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Other Enterprise Systems
Customer Relationship
Management &
Supply Chain Management
What is a Supply Chain?
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The flow of materials, information, money and services from raw
material suppliers, through factories and warehouses, to the end
customers
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Supply chains exist within businesses and across businesses
A network of facilities for procuring materials, transforming raw
materials into finished products,' and distributing finished
produce to customers.
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Structure & Components of Supply
Chains
Capacity, inventory level, delivery schedule, payment terms
Supplier
Manufacturer
Distributor
Retail
Outlet
Customer
Orders, return requests, repair and service requests, payments
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Material flows
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Information flows
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The physical products, raw materials, supplies and so forth that flow along the
chain.
Reverse flows – returned products, recycled products and disposal of materials or
products.
All data related to demand, shipments, orders, returns and schedules as well as
changes in any of these data.
Financial flows
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all transfers of money, payments and credit-related data.
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Structure & Components of Supply
Chains
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A supply chain involves three segments:
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Upstream, where sourcing or procurement from external
suppliers occurs;
Internal, where packaging, assembly or manufacturing takes
place;
Downstream, where distribution takes place, frequently by
external distributors.
Tiers of suppliers
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Suppliers may have one or more subsuppliers, and the
subsupplier may have its own subsupplier(s) and so on.
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Supply Chain Management: Objectives
and results of poor management
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An efficient supply chain
ensures…
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The right products
The right place
The right time
In the proper quantity
At an acceptable cost
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Results associated with
poor supply chain
management
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High inventory costs:
Excessive product
Poor customer service – not
delivering products or services
when and where the
customers need them.
Poor quality product: mismatch
between requirement and
product delivered
Poor planning capabilities
Increased cost associated with
tracking/managing supply
chain
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Typical supply chain challenges
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Supply chains involve diverse organisations
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This span from small to very large organisations
Introduces diversity of processes and IT systems
Increasingly supply chains are international or global and this
introduces
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Cultural differences
Localisation (language, currency etc)
Economic and Political Differences
Legal issues (related to customs, logistics/port, trade restrictions)
Cross-border data transfer which refers to the flow of corporate data
across nations’ borders.
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Examples of modern supply chain
challenges
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Tracking farm of origin of food produce
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Processing of returned product
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The consumer may be based in Europe, the producer based in Africa or
South America
Products have to be returned through the supply chain to the
manufacturing facility
Heavily seasonal/unpredictable demand
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E.g. Christmas toy demand, weather impacted products (such as fruit),
new product launches (iPhone etc)
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Typical supply Chain failures
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Problems stem mainly from two sources:
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Uncertainties due to demand forecast, delivery times, quality problems in
materials and parts that can create production delays;
The need to coordinate several activities, internal units and business
partners.
Supply chains are often chaotic systems: small changes
amplify to become major problems
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An issue in one part of the supply chain will lead to problems further
down the supply chain
The downstream problems will in turn lead to secondary problems
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Supply Chain Management Systems
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Supply chain management (SCM)
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A supply chain management system
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The function of planning, organising and optimising the supply
chain’s activities.
A cross-functional inter-enterprise system
To help support and manage the links between a company’s key
business processes
And those of its suppliers, customers & business partners
SCM systems implement process change and change roles of
participant organisations
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Challenges similar to those face in ERP - but across multiple
organisations
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Role of SCM
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Supply chain management (SCM) provides capabilities at all
levels of enterprise systems pyramid.
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SCM Architecture: Integration
Market research data
scheduling information
Engineering and design data
Order flow and cash flow
Supplier
Inventory
Supplier
Customer
Ideas and design to
satisfy end customer
Material flow
Credit flow
Customer
Manufacturer
Inventory
Supplier
Inventory
Distributor
Customer
Inventory
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SCM systems must support data flows across multiple systems and
organisational boundaries
The data is integrated into a data warehouse and then distributed to other
points in the supply chain using pub/sub or point-to-point messaging
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SCM Architecture: Consolidation
Planning
Operational execution
Market research data
scheduling information
Engineering and design data
Order flow and cash flow
Ideas and design to
satisfy end customer
Material flow
Credit flow
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Using the data warehouse, functionality to support
 operational execution of the supply chain activities and
 planning of future requirements is implemented in new business logic
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SCM business benefits and blockers
Visibility
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Enhanced visibility - trading
partners have the info
needed for planning
(win/win)
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Trust
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Resistance
Competition from traditional
communication media,
hunches, human to human
interaction
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Planning was naïve
 Sales force inertia
Cost of implementing the
system
 Participants need to
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determine who pays
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Collaboration with
Suppliers
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When supplies run low,
replenish message to
supplier who sends goods
directly to shelves
bypassing warehousing
costs
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Between trading partners is
NOT the norm
Zero-sum game, like politics,
Trust and resistance
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Fully implemented SCM systems require high degrees of
transparency between the supply chain participants
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Often moves negotiation away from price and towards cost
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And SCM is similar to ERP in impact on organisation – and face similar
issues related to organisational readiness
i.e. The buyer has visibility of the sellers’ costs and the price is based on
an agreed profit margin – not supply/demand dynamics
This means SCM systems are often most successful where the
supply chain has a dominant participant who can force co-operation
from other participants and pay for the system
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E.g. Tesco, Walmart, large car manufacturers
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Customer Relationship Management
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Move from a ‘transactional’ model of marketing to a
‘relationship’ model
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An enterprise wide effort to acquire and retain customers.
