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entERPRISE APPLICATIONS:
BUSINESS COMMUNICATIONS
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,” said 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.”
Traditional SCM thinking involved “I buy from my suppliers, I sell to my
customers.” Today, organizations are quickly realizing the tremendous value
they can gain from having visibility throughout its supply chain. Knowing
immediately what is transacting at the customer end of the supply chain,
instead of waiting days or weeks for this information to 4ow upstream, allows
the organization to react immediately. The role of SCM is evolving and it is
not uncommon for suppliers to be involved in product development and for
distributors to act as consultants in brand marketing. This chapter takes a
look at extending an organization through SCM.
SECTION 8.1 – ENTERPRISE SYSTEMS AND SUPPLY CHAIN
MANAGEMENT
Building a Connected Corporation through Integration
Supply Chain Management
Technologies Reinventing the Supply Chain
8
CHAPTER
SECTION 8.2 – CUSTOMER RELATIONSHIP MANAGEMENT AND
ENTERPRISE RESOURCE PLANNING
Customer Relationship Management
The Benets of CRM
Enterprise Resource Planning
Organizational Integration with ERP
SECTION 8.1
SUPPLY CHAIN MANAGEMENT
Traditional SCM thinking involved “I buy from my suppliers, I sell to my
customers.” Today, organizations are quickly realizing the tremendous value
they can gain from having visibility throughout its supply chain. Knowing
immediately what is transacting at the customer end of the supply chain,
instead of waiting days or weeks for this information to 4ow upstream, allows
the organization to react immediately. The role of SCM is evolving and it is
not uncommon for suppliers to be involved in product development and for
distributors to act as consultants in brand marketing. This chapter takes a
look at extending an organization through SCM.
LEARNING OUTCOMES
Learning Outcome 8.1: Explain integrations and the role they play in
connecting a corporation.
Integrations allow separate systems to communicate directly with each
other, eliminating the need for manual entry into multiple systems. Building
integrations allows the sharing of information across databases along with
dramatically increasing its quality.
Learning Outcome 8.2: Describe supply chain management along
with its associated bene.ts and challenges.
A supply chain consists of all parties involved, directly or indirectly, in
obtaining raw materials or a product. To automate and enable sophisticated
decision making in these critical areas, companies are turning to systems
that provide demand forecasting, inventory control, and information 4ows
between suppliers and customers. Supply chain management (SCM) is the
management of information 4ows between and among activities in a supply
chain to maximize total supply chain e:ectiveness and corporate protability.
In the past, manufacturing e:orts focused primarily on quality improvement
e:orts within the company; today these e:orts reach across the entire
supply chain, including customers, customers’ customers, suppliers, and
suppliers’ suppliers. Today’s supply chain is an intricate network of business
partners linked through communication channels and relationships.
Improved visibility across the supply chain and increased protability for the
rm are the primary business benets received when implementing supply
chain management systems. Supply chain visibility is the ability to view all
areas up and down the supply chain in real time. The primary challenges
associated with supply chain management include costs and complexity. The
next wave in supply chain management will be home-based supply chain
fulllment. No more running to the store to replace your products as your
store will come to you as soon as you need a new product.
Learning Outcome 8.3: Identify the three technologies that are
reinventing the supply chain.
The goal of ERP is to integrate all of the organizational systems into one fully
functioning, high-performance system that is capable of meeting all business
needs and user requirements. Of course, this goal is incredibly di/cult to
achieve because businesses and technologies experience rapid change, and
ERP must support mobility, cloud, SaaS, and tiered architectures.
CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Michael Dell Decides to Sell
PCs Directly to Consumers and Built-to-Order
Michael Dell decided that to be successful in the PC business and to gain a
signicant competitive advantage he would bypass the dealer channel
through which personal computers were being sold. Dell developed and
deployed their own channel for manufacturing and selling PCs. This personal
channel eliminated the reseller markups and large inventory expenses and
allowed Dell to operate with lower costs than anyone in the industry, which
led to higher prot margins.
Michael Dell understood that consumers were getting smarter and that
customer service abilities were becoming more sophisticated. Beginning with
telephone sales, and then moving to Internet sales, Dell bypassed retailers
and targeted corporate accounts. Dell understood that tailoring products to
meet specic requirements of large accounts could be accomplished not only
more cheaply, but also more e:ectively without an intermediary.
Dell boasts sales of $12.3 billion and is the world’s number one direct-sales
computer vendor. The company’s website currently generates over half of its
orders. Everybody in the industry is trying to imitate Dell’s strategy.
