Presentation on theme: "Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications."— Presentation transcript:
1 Chapter 9 Achieving
Operational Excellence and Customer Intimacy: Enterprise Applications
2 Enterprise Systems Enterprise Systems
Also called “enterprise resource planning (ERP) systems” Suite of integrated software modules and a common central database Collects
data from many divisions of firm for use in nearly all of firm’s internal business activities Information entered in one process is immediately available for other processes This slide describes the main purpose of enterprise systems. Ask students for examples of why it might be valuable to have information from one process instantly available to another process.
3 Enterprise Systems Enterprise Software
Built around thousands of predefined business processes that reflect best practices Finance/accounting: General ledger, accounts payable, etc. Human resources: Personnel administration, payroll, etc.
Manufacturing/production: Purchasing, shipping, etc. Sales/marketing: Order processing, billing, sales planning, etc. To implement, firms: Select functions of system they wish to use Map business processes to software processes Use software’s configuration tables for customizing This slide describes the functions in an enterprise software package and how it would be implemented by a firm. Ask students why it is
typically best to perform only minimal changes to enterprise software, and instead, change the way the firm works in order to conform to the software’s business processes.
4 Enterprise Systems HOW ENTERPRISE SYSTEMS WORK
Enterprise systems feature a
set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise. This graphic illustrates the function of enterprise software to integrate and share data between the different business functions. One of the key ideas of enterprise solutions is that there’s “one company, one database” and not a collection of disconnected databases. FIGURE 9-1
5 Enterprise Systems Business value of enterprise systems
Increase operational efficiency Provide firm wide information to support decision making Enable rapid responses to customer requests for information or products
Include analytical tools to evaluate overall organizational performance This slide discusses the business values of enterprise systems. What does it mean for the firm that enterprise systems enforce the use of common standardized definitions and formats for data by the entire organization? The text discusses Coca Cola, which implemented an SAP enterprise system to standardize and coordinate important business processes in 200 countries. Lack of standardized business processes
prevented the company from leveraging its worldwide buying power to obtain lower prices for raw materials and from reacting rapidly to market changes.
6 Supply Chain Management Systems
Network of organizations and processes for: Procuring raw materials
Transforming them into products Distributing the products Upstream supply chain: Firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them Downstream supply chain: Organizations and processes responsible for delivering products to customers This slide introduces the concept of the supply chain. Supply chain management software is a type of enterprise software for managing complicated
supply chains that may include thousands of suppliers. The text gives the example of Nike’s sneakers’ supply chain. What types of firms are in the upstream supply chain? In the downstream supply chain?
7 Supply Chain Management Systems
NIKE’S SUPPLY CHAIN FIGURE
9-2 This graphic illustrates the major entities in Nike’s supply chain. Ask students what the difference is between tier 1, 2, and 3 suppliers. This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker
soles.
8 Supply Chain Management Systems
Information and supply chain management Inefficiencies cut into a company’s operating costs Can waste up to 25% of operating expenses Just-in-time strategy: Components arrive as they are
needed Finished goods shipped after leaving assembly line Safety stock Buffer for lack of flexibility in supply chain Bullwhip effect Information about product demand gets distorted as it passes from one entity to next across supply chain This slide discusses the effects of timely and untimely information on a supply chain. Ask students what causes inefficiencies in a supply chain (parts shortages, underutilized plant
capacity, excessive finished goods inventory, high transportation costs). These are caused by untimely information. Perfect information– or nearly perfect-- can result in a just-in-time strategy where inventories and buffers are reduced to nearly zero. But because of the lack of timely information, manufacturers keep safety stock of parts and inventory. Why is this an inefficient result? Another effect of uncertainties is the bullwhip effect. How can information slow or eliminate bullwhip
effects?
9 Supply Chain Management Systems
THE BULLWHIP EFFECT FIGURE 9-3 This graphic illustrates how a slight rise in demand by customers for an item will cause successive participants to slightly overstock related inventory “just in case”. These changes
are amplified as one moves back further in the system. Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.
10 Supply Chain Management Systems
Supply chain management software Supply chain planning systems Model existing supply chain Demand planning Optimize sourcing, manufacturing plans Establish inventory levels Identifying
transportation modes Supply chain execution systems Manage flow of products through distribution centers and warehouses This slide describes some of the activities involved in building a supply chain management system. Building one of these systems encourages managers to take a deep and detailed look at how their business operates.
11 Supply Chain Management Systems
Global supply chain issues Global supply chains typically span greater geographic distances and time differences More complex pricing issues (local taxes, transportation, etc.) Foreign government regulations Internet
helps companies manage many aspects of global supply chains Sourcing, transportation, communications, international finance This slide discusses the additional complexities experienced by global supply chains. The text cites the example of Koret of California, which uses e-SPS Web-based software to gain end-to-end visibility into its entire global supply chain. Today’s apparel industry relies heavily on outsourcing to contract manufacturers in China and other low-wage
countries. Apparel companies are starting to use the Web to manage their global supply chain and production issues.
