Enterprise Applications
Achieving
Operational Excellence &
Customer Intimacy
Tasty Baking
Pre-wrapped single-portion treats
Cupcakes
Snack pies
Cookies
donuts
$170 million in sales in 2007
Through 15,500 convenience stores & supermarkets
Market share & sales dropping
Profitability at all-time low
Technically challenged, inflexible manufacturing
No timely info for
Tracking manufacturing outputs
Warehouse shipments
Challenges
Shipments were missed
Excess inventory had to be sold at a discount
Operating costs rose
Sales info come from its network of sales distribution
Solution
Install enterprise system using SAP
Consultants from SAP & Deloitte
Microsoft SQL server database
Changes in its business processes to take maximum advantages of SAP capabilities
Benefits
Reduced
Inventory write-downs by 60%
Price markdown by 40%
Customer satisfaction has increased
Lower return rates
Higher order fill rates
Enterprise systems
Supply chain management systems
Customer relationship management systems
Enterprise applications
New opportunities & challenges
Enterprise systems
Enterprise resources planning, ERP
Chapter 2
A suite of integrated software modules
A common central database
Data are collected from all
Divisions and departments in a firm
Key business process
Made data immediately available to all
Divisions and departments in a firm
Key business process
鼎新 Workflow ERP
Sales rep
Place an order for tire rims
The system verify
Customer’s credit limit
Schedule the shipment
Identify the best shipping route
If inventory is insufficient
The system schedules the manufacturing
Enterprise software
Built around thousands of predefined business processes
Best practice 典範作業
Most successful solutions or problem solving method
Sources of best practices
Consulting firms
Enterprise software firms
Hire a consulting firm or enterprise software firm
Obtain the knowledge base of best practice
=
Implementation
Select the functions
Finance & account, …
Map
Their business processes
Predefined business processes of software supported
Configuration tables
Tailor software to business processes
ABC accounting, standard cost accounting
If software does not support the way the organization does business
Rewrite software
Software is complex
Expensive customization
Degrade system performance
Company changes the way they work
Major ERP vendors
SAP
Oracle
鼎新電腦
Business value of enterprise systems
Increase operation efficiency
Provide firm-wide information
Make better decision
Enforce standard practices and data
Everyone does business the same way
Ex: Coca-cola (SAP)
Standardize business process in 200 countries
Leverage its world-wide buying power
Respond rapidly to customer requests
Integrate data
orders, manufacturing, …
Evaluate overall organizational performance
Analytical tools
Enterprise systems
Supply chain management systems
Customer relationship management systems
Enterprise applications
New opportunities & challenges
Supply chain
Network of organizations and business processes
Procuring raw materials
Transforming materials into
Components
Finish products
Distribute to customers
Design, market,
& sell
Shanks
Heels
Information & supply chain management
Inefficiencies in the supply chain
Part shortage
Underutilized plant capacity
Excessive finished goods inventory
High transportation cost
Caused by inaccurate or untimely information
Manufacturer has perfect information
Exactly how many units
When
customers wanted
Make Just-in-time strategy possible
Uncertainty arise in supply chains
Uncertain product demand
Late shipments from suppliers
Defective parts or raw materials
Production process breakdown
Solutions
Build more inventory
On product that manufacturer thinks customer need
Safety stock
Inventory cost vs. low fill rate cost
Bullwhip effect
長鞭效應、啤酒遊戲 (beer game)
Information about the demand for a product
Get distorted
As it pass from one entity to the next
Across the supply chain
These changes ripple throughout the supply chain
Magnifying
Creating excess inventory
P&G
Pampers disposal diapers
Offer aggressive price promotion
Customer purchases are fairly stable
Order from distributors will spike
The bullwhip is tamed
By reduce uncertainty
Accurate & up-to-date info
Supply chain management applications
Supply chain planning
Generate demand forecasts
Demand planning
How much product a business needs to make
to satisfy all its customers’ demand
Develop sourcing and manufacturing plans
How much to manufacture in a given period
Establish inventory level
Determine where to store finished goods
Example
A large customer
place a large order than usual or
change the order on short notice
Create a widespread impact
additional material
different mix of raw materials
Supply chain planning software
makes the necessary adjustments
shares the info about all changes
Supply chain execution
Manage the flow of products
Thru distribution centers and warehouse
Ensure that products are delivered
to the right locations
In the most efficient manner
Functions
Track goods
Manage material, warehouse, transportation
Financial information
Major vendors
i2
Manugistics
SAP
Oracle
Global SCM & the Internet
Before Internet
Difficulties to make info flow
Internal supply chain
ERP
External supply chain
Incompatible technology platform
Internet Technology
Intranet
Extranet
Improve coordination among supply chain
Benefits
Instantly communication
Up-to-date info
Example
Customer can tap into supplier’s system
台積電 虛擬工廠 TSMC/Virtue company
Global supply chain issues
Additional costs of offshore manufacturing
Transportation
Inventory
The need for a larger buffer of safety stock
Local taxes
Fees
Foreign government regulation
