9. IMPLEMENTING AN ERP SYSTEM
Project Purpose: To understand ERP benets and risks and apply industry
success factors.
Potential Solution: The biggest benet of an ERP system is its ability to
provide an enterprisewide view of organizational information. The biggest risk
is cost and implementation time. Students should use a combination of SCM
and CRM industry success factors for ERP industry success factors. These
APPLY YOUR KNOWLEDGE BUSINESS PROJECTS
Instructor Note: There are few right or wrong answers in the business world.
There are really only e%cient and ine%cient, and e&ective and ine&ective
business decisions. If there were always right answers businesses would never
fail. These questions were created to challenge your students to apply the
materials they have learned to real business situations. For this reason, the
authors cannot provide you with one version of a correct answer. When grading
your students’ answers, be sure to focus on their justication or support for their
specic answers. A good way to grade these questions is to compare your
student’s answers against each other.
AYK I: SHIPPING PROBLEMS
Companies that excel in supply chain operations perform better in almost every
nancial measure of success, according to a report from Boston-based AMR
Research Inc. When supply chain excellence improves operations, companies
experience a 5 percent higher prot margin, 15 percent less inventory, 17 percent
stronger “perfect order” ratings, and 35 percent shorter cycle times than their
competitors. “The basis of competition for winning companies in today’s economy
is supply chain superiority,” says Kevin O’Marah, vice president of research at
AMR Research. “These companies understand that value chain performance
translates to productivity and market-share leadership. They also understand that
supply chain leadership means more than just low costs and e%ciency; it requires
a superior ability to shape and respond to shifts in demand with innovative
products and services.”
PROJECT ANALYSIS AND SOLUTION
This is an excellent project to get your students thinking about the supply chain
and the drastic impact disasters or other uncontrollable factors, such as a strike,
The Los Angeles dock workers’ strike in 2002 provides a lesson in the importance
of agility and “nonroutine activities.” The story, the subject of numerous business
case studies, has taken on an air of urban myth, except that it happens to be true.
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Fortunately, the company had a sophisticated IT infrastructure that broke down
silos of information and let Dell make decisions as an integrated enterprise.
After using forecasting tools to analyze the potential damage of a protracted
strike, the company quickly began contracting for rental air freight carriers to #y
Now that it had the planes, what would it pack them with? In 2002, #at screen PC
displays hadn’t yet saturated the market, and traditional “tube” monitors still
outsold their thin cousins. However, since Asian suppliers could pack more #at
back orders before the strike ended. All of this happened during the crucial
Christmas buying season, and despite the strike, Dell succeeded in boosting its
market share throughout the period.
companies that are able to act quickly.
There’s no such thing as “out-of-the-box agility.” But thanks to its ability to
dynamically reallocate resources and break down stovepipes of processing power,
data and applications, grid computing ts easily into a world of nonroutine
AYK 2: Great Stories
CRM is a business philosophy based on the premise that those organizations that
understand the needs of individual customers are best positioned to achieve
sustainable competitive advantage in the future. Many aspects of CRM are not
new to organizations; CRM is simply performing current business better. Placing
customers at the forefront of all thinking and decision making requires signicant
operational and technology changes, however.
These Web sites show the power people have in the consumer market today
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AYK III: JetBlue on YouTube
CRM solutions make organizational business processes more intelligent. This is
achieved by understanding customer behavior and preferences, then realigning
http://www.youtube.com/watch?v=-r_PIg7EAUw
There are many pros and cons to using YouTube as a communication vehicle for an
An interesting CRM approach – using YouTube to apologize. Take a look. That’s
JetBlue founder and CEO David Neeleman apologizing to customers via YouTube
after a very, very bad week for the airline: 1,100 #ights canceled due to snow
storms and thousands more irate passengers. Neeleman’s unpolished, earnest
http://www.youtube.com/watch?v=-r_PIg7EAUw
Do you think this is a good way to reach customers? What else could JetBlue do to
help gain back the trust of its customers?
savvy will not see the video and customers who are need to be informed that the
video exists. YouTube has market reach issues in a small community with older
customers.
Students can use numerous tools to communicate including:
Blogs
Wikis
AYK IV: GAINING BUSINESS INTELLIGENCE FROM
STRATEGIC INITIATIVES
SCM enhances decision making. Collecting, analyzing, and distributing
transactional information to all relevant parties, SCM systems help all the di&erent
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entities in the supply chain work together more e&ectively. SCM systems provide
dynamic holistic views of organizations. Users can “drill down” into detailed
Operational CRM supports traditional transactional processing for day-to-day
front-o%ce operations or systems that deal directly with the customers. Analytical
CRM supports back-o%ce operations and strategic analysis and includes all
The primary purpose of an ERP is to collect, update, and maintain enterprisewide
information. All of the functional departments access the same information when
ERP is a logical solution to the mess of incompatible applications that had
sprung up in most businesses.
AYK V: Second Life CRM
Operating in a virtual world has many similarities and di&erences from operating
in the real world. In a virtual world you will be operating with many di&erent types
of customers who look di&erent from real customers.
1.1 The virtual world could become the 2rst point of contact between
companies and customers and could transform the whole experience
Web 2.0 is still the hottest buzzword in tech circles, with every big brand worth its
salt rushing to open a headquarters in Second Life or build its own MySpace page.
user-generated content could be the next frontier in customer service.
