Information Systems

Lecture 8: CRM, SCM, and SRM

Dr. Sobhan Sarkar

PDF(University of Edinburgh), Ph.D.(IIT Kharagpur)
Assistant Professor
IIM Ranchi
Email: sobhan.sarkar@iimranchi.ac.in

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 Contents
1. CRM
2. SCM
3. SRM
4. References

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Customer Relationship Management (CRM)

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 Benefits of CRM

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 Application areas of CRM

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Sales Force Automation

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Field Service Applications

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E Commerce Applications

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Call Centre Applications

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Partner Relationship Management

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 Marketing Management

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Product Configuration Applications

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 CRM Analytics

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 Leading CRM Products

• SAP CRM (SAP CRM is a part of SAP ERP (Enterprise Resource Planning) business suite and is used to implement
customize business processes related to Customer Relationship management CRM and to integrate with SAP and
non–SAP systems)
• Oracle Siebel (Oracle Siebel CRM is the world's most complete customer relationship management solution. Siebel
CRM is available in many different modifications tailored to the specific needs of specified industries and covering
completely the management of the following processes: sales, service, contact center, marketing, etc.)
• Salesforce.com (Salesforce, Inc. is an American cloud-based software company headquartered in San Francisco,
California. It provides customer relationship management software and applications focused on sales, customer
service, marketing automation, analytics, and application development.)
• Microsoft (Microsoft Dynamics 365 CRM is available as a cloud offering or an on-premises installation. As with CRM
4, this version can be highly customized using advanced extensions.)
• Amdocs (Amdocs is a multinational corporation that was founded in Israel and currently headquartered in
Chesterfield, Missouri, with support and development centers located worldwide. The company specializes in
software and services for communications, media and financial services providers and digital enterprises. Amdocs
CRM consists of a suite of applications designed to support a range of different business functions related to
customer support.)

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 Supply Chain Management (SCM)

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What is SCM?

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SCM Process

Objective of SCM

 Reduce time of delivery

 Reduce cost of delivery
 Increase collaboration among partners

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SCM- Features

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Supply network dynamics

The bullwhip effect

• The ‘bullwhip effect’ is used to describe how a small disturbance at the downstream end of a supply network causes
increasingly large disturbances, errors, inaccuracies and volatility as it works its way upstream.
• Its main cause is an understandable desire by the different links in the supply network to manage their production
rates and inventory levels sensibly.

Causes of the bullwhip effect

• Demand forecast updating is done individually by all members of a supply chain. Each member updates its own demand
forecast based on orders received from its “downstream” customer.
• Order batching occurs when each member receives order quantities and rounds up or down to suit production
constraints such as equipment setup times or truckload quantities. The more members who conduct such rounding of
order quantities, the more distortion occurs of the original quantities that were demanded.
• Price fluctuations due to inflationary factors, quantity discounts, or sales tend to encourage customers to buy larger
quantities than they require. This behavior tends to add variability to quantities ordered and uncertainty to forecasts.
• Rationing and gaming is when a seller attempts to limit order quantities by delivering only a percentage of the order
placed by the buyer. The buyer, knowing that the seller is delivering only a fraction of the order placed, attempts to
“game” the system by making an upward adjustment to the order quantity. Rationing and gaming create distortions in
the ordering information that is being received by the supply chain.

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Methods to control Bull-whip effect

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SCM Systems

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Global SC and the Internet

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Demand-driven SC: From Push to Pull Manufacturing

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 Push Vs Pull SC

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Just in Time (JIT)

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 Lean system:
A philosophy to shorten the time between the customer order and the shipment to customer by
eliminating waste.

1. Define Value - It is important to understand what the customers value

in terms of their needs, what they really want, and what they are willing
to pay for. Interviews, surveys, and demographic information that can
help you discover what exactly customers find valuable in case of
confusion or new products/technology

2. Mapping the Value Stream - The overall goal is to utilize the

customer’s value as a reference point and locate areas that correlate with
their values.
Any activities and processes that do not add value to the end customer
are considered wasteful.
The waste can be broken into two categories: non-value added but
necessary and non-value & unnecessary.
The latter is pure waste and should be eliminated while the former
should be reduced as much as possible.

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 3. Creating Flow - After removing the waste from the value stream, the
following action is to ensure that the flow of the remaining steps will run
smoothly without interruption or delays. Some strategies, such as re-
configuring production steps, leveling out the workload, or creating cross-
functional departments can be adopted
4. Establish Pull - A pull-based system allows for Just-In-Time delivery and
manufacturing where products are created at a time they are needed and in
the quantities needed.
5. Pursue Perfection - All employees should attempt to strive toward
perfection while delivering products based on the customer’s needs.

APS software: Advanced Planning and Scheduling (APS) software can be

used as a standalone system to manage planning and scheduling and helps
in lean system, and can also be integrated with Enterprise Resource
Planning (ERP), Manufacturing Execution System (MES), and other software
solutions.

