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ENTERPRISE BUSINESS SYSTEMS

Customer Relationship Management (CRM)


Enterprise Resource Planning (ERP)
Supply Chain Management (SCM)
Customer Relationship Management (CRM):
WHAT IS CRM?

Customer relationship management (CRM) is a system for managing a companys


interactions with current and future customers. It often involves using technology to
organize, automate and synchronize sales, marketing, customer service, and technical
support.

Managing the full range of the customer relationship involves

Providing customer-facing employees with a single, complete view of every customer at


every touch point and across all channels

Providing the customer with a single, complete view of the company and its extended
channels

CRM uses IT to create a cross-functional enterprise system that integrates and automates many
of the customer-serving processes.

CRM systems include a family of software modules that provides the tools that enable a business
and its employees to deliver fast, convenient, dependable, and consistent service to its
customers. Siebel Systems, Oracle, PeopleSoft, SAP AG, and Epiphany are some of the leading
vendors of CRM software.

APPLICATION COMPONENTS OF CRM?


1. Contact and Account Management:

CRM systems store the data in a common customer database that integrates all customer
account information and makes it available throughout the company via Internet, intranet, or
other network links for sales, marketing, service, and other CRM applications.

2. Sales:
A CRM system provides sales reps with the tools and data resources they need to

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Support and manage their sales activities

Optimize cross-and up-selling

CRM also provides the means to check on a customers account status and history before
scheduling a sales call
3. Marketing and Fulfillment:
CRM systems help with direct marketing campaigns by automatic such tasks as

Qualifying leads for targeted marketing

Scheduling and tracking mailings

Capturing and managing responses

Analyzing the business value of the campaign

Fulfilling responses and requests

4. Customer Service and Support:


A CRM system gives service reps real-time access to the same database used by sales and
marketing

Requests for service are created, assigned, and managed

Call center software routes calls to agents

Help desk software provides service data and suggestions for solving problems

Web-based self-service enables customers to access personalized support information

5. Retention and Loyalty Programs:

Enhancing and optimizing customer retention and loyalty is a major business strategy and
primary objective of customer relationship management.

CRM systems try to help a company identify, reward, and market to their most loyal and
profitable customers.

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THE THREE PHASES OF CRM:


1. Acquire: A business relies on CRM software tools and databases to help it acquire new
customers by doing a superior job of contact management, sales prospecting, selling, direct
marketing, and fulfillment.
2. Enhance: Web-enabled CRM account management and customer service and support tools
help keep customers happy by supporting superior service from a responsive networked team of
sales and service specialists and business partners.
3. Retain: CRM analytical software and databases help a company proactively identify and reward
its most loyal and profitable customers to retain and expand their business via targeted marketing
and relationship marketing programs.

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Benefits of CRM:

Identify and target the best customers


Real-time customization and personalization of products and services

Track when and how a customer contacts the company


Provide a consistent customer experience

Provide superior service and support across all customer contact points

CRM Failures:
Business benefits of CRM are not guaranteed

50 percent of CRM projects did not produce promised results


20 percent damaged customer relationships

Reasons for failure


Lack of understanding and preparation
Not solving business process problems first
No participation on part of business stakeholders involved
TRENDS IN CRM / TYPES OF CRM SYSTEMS:

Operational CRM
Analytical CRM
Collaborative CRM
Portal-based CRM

Operational CRM

Supports customer interaction with greater convenience through a variety of channels including
phone, fax, e-mail, chat, and mobile devices
Synchronizes customer interactions consistently across all channels
Makes the company easier to do business with

Analytical CRM:

Extracts in-depth customer history, preferences, and profitability information from your data
warehouse and other databases
Allows you to analyze, predict, and derive customer value and behavior and forecast demand
Lets you approach your customers with relevant information and offers that are tailored to their
needs

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Collaborative CRM:

Enables easy collaboration with customers, suppliers, and partners


Improves efficiency and integration throughout the supply chain
Allows greater responsiveness to customer needs through sourcing of products and services
outside of your enterprise

Portal-based CRM:

Provides all users with the tools and information that fit their individual roles and preferences
Empowers all employees to respond to customer demands more quickly and become truly
customer-focused
Provides the capability to instantly access, link, and use all internal and external customer
information

ENTERPRISE RESOURCE PLANNING (ERP): THE BUSINESS BACKBONE


ERP is a cross-functional enterprise backbone that integrates and automates processes within

Manufacturing
Logistics
Distribution
Accounting
Finance
Human resources

ERP is recognized as a necessary ingredient for the companies to gain the efficiency, agility and
responsiveness required to succeed in the business.
What is ERP?

It means enterprise resource planning, which itself means planning the resources in an
enterprise (business). So, this abbreviation simply means, that this is a way of using the
resources in a company more effectively.

Various processes that are essential to running a business, including inventory and order
management, accounting, human resources, customer relationship management (CRM),
and beyond. At its most basic level, ERP software integrates these various functions into one
complete system to streamline processes and information across the entire organization.

It is a set of business software tools designed to facilitate the flow of information between
all departments or functions within a business.

The central feature of all ERP systems is a shared database that supports multiple functions
used by different business units. In practice, this means that employees in different divisionsfor
example, accounting and salescan rely on the same information for their specific needs.