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Includes a one-to-one relationship between a customer and a
seller.
One simple idea “Treat different customers differently”.
Helps keep profitable customers and maximizes lifetime revenue
from them.
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Identify/acquire/retain most profitable prospects
20/80 rule (20% customers generate 80% revenues)
Acquisition is far more expensive that retention.
Integrating information from sales, customer service, marketing
and any other service points
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Also known as touch points – where the customer interacts with
the organisation
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CRM cycle
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CRM is a continuous
process of optimising
interactions with the
customer and seeking
new opportunities to
increase sales
© HP
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This CRM cycle consists of 4 stages
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Identify customer
Analyse and differentiate customer behaviour to identify propensity to buy
specific products.
Customise customer plan to optimise revenue
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Customise customer touchpoints to optimise revenue.
Customer Relationship Management (CRM):
Technical requirements
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A cross-functional enterprise system that integrates and automates
many of the processes in sales, marketing & customer service that
interact with customers (Customer touchpoints)
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Create a framework of software & databases that integrate these
processes with the rest of the company’s processes
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Customer touch point is any method of interaction with a customer,
such as telephone, e-mail, a customer service or help desk,
conventional mail, Web site and store.
These processes may be in functional/departmental systems
Therefore, CRM is similar to ERP in impact on organisation – and face
similar issues related to organisational readiness
Additional integration and business logic required
Provides analytic capabilities to optimise the customer relationship
across all touchpoints
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CRM architecture
© HP
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To implement the CRM cycle requires a combination of
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Execution steps: Using new business logic (e.g. data mining, marketing
planning
Propagation steps: Results are propagated to functional systems for
execution (e.g. complete a sales campaign, upgrade call centre service
etc)
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CRM challenges
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Data model integration and synchronisation
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On-going data synchronisation and propagation
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CRM gathers customer touchpoint data into a single system for analysis
CRM should ensure consistency of the data across the systems
CRM must ensure that data remains synchronised through on-going
customer change (e.g. Change of address)
Outputs from analysis/planning must be propagated back into individual
functional/departmental systems
Note: If a ‘global’ ERP has already been implemented, CRM
can be more easily implemented over the ERP
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Data integration stage and data synchronisation should already be in
place in the ERP
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CRM Architecture: Integration
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Integration layer supports integration between data mart and the
existing functional systems
Shared customer and
Touch point Data
(e.g. customer records,
Profiling, contact history,
purchase history)
Call centre
Data mart
Sales system
New integration points for
Data collection and propagation
Marketing
Existing integration points
Existing
Functional
systems
CRM Architecture: Consolidation
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New functional is built using the data mart
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Can replace functional existing in some or all of the functional systems
(e.g. A new customer support system which provides more information
about the customer)
Can be entirely new functionality (e.g. Retention and loyalty
programme)
Direct Marketing
Account management
Sales Force Automation
Shared customer and
Touch point Data
(e.g. customer records,
Profiling, contact history,
purchase history)
Retention and
Loyalty Programmes
Customer Support
Data mart
New integration points for
Data collection and propagation
Examples of CRM Functional Modules
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Contract and Account Management
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Helps sales, marketing & service professionals
Capture & track data about past/planned contacts with
customers/prospects
Sales Force Automation
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Provides sales reps with software tools & data they need to
support & manage sales activities
Cross-selling is trying to sell a customer of one product with a
related product
Up-selling is trying to sell customer a better product than they
are currently seeking
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Examples of CRM Functional Modules
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Direct Marketing
 Help marketing professionals accomplish direct marketing
campaigns by tasks such as
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Qualifying leads for targeted marketing & scheduling & tracking
direct marketing mailings
Retention and Loyalty Programs
 Try to help a company identify, reward, & market to their most
loyal and profitable customers
 Data mining tools & analytical software
 Customer data warehouse
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Examples of CRM Functional Modules
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Customer Service and Support
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Provides sales reps with software tools & database access to
customer database shared by sales & marketing professions
Helps create, assign and manage requests for service
Call center software routes calls to customer support agents
based upon their skills and type of call
Help desk software provides relevant service data &
suggestions for resolving problems for customer service reps
helping customers with problems
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An example of technology used
to implement CRM
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N-tier architecture
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Database server hosting data
warehouse
Application logic servers with
process models (multiple
servers, distributed )
Integration server to integrate
with external applications
Web/Internet server
Presentation level
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Browsers
Mobile phones
© Sage
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CRM Benefits and risks
Benefits
 Single view of customer
data
 Immediate availability of
real-time information
 Better knowledge of
customers
 Better understanding of
customer needs
 Knowledge retention
improved
Risks
 Difficult and expensive
implementation due to
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Integration challenges
Business change required
Scalability an issue due to the
potential scale of data available
No guarantee on effectiveness
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Can be hard to prove that CRM
works because CRM cannot be
separated from everyday
operations to assess impact
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