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Principles of Supply Chain Management:

A Balanced Approach

Prepared by Daniel A. Glaser-Segura, PhD

 

 ! "#"$
± Discuss the strategic importance of Customer Relationship
Management (CRM).
± Describe the components of a CRM initiative.
± Discuss the implementation procedures used for CRM
programs.
± Describe how information is used to create customer
satisfaction and greater profits for the firm.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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Defining Customer Relationship Management (CRM)
CRM¶s Role in Supply Chain Mgmt
Key Tools & Components of CRM
‡ Segmenting Customers
‡ Predicting Customer Behaviors
‡ Customer Profitability Determination
‡ Personalizing Customer Communications
‡ Automated Sales Force Tools
‡ Customer Service Capabilities
Designing and Implementing a Successful CRM Program
Some CRM Application Providers
Future Trends in CRM

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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± Customer relationship
management (CRM) is
associated with automated
transaction and communication
applications.
± Increased automated
interactions will lead more
organizations to find they must
continue to identify and develop
new value for customer
relationships

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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Customer Relationship Management (CRM) is defined as:.
‡ Building and maintaining profitable long-term customer
relationships.
‡ Successful CRM programs require cultural change in
many organizations, leading to strategies that are
focused on cultivating long-term relationships with
customers, aided by the software capabilities.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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The firm seeks position as a value-enhancing supplier to its

customers.
± Firms must create methods for finding and developing good
suppliers
± Firms must create methods for becoming and staying good
suppliers themselves.
± It may be necessary for a firm to certify its intermediate
customers as to their ability to adequately represent their firm¶s
products.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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'| ' rouping customers in a variety of ways to

create more specialized communications about their products.
± '+&& e-mail or direct mail saves labor and
postage, reduces chances of being a nuisance.

"!%'+ or %''+ customers select

the type and time of communication. Requires software and customer
participation

| "" Additional products are sold as the result of an initial

purchase (e.g., e-mails from Amazon.com describing other books
bought by people).

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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#| '-! Behaviors can be predicted

and firms forecast likelihood of customers¶ purchases.
| '4&
") methods to retain customers.
|
 #  reducing customer defections.
".| '|''  understanding
customers, their behaviors, and their preferences allows firms to
customize communications aimed at specific groups of customers.
|
 how a customer navigates a Web site can help tailor
a Web site¶s images, ads, or discounts.
 -# + Offering individual promotions tied to
specific events to offer the right products & services to customers at
the right time.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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'#"/" Used for documenting

field activities, communications with the home office, &
retrieving sales history.
± "
) ' ool offering sales reps a guided
sequence of sales activities
± ") ' Sales managers obtain
information of each sales rep¶s activities (e.g., total sales per
sales rep.)
± # ' Sales reps can follow prescribed tactics
when dealing with prospects to aid closing the deal.
± :0"# ' Enables quick decision making,
better customer service, and a better-equipped and happy sales
staff.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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| '|%"
± What does customer service actually mean?
± Seven Rs Rule´ having the 
 product, in the 
 quantity, in
the 
condition, at the 
place, at the 
 time, for the

 customer, at the 
 costs.
± Performance measures are often designed around satisfying the
seven Rs. These kinds of services can come at a cost.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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| '"'can be classified as:

± Pre-transaction elements- Precede the sale (e.g., customer
service policies, the mission statement, organizational structure,
& system flexibility).
± Transaction elements- Occur during the sale & include the order
lead time, the order processing capabilities & the distribution
system accuracy.
± Posttransaction elements- Occur after the sale & include
warranty repair capabilities, complaint resolution, product
returns, and operating information.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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|""|
Call center systems can now categorize all calls, determine average
resolution time, and forecast future and improve the overall productivity
of the staff, increasing customer satisfaction levels.
&'"%
Scripts to successfully guide service representatives through many
types of customer problems. They do not allow for much ³out-of-the-
box´ thinking.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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1"&  Web sites act as support mechanisms for call
centers. Customers can access their account information and operating hours,
contact information, etc.
/"# ' Customers can communicate directly with
product specialists using wireless devices and the right diagnosis can be made
quickly.
 | '& Customers are frequently given
opportunities to provide feedback about a product, service, or organization.
| ')|%" Two important issues are ability to assure
privacy and ability to minimize customer harassment.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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This question must involve employees from all functions.
%,|!| " should include:
± Objectives of the CRM program
± CRM¶s fit with corporate strategy
± New applications to be purchased or developed
± Integration or replacement of existing methods or legacy systems
± Personnel Requirements- personnel, training, policies, Upgrades, and
maintenance and
± the costs and time frame for implementation.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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%3 "|  &'!  To get acceptance of
the CRM initiative, employees should understand how it affects their
jobs.
± Create a project team with members from all affected organizational
areas.
± Test with a pilot application
%4 "!!
%%"## Find an
appropriate application and determine the extent of customization
(adaptation).

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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%5 6| 
%%" CRM is a collection of
various applications implemented over time.
± Customer contact mechanisms need to be coordinated so that every
CRM application user in the firm knows about all of the activity
associated with each customer.
± Centralized database or #0! containing all customer
information.
%7 "!&'   Measuring performance
allows the firm to:
± Determine if objectives have been met
± Compare actual to planned = variance

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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%8 Providing CRM Training for All
Users-
± Provide and require training for
all of the initial users and then
provide training on an ongoing
basis as applications are added.
± Training can also help convince
key users like sales, call center,
and marketing personnel of the
benefits and uses of CRM
applications.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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%%"#
"
‡ | integrates with service, sales, contracts, and marketing
applications.
‡ "" processes across all sales and customer interaction
channels.
‡ " + -provides automation and tools for the entire marketing
process.
")'
‡ |""| improve agent productivity by providing critical customer
information.
‡ "" the means to focus on the right deals at the right time.
‡ " + optimizes targeting and improves response rates with
robust segmentation capabilities.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
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0) " Rules and
laws regarding invasion of privacy are
springing up. Solution: develop a
privacy policy and post it on their Web
site.

%%"#9
:
Fifty 50 percent of all CRM programs
are now designed and maintained for
clients by ASPs.

#%| &"" 
increasing-New Markets out side of
traditional industrialized countries
require adaptation to local needs,
language, and culture

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing