Achieving Operational Excellence

Achieving operational excellence and customer intimacy: Enterprise applications Lesson – -08 Enterprise Systems • Around the global, companies are increasingly becoming more connected, both internally and with other companies. • Enterprise systems provide the integration to make this possible. • Enterprise systems, or enterprise resource planning (ERP) systems, integrate the key internal business processes of a firm into a single software system 1 Enterprise software • It is based on a suite of integrated software modules and a common central database. When new information is entered by one process, the information is made available immediately to other business processes. • Enterprise software is built around thousands of redefined business processes that reflect best practices. How enterprise systems works 2 Business value of Enterprise systems • Increase operational efficiency. • Immediate response to customer’s request • Use analytical tools to evaluate a firm’s overall performance • Use standard definitions, formats, and performance figures across the organization Supply Chain Management Systems Supply chain management refers to the coordination of activities and involved in making and moving a product. • The supply chain is the network of businesses and business processes involved the creation and selling of a product, from suppliers that procure raw materials through retail outlets and customers. • The upstream portion of the supply chain includes the organization’s suppliers and the processes for managing relationships with them. • The downstream portion consists of the organizations and processes for distributing and delivering products to the final customers. Sample supply chain systems Classification of Supply chain software • Supply chain planning systems: Systems which enable the firm to generate demand forecasts for a product, develop sourcing and manufacturing plans for that product, make adjustments to production and distribution plans, and share that information with relevant supply chain members. • demand planning, which determines how much product a business needs to make to satisfy all of its customers’ demands. Supply chain execution systems: Systems that manage the physical flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner. 4 Intranet and extranets for supply chain management Supply chain management were driven by: 5 Future internet driven supply chain management The business value of supply chain management systems • Streamlined supply chain and accurate information • Reduced supply chain costs • Increased sales through accurate product availability 6 Customer relationship management CRM systems capture and integrate customer data from all over the organization, consolidating the data, analyzing the data, and then distributing 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, or retail store CRM systems software • Partner relationship management (PRM): PRM software uses many of the same data, tools, and systems as customer relationship management to enhance collaboration between a company and its selling partners. Employee relationship management (ERM). 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. 7 Customer relationship management systems CRM systems provide tools for…. • Sales force automation (SFA): SFA modules help sales staff increase their productivity by focusing sales efforts on the most profitable customers. • Customer service: Customer service modules provide information and tools to make call centers, help desks, and customer support staff more efficient. Marketing: Marketing modules support direct-marketing campaigns with capabilities for capturing prospect and customer data, qualifying leads, and scheduling and tracking campaign mailings. – Eg. , cross selling 8 CRM software capabilities Customer loyalty management process 9 Operational and analytical CRM • Operational CRM: Customer facing applications such as tools for sales force automation, call center and customer service support, and marketing automation. • Analytical CRM: Applications that analyze customer data generated by operational CRM applications to provide information for improving business performance management.

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Eg. , customer life time value Analytical CRM data warehouse 10 The business value of CRM systems • • • • • Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition and retention Increased sales revenues through identifying profitable customers • Reduced churn rate: The churn rate measures the number of customers who stop using or purchasing products or services from a company and is an important indicator of the growth or decline of a firm’s customer base. Management Opportunities, Challenges, and Solutions Many firms obtain extraordinary business value from enterprise applications because of their power to improve process coordination and management decision making. Challenges: – Very expensive to purchase and implement. – require not only deep-seated technological changes but also fundamental changes in the way the business operates, including changes to business processes, employee responsibilities, and functions – Enterprise applications also introduce “switching costs. ” Once an enterprise application is purchased and implemented, it becomes very costly to switch vendors 11 Solutions for gaining more value from enterprise applications • Enterprise solutions (enterprise suites or e-business suites): Flexible enterprise software that enables close linking between CRM, SCM, and enterprise systems, as well as to customer and supplier systems. • 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 Order-to-cash service 12 QUESTIONS? 13

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