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ERP Application Components:

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Benefits and Challenges of ERP


ERP Business Benefits:
1. Integration across all business processes
2. Automation enhances productivity
3. Increase overall performance
4. Quality Reports and Performance Analysis
5. Enterprise Agility
6. Decision Supports
ERP Costs:
1. Risks and costs are considerable
2. Hardware and software are a small part of total costs
3. Failure can cripple or kill a business
4. The costs and risks of failure in implementing a new ERP system are substantial. Most
companies have had successful ERP implementations, but a sizable minority of firms
experienced spectacular and costly failures that heavily damaged their overall business.

5. Example: The most recent example of ERP failure is Shane Co., the family owned jewelry
retailer and one of the 10 largest jewelry retailers in the world. In January 2009, Shane Co.
sought bankruptcy protection, attributing the companys decline to delays and cost overruns in
their $36 million SAP AG inventory-management system. Shane Co. claimed SAP took almost
three years to install and implement the system instead of one year, while costs ballooned to
$36 million from a projected maximum of $10 million.
CAUSES OF ERP FAILURE:
Most common causes of ERP failure

Under-estimating the complexity of planning, development, training


Failure to involve affected employees in planning and development
Trying to do too much too fast
Insufficient training
Insufficient data conversion and testing
Over-reliance on ERP vendor or consultants

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Trends in ERP:
ERP is still evolvingadapting to developments in technology and the demands of the market.
Four important trends are shaping ERPs continuing evolution: improvements in integration and
flexibility, extensions to e-business applications, a broader reach to new users, and the adoption of
Internet technologies. Figure 8.12 illustrates four major developments and trends that are evolving in
ERP applications.

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First, the ERP software packages that were often criticized for their inflexibility, have gradually
been modified into more flexible products.

Web enabling ERP software - is a second development in the evolution of ERP.

The growth of the Internet and corporate intranets and extranets prompted software companies
to use Internet technologies to build Web interfaces and networking capabilities into ERP
systems.

This Internet connectivity has led to the development of interenterprise ERP systems that
provide Web-enabled links between key business systems (such as inventory and production) of
a company and its customers, suppliers, distributors, and others.

All of these developments have provided the business and technological momentum for the
integration of ERP functions into e-business suites.

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SUPPLY CHAIN MANAGEMENT (SCM):


What is Supply Chain Management (SCM)?

The interrelationships
o

With suppliers, customers, distributors, and other businesses

Needed to design, build, and sell a product

Each supply chain process should add value to the products or services a company
produces
o

Frequently called a value chain

Fundamentally, supply chain management helps a company


o

Get the right products

To the right place

At the right time

In the proper quantity

At an acceptable cost

Goals of SCM:
The goal of SCM is to efficiently

Forecast demand

Control inventory

Enhance relationships with customers, suppliers, distributors, and others

Receive feedback on the status of every link in the supply chain

SUPPLY CHAIN LIFE CYCLE:

The figure below illustrates the basic business processes in the supply chain life cycle and the
functional SCM processes that support them.

It also emphasizes how many companies today are reengineering their supply chain processes,
aided by Internet technologies and supply chain management software.

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For example, the demands of todays competitive business environment are pushing
manufacturers to use their intranets, extranets, and e-commerce Web portals to help them
reengineer their relationships with their suppliers, distributors, and retailers.

The objective is to significantly reduce costs, increase efficiency, and improve their supply chain
cycle times.

SCM software can also help to improve interenterprise coordination among supply chain process
players. The result is much more effective distribution and channel networks among business
partners.

Electronic Data Interchange (EDI):

One of the earliest uses of information technology for supply chain management

The electronic exchange of business transaction documents between supply chain trading
partners

The almost complete automation of an e-commerce supply chain process

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Many transactions occur over the Internet, using secure virtual private networks

EDI is an example of the almost complete automation of an e-commerce supply chain process.
EDI over the Internet, using secure virtual private networks , is a growing B2B e-commerce
application.

Roles and Activities of SCM in Business:


The top three levels of Figure 8.17 show the strategic, tactical, and operational objectives and
outcomes of SCM planning, which are then accomplished by the business partners in a supply
chain at the execution level of SCM. The role of information technology in SCM is to support these
objectives with interenterprise information systems that produce many of the outcomes a business
needs to manage its supply chain effectively.

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BENEFITS AND CHALLENGES OF SCM:


Key Benefits

Decide when and what to produce, store and move

Rapidly communicate orders

Track the status of the orders

Monitor the inventory levels

Track Shipments

Plan production based on actual customer demand

Rapidly communicate changes in product design

Lower transaction and materials costs

Strategic relationships with supplier

Key Challenges

Lack of demand planning knowledge, tools, and guidelines

Inaccurate data provided by other information systems

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Lack of collaboration among marketing, production, and inventory management

SCM tools are immature, incomplete, and hard to implement

Trends in SCM:

In the first stage, a company concentrates on making improvements to its internal


supply chain processes and its external processes and relationships with suppliers
and customers. Its e-commerce Web site and those of some of its trading partners provide
access to online catalogs and useful supply chain information as they support limited online
transactions.

In stage two, a company accomplishes substantial supply chain management


applications by using selected SCM software programs internally, as well as externally
via intranet and extranet links among suppliers, distributors, customers, and other
trading partners. Companies in this stage also concentrate on expanding the business
network of Web-enabled SCM-capable trading partners in their supply chain to increase its
operational efficiency and effectiveness in meeting their strategic business objectives.

In the third stage, a company begins to develop and implement cutting-edge


collaborative supply chain management applications using advanced SCM software.
Examples include collaborative supply chain planning and fulfillment applications like
collaborative product design and delivery, and collaborative planning, forecasting, and
replenishment (Renewal, Replacement) (CPFR).

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Example of SCM:

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