Cultural difference
Demand-driven supply chains
From push to pull manufacturing
Efficient customer response (ECR)
Push-based model
Build-to-stock
Based on forecast
Products are pushed to customers
Pull-based model
Demand-driven model
Build-to-order
Orders or purchases trigger events
Transactions to produce and deliver only what customers have ordered
Walmart
Continuous replenishment system
Dell computer
Build-to-order
Internet technology
Change supply chain information movement
From sequential
To concurrent
Information flow in many directions simultaneously
Members of supply chain can adjust to changes immediately
Business value of SCM systems
Streamline processes
More accurate information
Match supply to demand
Reduce inventory levels
Improve delivery service
Reduce cost
優化、暢流
Enterprise systems
Supply chain management systems
Customer relationship management systems
Enterprise applications
New opportunities & challenges
Innovation-based competitiveness is short-lived
Enduring competitive strength may be their relationship with customers
Info nurture strong, long-lasting relationship
Exactly who your customers are
How to contact them
Whether they are costly to service and sell to
What kind of products or services they are interested in
How much they spend on your products
Small-town store
Small business owners
Know their customers
Personal
Face-to-face
Large business
Impossible to “know your customers”
Too many customers
Too many ways to interact with customers
over the web, phone, fax, face-to-face
difficult to integrate info from all sources
Customer relationship management
Capture and integrate customer data
from all over the organization
Consolidate data
Analyze the data
Distribute the results
to various systems and customer touch points
Touch points
Contact points
Methods of interaction with the customer
Phone
Email
Customer service desk
Conventional mail
Web site
Wireless device
Retail store
CRM software
A single enterprise view of customers
Regardless of touch point
Analytical tools
Customers’ lifetime value
Loyal customers
Most profitable customers
Most frequently asked questions
Customer’s preferences
CRM software
Niche tools
Personalizing web sites for specific customers
Large-scale enterprise applications
Capture many interactions with customers
Link to other enterprise systems
SCM
CRM software
Partner relationship management
Enhance collaboration between a company and its selling partners
Company does not sell directly to customers
Via distributors and retailers
Distribute
Leads
Data about customers
Integrate
Lead generation, pricing, promotions, availability
CRM software
Employee relationship management
Setting objectives
Employee performance management
Performance-based compensation
Employee training
Major CRM vendors
Siebel systems
Clarify
Sales force automation
Focus sales efforts on the most profitable customers
Sales prospect
Product info
Product configuration
Quote generation
Forecast
Territory management
Customer Service
Increase efficiency
Call centers
Help desks
Customer support staff
Capabilities
Assign & manage customer service requests
Route calls to the correct service person
Consistent and accurate info
Handle more calls
Shorten the duration of calls
Web-based self service
Marketing
Direct-marketing campaigns
Capture prospect
Provide product & service info
Qualify leads
Scheduling & tracking mails & emails
Cross selling
Marketing of complementary products
Customer loyalty management process map
Operational & Analytical CRM
Operational CRM
Customer-facing application
Sales force automation
Call center
Customer service support
Marketing automation
Analytical CRM
Analyze customer data
Data warehousing
Consolidate data from
operational CRM
customer touch points
OLAP, online analytical processing
Data mining
Outputs
Identify buying pattern
Create segments
Pinpoint profitable and unprofitable customers
Outputs
Customer lifetime value
Revenue produced by a specific customer
The expense incurred in acquiring and servicing that customer
Expect life of the relationship between the company and the customer.
Business values of CRM
Increase customer satisfaction
Reduced direct marketing costs
Lower cost for customer acquisition and retention
Increase sale revenue
More effective marketing
Enterprise systems
Supply chain management systems
Customer relationship management systems
Enterprise applications
New opportunities & challenges
Enterprise systems
Powerful instruments for
Achieving operational excellence
Enhancing decision making
Powerful in
Changing the way the organization works
Challenging to implement
Challenges of enterprise applications
Complex software
Expensive to purchase and implement
Software
Database tools
Consulting fee
Personnel cost, training
hardware
Fundamental changes in the way the business operates
Best practices
Employee must accept
new job function & responsibility
New set of work activities
Implementation create enormous operation problems
K-Mart, i2,
did not work with promotion-driven business model
Hersey, SAP
Shipment ran 2 weeks late
Best practice is not compatible with unique business process
Switching cost
Organization-wide definition of data
就源輸入
Next generation enterprise software
More flexible, web-enabled, and capable of integration with other systems
Integrated platform
Integrate multiple application
From multiple business
Deliver seamless experience
Customer
Employee
Business partner
Order-to-cash service
Interactive session
(Minicase)
Technology
Procter & Gamble tries to optimize inventory
Organization
Chase card service
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