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 The Toyota Production System

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 TPS- Basic concept

Jidoka

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Just-in-time (JIT)

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 Establishing JIT

continuous flow

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 Andon: It is a system developed to alert operators about an issue
on the production line in Lean manufacturing [2].
Heijunka: It is a Lean method for reducing the
unevenness in a production process and
minimizing the chance of overburden. The term
Heijunka comes from Japanese and literally
means leveling. It can help you react to demand
changes and utilize your capacity in the best
possible way [2].
Jidoka: It is a Lean method that is widely adopted
in manufacturing and product development. Also
known as autonomation, it is a simple way of
protecting your company from delivering
products of low quality or defects to your
customers while trying to keep up your takt time
[2].
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• Originating from the Toyota Production System (TPS), it is
used as a tool to “stop the line” once a product defect is
detected.
• The idea of Andon evolved as a result of the Jidoka
concept in Lean, which empowers people to stop the
production process themselves once a product issue
occurs.
• Translated from Japanese, the word “Andon” means a
“lantern” or “light”. In a manufacturing setup, this refers to
an alert system that notifies operators that a product issue
has been detected.
• The main feature of Andon is a cord positioned above the
production line (it can also be a button). Two types of
Andon: (i) Manual and (ii) Automatic.
 It may be described as "intelligent automation" or
"automation with a human touch". This type of
automation implements some supervisory functions
rather than production functions. At Toyota, this
usually means that if an abnormal situation arises, the
machine stops and the worker will stop the
production line.
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 Waste in operations

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Kanban
• Developed by Taiichi Ohno
• The Japanese word “kanban”, meaning “visual board” or a “sign”, has been used in the sense of a process definition
since the 1950s.
• It was first developed and applied by Toyota as a scheduling system for just-in-time manufacturing.
• On the other hand, the capitalized term “Kanban” is known and associated with the emergence of the “Kanban
Method,” which was first defined in 2007.

Production Kanban System

• Within plant for material
identification and tracking

Transportation Kanban System

• Tracking the material movement out
of the plant

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Minimizing waste: Kanban Production Control System

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The emerging internet-driven SC

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Challenges in SC

Quality Customer Service

The supply chain management is centralized on the needs of the customers. It is about giving the right quantity
and the right quality of the product for the right amount of money. All this, in perfect timing and setting.

Costing
Globally, the costs of raw materials, energy and labor have increased due to economical constraints. In order
for operations to continue production and provide customers with good quality items at affordable rates,
adjustments have to be made to keep operations running.

Risk Management
Due to the constant change in the market, coming from a variety of sources such as consumer demands,
political agendas and global sourcing, would cause major issues to the operations.

Supplier Relationship
By creating a mutually sound and harmonious relationship with your partners or suppliers, you will be able to
provide your customers with products of high standards in a timely manner. This also allows you to create
opportunities for improvement in terms of performance.

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 Qualified Personnel
Over the years, it has become a challenge to find talent interested and passionate about this line of work.
Personnel hired in this field must have an understanding about the duties and responsibilities needed.

Unforeseen Delays
Procurement of materials and products may be easy, but the delivery may not always be 100% on time,
especially with time differences and a variety of shipping time frames. When items are sourced from different
countries, delays like this are very common.

Fast-Changing Markets
With technological advancements changing our markets everyday, it is quite difficult to stay in pace and adapt to
the variety of innovations in the market. But because the goal is to stay efficient in these changing times,
companies would have to be more flexible.

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 Supplier Relationship Management (SRM)

• Supplier relationship management (SRM) is a coordinated effort to identify and develop the best suppliers able to
support the overall business strategy.
• It is a comprehensive approach to managing an organization’s interactions with the firms that supply the products
and services it uses.
• It has its origins in the late 80’s basing on the seminal work of Dwyer et al. [1] about relationship theory and of
Davenport and Short [2] about process re-design.
• The immediate objective of SRM is to streamline and make more effective the sourcing processes between an
enterprise and its suppliers. Indirectly, SRM is also aiming at quality-related improvements of information, products,
services, and work force capabilities.

[1] F. R. Dwyer, P. H. Schurr, and S. Oh, Developing Buyer-Seller Relationships, Journal of Marketing, vol. 51, no. 2, pp. 11-27,
1987
[2] T. H. Davenport, and J. E. Short, The New Industrial Engineering - Information Technology and Business Process Redesign, Sloan
Management Review, vol. 31, no. 4, pp. 11-27, 1990.

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 Relationships

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  TRUST

 COOPERATION

 SHARED RISK &

INVESTMENT

 MUTUALLY AGGREABLE
GOALS

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Intensity of Involvement
Relationship

Reducing uncertainty

Improving communication

Increasing loyalty

Establishing vision

No collaboration with buyer

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 Forming a Supply Chain Relationships

Relationship

Manufacturing firm Supplier of logistic services

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Successful SRM Model

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 Logistic services
Trucking
firm

Core competency
of the company

Express
Manufacturing firm logistic
provider

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 Very close consideration
of the credentials of the
candidates

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 Future success Ability of organization
Achieve continuous
and breakthrough
improvement

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 SRM software offers: SRM software vendors

•contact and communication management;

•invoices and requisitions;
•order histories;
•scheduling;
•performance analytics;
•procurement intelligence, including supplier risk
management;
•product lifecycle management such as portfolio strategy
management;
•sourcing;
•supplier data management, including validating supplier
requests;
•supplier performance management;
•contract management;
•catalog management;
•operational procurement, such as processing purchase
orders;
•external resources, such as product specifications.

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Issues in SRM

 Overemphasis on using it to reduce cost rather than cultivate value and strategic ties;

 Lack of visibility into suppliers, their importance to the organization and the value they can

deliver;

 Insufficient commitment to developing clear objectives for the program, assigning and training staff

to run it, and aligning business units to the objectives.

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References
[1] Laudon, K. C., & Laudon, J. P. (2004). Management information systems: Managing the digital firm. Pearson Educación.
[2] https://kanbanize.com/continuous-flow/andon

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