
Business Value of Supply Chain Management Systems
Total supply chain costs represent the majority of operating
expenses for many businesses and in some industries approach 75 percent of the
total operating budget. Reducing supply chain costs may have a major impact on
firm profitability. In addition to reducing costs, supply chain management
systems help increase sales.
9.3 Customer Relationship Management Systems
What Is Customer Relationship Management?
In a small business operating in a neighborhood, it is possible
for business owners and managers to really know their customers on a personal,
face-to-face basis. But in a large business operating on a metropolitan,
regional, national, or even global basis, it is impossible to “know your
customer” in this intimate way. Customer relationship management (CRM) systems,
capture and integrate customer data from all over the organization, consolidate
the data, analyze the data, and then distribute the results to various systems and
customer touch points across the enterprise. A touch point (also known
as a contact point) is a method of interaction with the customer, such as telephone,
e-mail, customer service desk, conventional mail, Web site, wireless device, or
retail store.
Customer Relationship Management Software
The more comprehensive CRM packages contain modules for partner relationship management (PRM) and employee relationship management (ERM). PRM uses many of the same data, tools, and systems as customer
relationship management to enhance collaboration between a company and its
selling partners. ERM software deals with employee issues that are closely
related to CRM, such as setting objectives, employee performance management,
performance-based compensation, and employee training. Customer relationship
management systems typically provide software and online tools for sales,
customer service, and marketing. We briefly describe some of these
capabilities.
- Sales Force Automation (SFA)
- Customer Service
- Marketing
Operational and Analytical CRM
Operational CRM includes
customer-facing applications, such as tools for sales force automation, call center and customer
service support, and marketing automation. Analytical CRM includes
applications that analyze customer data generated by operational CRM applications to provide
information for improving business performance.
Another important output of analytical CRM is the customer’s
lifetime value to the firm. Customer
lifetime value (CLTV) is based on
the relationship between the revenue produced by a specific customer, the
expenses incurred in acquiring and servicing that customer, and the expected
life of the relationship between the customer and the company.
Business Value of Customer Relationship Management Systems
Companies with effective customer relationship management systems
realize many benefits, including increased customer satisfaction, reduced
direct marketing costs, more effective marketing, and lower costs for customer
acquisition and retention.
9.4 Enterprise Applications: New Opportunities and Challenges
Enterprise Application Challenges
Enterprise applications require not only deep-seated technological
changes but also fundamental changes in the way the business operates. Supply
chain management systems require multiple organizations to share information
and business processes. Some firms experienced enormous operating problems and
losses when they first implemented enterprise applications because they didn’t
understand how much organizational change was required.
Next-Generation Enterprise Application
The major enterprise software vendors have created what they call enterprise solutions, enterprise suites, or e-business suites to make their customer relationship management, supply chain
management, and enterprise systems work closely with each other, and link to
systems of customers and suppliers.
Next-generation enterprise applications also include open source
and on-demand solutions. Compared to commercial enterprise application software,
open source products such as Compiere, Apache Open for Business (OFBiz), and
Openbravo are not as mature, nor do they include as much support. The major
enterprise application vendors also offer portions of their products that work
on mobile handhelds.
Service Platforms
A service platform integrates multiple applications from multiple business functions,
business units, or business partners to deliver a seamless experience for the
customer, employee, manager, or business partner.
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source: "Management Information System" e-book, 12th edition, written by Kenneth C. Laudon and Jane P. Laudon.