12 Supply Chain Management Systems
Push-based model (build-to-stock) Schedules based on best guesses of demand Pull-based model
(demand-driven) Customer orders trigger events in supply chain Sequential supply chains Information and materials flow sequentially from company to company Concurrent supply chains Information flows in many directions simultaneously among members of a supply chain network This slide discusses the fact that SCM systems facilitate efficient customer response, allowing the workings of the business to be driven more by
customer demand, moving from push-based, sequential models to pull-based, concurrent models. Ask students for examples from the text of the pull-based model (Walmart, Dell.)
13 Supply Chain Management Systems
THE BULLWHIP EFFECT This graphic illustrates the difference
between the earlier, push-based model of supply chains to the pull-based model. Ask students if there are some industries uniquely suited to the pull-based model. How about automobiles, appliances and consumer durables? What are the draw backs of a pull-based model? The difference between push- and pull-based models is summarized by the slogan, “Make what we sell, not sell what we make.” FIGURE 9-4
14 Supply Chain Management Systems
Business value of SCM systems Match supply to demand Reduce inventory levels Improve delivery service Speed product time to market Use assets more effectively Reduced supply chain costs lead to
increased profitability Increased sales This slide examines the value of using SCM systems to businesses. Ask students how increases in sales can result from a more efficient supply chain.
15 Supply Chain Management Systems
THE FUTURE INTERNET-DRIVEN
SUPPLY CHAIN The future Internet- driven supply chain operates like a digital logistics nervous system. It provides multidirectional communication among firms, networks of firms, and e- marketplaces so that entire networks of supply chain partners can immediately adjust inventories, orders, and capacities. This graphic illustrates the multidirectional communications within a future supply chain driven by the Internet. Private industrial networks and net marketplaces are
discussed in Chapter 10 (E-commerce). Private industrial networks are typically a large firm using an extranet to link to its suppliers and other key business partners. Net marketplaces are digital marketplaces based on Internet technology for many different buyers and sellers. FIGURE 9-5
16 Customer Relationship Management Systems
Knowing the customer In large businesses, too many customers and too many ways customers interact with firm Customer relationship management (CRM) systems Capture and integrate customer data from all over
the organization Consolidate and analyze customer data Distribute customer information to various systems and customer touch points across enterprise Provide single enterprise view of customers This slide introduces the concept of customer relationship management as a key function of the business and the use of CRM systems to provide a single place to consolidate and analyze data about the customer. Ask students to provide examples of the
different types of customer data that would be captured by a firm. What is a touch point (ask students to give examples of touch points)? What types of valuable information does the firm need to know about its customers (most profitable, loyal customers)? Have students directly interacted with a CRM? They probably do not know it, but anytime they call into a call center for help they are dealing with some kind of CRM that tracks some or all of their interactions with a firm.
17 Customer Relationship Management Systems
CUSTOMER RELATIONSHIP MANAGEMENT (CRM) CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer
service, sales, and marketing. This graphic illustrates the functions found in the integrated applications of a typical CRM system. FIGURE 9-6
18 Customer Relationship Management Systems
CRM packages typically include tools for:
Sales force automation (SFA) E.g. sales prospect and contact information, and sales quote generation capabilities Customer service E.g. assigning and managing customer service requests; Web- based self-service capabilities Marketing E.g. capturing prospect and customer data, scheduling and tracking direct-marketing mailings or This slide continues the discussion of CRM software packages.
19 Customer Relationship Management Systems
Business value of CRM Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition/retention Increased sales
revenue Reduce churn rate Number of customers who stop using or purchasing products or services from a company. Indicator of growth or decline of firm’s customer base This slide discusses the value to businesses of implementing a CRM system. How would marketing be made more effective by using a CRM system?
20 Enterprise Applications: New Opportunities and Challenges
Next-generation enterprise applications Move is to make applications more flexible, Web-enabled, integrated with other systems Enterprise suites Software
to enable CRM, SCM, and enterprise systems work together and with suppliers and client systems Utilize Web services, SOA Open source & on-demand solutions Mobile compatible; Web 2.0 capabilities Complementary analytics products This slide looks at the trends in enterprise software. The text cites the example of enterprise solutions from SAP, which combines key applications in finance, logistics and procurement, and human
resources administration into a core ERP component. Businesses then extend these applications by linking to function-specific Web services such as employee recruiting or collections management provided by SAP and other vendors. SAP provides over 500 Web services through its Web site. Ask students to define open-source, and on-demand.