CLASSROOM SIMULATION
Near Beer Game
This is an excellent exercise for students who are just learning about the
supply chain.
http://www.forio.com/nearbeer.htm
CLASSROOM EXERCISE
Business Bene.ts of RFID
Great white paper o:ering great examples on Business Benets from Radio
Frequency Identication (RFID)
Cost reduction
The cost reduction value case is a target area of many consumer packaged
goods (CPG) companies, retailers and the United States Department of
Defense (DoD). These enterprises expect to reduce inventory and inventory
management expenses by billions of dollars over the next several years.
Examples of cost-reduction objectives for an RFID program include:
Lower inventory stock levels
Reduce waste
Reduce manual checks
Reduce inventory handling costs
Reduce logistics costs
Reduce claims and deductions
Improve asset utilization
Shrinkage, theft and diversion prevention
High-value consumer and industrial products face the large risk of theft and
diversion. RFID has shown considerable progress in:
Identifying theft and diversion at the shelf level
Identifying theft and diversion points in the supply chain
Counterfeit product shielding
Quality manufacturers across the globe are losing sales, prots and their
quality image from the expanding 4ow of counterfeit products. Equally
important, counterfeits of many products (such as pharmaceuticals,
currency, passports and aircraft parts) represent a safety and security hazard
for customers across the globe. There are several deployments in place to
identify counterfeits using RFID. These RFID tagged products, coupled with
real-time databases, represent a viable information platform to prevent the
distribution and sale of counterfeit products.
http://www.symbol.com/assets/les/RFIDBenets.pdf
CLASSROOM VIDEO
Video on SCM and RFID
Great video on SCM and RFID to start o: a lecture
http://www.youtube.com/watch?v=4Zj7txoDxbE
CLASSROOM EXERCISE
Business Week Slide Show
Business Week Slide Show on RFID
http://images.businessweek.com/ss/06/10/ceoguide_rd/slideshow.htm
Ask your students to list any other businesses they know are using RFID to
streamline business processes.
Can they create a new product that uses RFID to help a business become
more e/cient or e:ective?
CLASSROOM EXERCISE
Designing a Digital Dashboard for an SCM System
Digital dashboards o:er an e:ective and e/cient way to view enterprisewide
information at near real-time. According to Nucleus Research, there is a
direct correlation between use of digital dashboards and a company’s return
on investment (ROI), hence all executives should be using or pushing the
development of digital dashboards to monitor and analyze organizational
operations.
Break your students into groups and ask them to develop a digital dashboard
for the CEO of a transportation company. Be sure your students have
addressed all of the following in their digital dashboard:
Inventory
Materials
Demand/Supply
Sales
Supplier’s supplier
Supplier
Manufacturer
Distributor
Retailer
Customer
Customer’s Customer
BUSINESS DRIVEN DISCUSSION – BEAN INTEGRATION
Enterprise resource planning systems serve as the organization’s
backbone in providing fundamental decision-making support. In the past,
departments made decisions independent of each other. ERP systems
provide a foundation for collaboration between departments, enabling
people in di:erent business areas to communicate. ERP systems have
been widely adopted in large organizations to store critical knowledge
used to make the decisions that drive performance
An integration allows separate systems to communicate directly with each
other. An organization typically maintains multiple systems, with each
system having its own database. Without integrations, an organization will
(1) spend considerable time entering the same information in multiple
systems and (2) su:er from the low quality and inconsistency typically
embedded in redundant information. While most integrations do not
completely eliminate redundant information, they can ensure the
consistency of it across multiple systems. An organization can choose from
two integration methods. The rst is to create forward and backward
integrations that link together processes (and their underlying databases)
in the value chain. A forward integration takes information entered into a
given system and sends it automatically to all downstream systems and
processes. A backward integration takes information entered into a given
system and sends it automatically to all upstream systems and processes.
Flavors needs to integrate the information from its many di:erent database
so it can obtain a 360 degree view of its customers. It can perform a forward
integration or a backward integration, as shown below.
It could also use a central repository to integrate its information, as shown
below.
With an integrate CRM system the company could start to nd answers to
the following business intelligence questions:
Live Music Events
Which customers are attending live music events?
How frequently do they attend?
How much money do they spend?
Who are the top 10 live music event customers?
Do these customers attend more than one live music event per month?
Do these customers attend any other events?
