INFO 3130 Ch. 9

Operational Excellence New products, services, and business models Customer and supplier intimacy Improved decision making Competitive advantage Survival

Example: Wal-Mart's Retail Link system links suppliers to stores for superior replenishment system Suppliers have complete access to inventory information and in turn are held accountable for KPIs Vendor managed inventory system. Power of Buyer -->Mercy of Buyer Wal-Mart is the most efficient retailer in the industry and exemplifies operational excellence.

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 (application component) is immediately available for other processes Examples: Sage and Microsoft Dynamics

To implement, firms: Select functions of system they wish to use Map business processes to software processes Use software's configuration tables for customizing Process Mapping -> Microsoft Visio

Sales/Mktg, Finn & Acct, HR, and Mfg. & Production are all stored on a centralized database.

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

Network of organizations and processes for: Procuring raw materials Transforming them into products Distributing the products

company's suppliers, the suppliers' suppliers, and the processes for managing relationships with them. (Supplier-->Supplier-->Supplier) Tier 1, 2, and 3

Organizations and processes for distributing and delivering products to final customers. (Distributor --> Retailer --> Customer)

Recurring problem in supply chain mgmt is the BULLWHIP EFFECT. Information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain. A slight rise in demand for an item might cause different members in the supply chain- distributors, mfgs., suppliers, etc to stockpile inventory so each has enough "just in case." It can create excess inventory, production, warehousing, and shipping costs. It is tamed by reducing uncertainties about demand and supply when all members of the supply chain have accurate and up-to-date information.

Manage flow of products through distribution centers and warehouses. Track physical status of goods, the mgmt of materials, warehouse and transportation operations, and financial information involving all parties.

-Model existing supply chain -Demand planning (forecasting, sales planning) -Optimize sourcing, manufacturing plans (MRP) -Establish inventory levels (inventory control) -Identifying transportation modes

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

Production master schedules are based on forecasts or best guesses of demand for products, and products are "pushed" to customer. Many earlier models followed this.

Because of the new flows of information made possible for the internet, this model is also known as a demand-driven or build-to-order model. Actual customer orders or purchases trigger events in the supply chain. Walmart's continuous replenishment system is an example of pull-based model.

Information and materials flow sequentially from company to company Information flows in many directions simultaneously among members of a supply chain network

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

Emerging 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 the entire networks of supply chain partners can immediately adjust inventories, orders, and capacities.

-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 -Touch point (Contact Point): a method of interaction with the customer, such as telephone, email, customer service, etc. -Provide single enterprise view of customers

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.

PRM: Integrating lead generation, pricing, promotions, order configurations, and availability Tools to assess partners' performances ERM: E.g. Setting objectives, employee performance management, performance-based compensation, employee training

-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 e-mail

CRM software provides a single point for users to manage and evaluate marketing campaigns across multiple channels, including email, direct mail, telephone, the Web, and wireless messages.

Customer-facing applications, such as tools for sales force automation, call center and customer service support, and marketing automation.

Includes applications that analyze customer data generated by operational CRM applications to provide information for improving business performance. Uses a customer data warehouse or analytic platform and tools to analyze customer data collected from the firm's customer touch points and from other sources.

Based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and company.

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

Highly expensive to purchase and implement Averages $3.5 million to over $12 million Technological changes Business process changes Organizational changes Switching costs, dependence on software vendors Data standardization, management, cleansing

-Move is to make applications more flexible, Web-enabled, integrated with other systems -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

Order-to-cash is a composite process that integrates data from individual ERP's and legacy financial applications. The process must be modeled and translated into a software system using application integration tools.