Since it began hosting the likes of Adidas, Dell, Reuters and Toyota, Second Life
has become technology’s equivalent of India or China – everyone needs an o%ce
Rather than a simple showcase, some believe Second Life could one day become
a rst point of contact for customers.
having a website is not enough if there isn’t a call centre to back it up when a
would-be customer wants to speak to a human being. In future, the consultants
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believe call centers could one day ask customers to follow up a phone call with
them by moving the query into a virtual world.
Instead of being placed in a queue to enjoy hold ‘muzak’ when contacting a call
centre, virtual world visitors could make more protable use of their time – talking
to other inhabitants, viewing videos, reading information in the environment for
example.
opened up – those who need to work from home or mothers with young children
for example, can be brought back into the virtual workforce. It can also remove
some of the issues with customers being prejudiced against call centre workers
who have certain accents.
make use of virtual worlds.
It may yet be some time before these cyber worlds come into their own – yet other
web 2.0 technologies may o&er another route for companies to make
relatively niche customer service tool: “It’s a new environment, there’s a lot of
interest… but it’s not growing rapidly, it’s not a major area.”
He added that more established web 2.0 favorites such as YouTube might be able
Some companies have already cottoned on to the potential of user-generated
content and have begun milking users for their expertise in problem solving – Sony
Andy Barker, director of customer services for Sony UK, told silicon.com the
hardware maker will be relying on PS3 fans to help each other out, although the
we’d step in and moderate that. There will also be classic moderating if someone
posts an o&ensive comment or a dodgy link.”
Sony recently opened its own virtual world, Sony@home, and is looking into the
looking a bit further in the future.”
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Meanwhile, others are exploring how user–generated content from mobile phones
can be used for customer service purposes.
In Accenture’s US labs, some researchers are already working on how customers
and MMS them to the police.
Andy Fano, global director of research, Accenture Technology Labs, told
silicon.com the system has to-date just been piloted in the US. He added: “We
With the addition of image recognition tech, the capacities of mobiles could be
extended. Consumers could take pictures of a broken car part, for instance, and
text it to the manufacturer to request a replacement.
However, with a brave new world of new media customer services, call centers
AYK VI: SEARCHING TELEPHONE CALLS
Student answers will vary. Encourage your students to use tools to create their
AYK VII: SHARPTOOTH INCORPORATED
Stephen Kern is the founder and CEO of Sharptooth, a small business that buys
and sells comic strips to magazines and newspapers around the country. Some of
Sharptooth’s artists have made it big and are syndicated in hundreds of
background is great for spotting talented young artists, but not so great for
running the business.
Stephen recently began selling comics to new forms of media such as blog sites,
Web sites, and other online tools. Stephen has hired you to build him a new
system to track all online comic sales. You quickly notice that Stephen has a
separate system for each of his di&erent lines of business including newspaper
his business as a whole. Create a list of issues Stephen will encounter if he
continues to run his business with four separate systems performing the same
operations. What could happen to Stephen’s business if he cannot correlate the
details of each? Be sure to highlight at least 10 issues where separate systems
could cause Stephen problems.
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di&erent media forms
Costly to maintain redundant information
Updates need to be made multiple times which costs money and can lead to
inconsistencies in data. For example. Customers and suppliers will be listed in
each system and if an address or name changes how will Stephen ensure the
change is made in all the systems
will require Stephen to consolidate the information he has in his di&erent
systems – which is a hard task to complete.
Customer numbers could be di&erent across systems
How will Stephen track due dates for work. Will he look at each system every
day and record what is due?
How is the detail tracked in each system? If it is tracked di&erently this will
cause additional problems. For example, billboards might track sales by month
AYK VIII: EATING IN
As Mrs. Smith begins to plan her expansion she needs your assistance in
answering the following questions:
1. How important is customer loyalty for Smith’s business? What can she do to
ensure her customers remain loyal? How could one disgruntled customer hurt
business? What can she do to combat this challenge?
Customer service is key and Dell has taken a great deal of negative publicity
when its service level decreased after outsourcing its help centers to India.
Without proper service the company will lose its customers.
2. Research the business Yelp.com. What service does Yelp.com perform? Would
a small business see Yelp.com as an opportunity or a threat? What are the
pros and cons a customer should be aware of when using yelp.com?
3. Smith’s responsibilities include forecasting, inventory control, scheduling, and
ensuring high-quality products. What types of forecasts would she require to
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run her business? What types of inventory would she want to track? What
might happen if her inventory tracking tool was o& by 50 percent? What
types of schedules does Smith need to generate? What things might occur to
disrupt schedules and cause her to reschedule? How can a supply chain
management system help run the business?
Managers can use IT to heavily in#uence operational decisions including
goals and objectives of the organization are realized. Most decisions involve
many possible alternatives that can have varying impacts on revenues and
expenses. Information systems are critical for managers to be able to make
strategic key decisions are based on OM information systems that a&ect the
entire organization including:
What: What resources will be needed, and in what amounts?
corrective action needed?
Where: Where will the work be performed?
How: How will the product or service be designed? How will the work be
Operations strategy is concerned with the development of a long-term plan
for determining how to best utilize the major resources of the rm so that
order to achieve the desired corporate objectives. Some of the major
long-term issues addressed in operations strategy include:
How big to make the facilities?
4. Smith wants to create a business based on loyal customers and loyal
employees. She o&ers her employees bonuses for new ideas, recipes, or
business referrals. What risk is Smith encountering by o&ering these bonuses?
One employee idea that she has implemented is turning out to be a
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