Can we o:er special discounts to customers who attend multiple live
music events?
Can we o:er cross-selling discounts to customers who attend music
events and other Flavors events?
Can we up-sell music event customers by providing dinner along with the
event?
How much does the average live music customer spend?
Book Club Events
Which customers are attending book club events?
How frequently do they attend?
How much money do they spend?
Who are the top 10 book club customers?
How much does the average book club customer spend?
Do these customers attend more than one book club event per month?
Do these customers attend any other events at Flavors?
Can we o:er special discounts to customers who attend multiple book
club events?
Can we o:er cross-selling discounts to customers who attend book club
events and other Flavors events?
Can we up-sell book club event customers by providing dinner along with
the event?
If we begin providing local author nights we could promote these events
to book club customers
Artist Gallery, Co9ee Sampler, Community Events, Courses
All of the above questions can be applied to each of the above areas. Here
are a few additional that are specic or cross-events.
What can we do to prevent having art displayed in the store that might be
o:ensive to some of our customers?
What happens if there is not enough art to display in the store?
Can we have art that corresponds to a live music event or book club
event?
Can we o:er co:ee samples during events to promote special co:ees?
Can we format all information received from customers into a common
form?
Can we have brewing and machine resource course information delivered
weekly or monthly?
Can we provide co:ee samples during courses?
How can we nd out who are our 20 best customers across all events?
How can we nd out which events receive the highest attendance?
How can we nd out which events generate the greatest prot?
Which days generate the highest revenue, regardless of event?
Is there any correlation between certain employees working and event
prot?
Is there any correlation between specialty products and prots during
events?
BUSINESS DRIVEN MIS – CLASSIC CARS
The major problem hurting this car dealership is that it can’t see its
operations from an enterprisewide perspective. It can’t see inventory across
dealerships, prices across locations, and sales representatives and
customers. An enterprisewide system will help this dealership get back on
track.
Classic Cars Inc. can use ERP to alleviate many of the company’s issues by
gaining a comprehensive view of each customer, sales representative,
location, inventory, etc.
ERP can compile the information from the 4 di:erent locations and the 40
di:erent sales representatives into one critical system. This will allow the
company to understand its entire business and which customers want
which cars at which time.
The company could standardize quoting with its ERP system. Sales
representative would only be allowed to quote the price o:ered in the ERP
system.
The company could help the sales representatives track their customers
and see if they are dealing with more than one sales representative. This
would alleviate the issue with stolen customers and commissions.
The sales representative could see which cars are located at each location
and notify the location that a customer is coming to view the car.
The business intelligence that could be pulled from the ERP system will
help the dealerships make better decisions regarding marketing
campaigns and sales strategies.
There would no longer be an issue if a sales representative quit because
the ERP system would contain all of his or her customer information.
BUSINESS DRIVEN ETHICS AND SECURITY – KIVA’S ROBOTS
Warehouse Robots at Work - Video
http://www.youtube.com/watch?v=lWsMdN7HMuA
Kiva Robots - Video
http://videos.howstu:works.com/discovery/36898-mega-engineering-kiva-rob
ots-video.htm
BUSINESS DRIVEN GLOBALIZATION – BANKING ON
CUSTOMER RELATIONSHIPS
Mr. Bean Bad Customer Service - Video
http://www.youtube.com/watch?v=lmFXThtn014&feature=related
Starbuck’s Customer Service – Video
http://www.youtube.com/watch?v=6M0TgEUbRBc&feature=related
BUSINESS DRIVEN INNOVATION – NICE EMOTIONS
Nice Emotions - Video
http://www.informationweek.com/news/global-cio/showArticle.jhtml?
articleID=159906176
BUSINESS DRIVEN DEBATE – FIXING THE POST OFFICE
U.S. Postal Service on the Verge of Going Broke? Video
It's the biggest civilian employer after Walmart, but apparently the U.S.
Postal Service is not too big to fail. Today, the Postal Service said that without
Congressional action, it could be bankrupt by the end of next year.
BUSINESS DRIVEN START-UP – STRAIGHTJACKET CUSTOMER
SERVICE
Straightjacket Winner - Video
http://www.youtube.com/watch?v=dYL_OqUIWXU
CORE MATERIAL
The core chapter material is covered in detail in the PowerPoint slides. Each
slide contains detailed teaching notes including exercises, class activities,
questions, and examples. Please review the PowerPoint slides for detailed
notes on how to teach and enhance the core chapter material.
