Chapter 09

Enterprise Applications

ENTERPRISE SYSTEMS
What Are Enterprise Systems?
Enterprise System Architecture

How Enterprise Systems Work

Enterprise Systems:
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:
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.

Business Value of Enterprise Systems

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.

SUPPLY CHAIN MANAGEMENT SYSTEMS The Supply Chain

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.

Supply chain: (characteristics)

Goods or product start as raw materials. Transforming these materials into intermediate and finished products to customer. The finished products are shipped to distribution centers and from there to retailers and customers. Returned items flow in reverse direction from the buyer back to the seller. The upstream portion of the supply chain includes the company suppliers, the suppliers suppliers, and the process of managing relationship with them. The downstream portion consists of organizations and process for distributing and developing products to final customers.

SUPPLY CHAIN MANAGEMENT SYSTEMS

Supply chain management:

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 SYSTEMS

A Supply Chain

Figure 9-3

Supply Chain Processes SCOR (Supply Chain Operations Reference Model) identifies five major supply chain processes: 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 finished state

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 (Continued)

Key Supply Chain Management Processes

Figure 9-4

Information and Supply Chain Management

Inaccurate or untimely information causes inefficiencies in supply chain, such as shortages, excessive inventory Just-in-time strategy : 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.

Safety stock
To satisfy customer , manufacturer often deal with uncertainties 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 it passes from one entity to the next across the supply chain

SUPPLY CHAIN MANAGEMENT SYSTEMS

The Bullwhip Effect

Figure 9-5

Supply Chain Management Applications

Supply chain management systems: Automate flow of information between company and supply chain partners 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 centers

and warehouses to ensure that products are delivered to the

right locations in the most efficient manner .

Supply Chain Performance Measurement

Metrics for measuring supply chain performance: 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

Supply Chain Management and the Internet

Intranets and Extranets for Supply Chain Management

Figure 9-6

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 among their internal supply chain process, they use extranet to coordinate supply chain process shared with their business partners.

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 goods 2. Transportation cost 3. Inventory 4. Local taxes or fees 5. Government regulation and culture

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

SUPPLY CHAIN MANAGEMENT SYSTEMS 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 deliver only what customers have ordered.

SUPPLY CHAIN MANAGEMENT SYSTEMS

Push- versus Pull-Based Supply Chain Models

Figure 9-7

SUPPLY CHAIN MANAGEMENT SYSTEMS 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.

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS Customer Relationship Management and Partner Relationship Management

Customer Relationship Management (CRM):

Business and technology discipline for managing customer relationships to optimize revenue, profitability, customer satisfaction, and customer retention. Partner Relationship Management (PRM): Automation of the firms relationships with its selling

partners using customer data and analytical tools to

improve coordination and customer sales

Why Customer Relationship management Necessary?

In a small business it is possible for business owners and managers to know their customers on a personal, face to face basis. But in a large organization operating on a metropolitan, regional, national or even global basis, it is impossible to know the customers. Well designed CRM system provide a single enterprise view of customers that is useful for improving both sales and customer service.

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?

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.

Customer Relationship Management Applications CRM systems:

Capture and integrate customer data from all over the organization 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 .

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)

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 closely related to CRM, such as setting objectives, employee performance management, performance based compensation, and employee training.

CRM software Module

Partner Relationship Management (PRM): PRM use many of the same data, tools and systems as CRM to enhance collaboration between a company and its selling partners. If a company doesn't sell directly to customers but rather works through distributors, or retailers, PRM helps this channels to sell customer directly. CRM Software Vendors Major CRM applications software vendors include oracle owned Sieble systems and peoplesoft, SAP, Salesforce.com, Microsoft Dynamics CRM.

Customer Relationship Management (CRM) Software (Continued)

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

Capabilities of CRM software

Customer service: Customer service modules in CRM systems provide information and tools to increase the efficiency of call centers, help desks, and customer support staff. They have capabilities for assigning and managing customer service request. Marketing: CRM system support direct market campaigns by providing capabilities for capturing prospect and customer data, for providing product and service information, for qualifying leads for targeted marketing and for scheduling and tracking direct marketing mailings or email. Cross selling is the marketing of complementary products to customers.

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

CRM Software Capabilities

Figure 9-9

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

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

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS

Analytical CRM Data Warehouse

Figure 9-11

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 profitable customers and segments for marketing, cross-selling, upselling. Reduce churn rate: Number of customers who stop using or purchasing products or services from a company

The Importance of CRM Performance Measurement Successful CRM implementations require that financial and operation goals, and metric for evaluation, are clearly defined at outset of project. Metrics for CRM may include:
Cost per lead : A lead, in a marketing context, is a potential sales contact: an individual or organization that expresses an interest in your goods or services. Cost per sale: Pricing based on the number of sales transactions your ad generates. 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 costper-acquisition or pay-per-sale.

The Importance of CRM Performance Measurement (Continued)

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

ENTERPRISE INTEGRATION TRENDS

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

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.

ENTERPRISE INTEGRATION TRENDS

Order-to-Cash Service

Figure 9-12

THE END