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Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

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Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

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  1. Chapter 9:Achieving Operational Excellence and Customer Intimacy:Enterprise Applications Dr. Andrew P. Ciganek, Ph.D.

  2. Enterprise Systems • Based on suite of integrated software modules and common central database • 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

  3. How Enterprise Systems Work

  4. 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

  5. Supply Chain • Network of organizations & business processes for • Procuring raw materials • Transforming them into intermediate and finished products • Distributing finished products to customers • 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

  6. Nike’s Supply Chain

  7. 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

  8. 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

  9. Supply Chain Management and the Internet • 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

  10. 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

  11. Customer Relationship Management (CRM) Systems • Knowing the customer • In large businesses, too many customers and too many ways customers interact with firm • 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

  12. Customer Relationship Management (CRM) Systems

  13. CRM Systems • 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

  14. Customer Loyalty Management Process Map

  15. Two Main Categories of CRM • Operational CRM: • Customer-facing applications • e.g. sales force automation, call center and customer service support, and marketing automation • Analytical CRM: • Analyze customer data output from operational CRM applications • Based on data warehouses populated by operational CRM systems and customer touch points • Customer lifetime value (CLTV)

  16. Enterprise Application Challenges • Expensive to purchase and implement • Total implementation cost may be 4-5 times cost of software • Deep-seated technological change • Fundamental changes to organization, business processes • New functions and responsibilities for employees • SCM systems require business process change for multiple organizations • Introduce “switching costs”, dependency on enterprise software vendor • Require understanding firm’s data and cleansing data

  17. 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

  18. Extending Enterprise Software: Techniques to Extract More Value • Service platforms • Integrates applications from multiple business functions or partners • Enterprise application vendors provide middleware and tools that use XML and Web services for integrating enterprise applications with older legacy applications and systems from other vendors

  19. Enterprise System: Case Study • The Company • Midwest Manufacturing Company (MMC) • Manufacturing and sales organization • Locations and customers are worldwide • Extensive use of an ERP solution at headquarters

  20. Enterprise System: Case Study • Business Problem • Receiving purchase orders from customers • EDI exchanges – 35% of the orders received • Extranet (customers logon) – 12% of the orders received • Fax-based transactions – 53% of the orders received • Goal: Reduce/Eliminate fax-based transactions

  21. Enterprise System: Case Study • Business Problem • Current “Fax” Process • Customer enters order into their own legacy system • Customer prints out purchase order in their own language using their legacy systems format • Customer then faxes this printout to MMC • MMC associate manually translates order and reenters it into MMC’s ERP system

  22. Enterprise System: Case Study • Business Problem • Customers Resistance • Many have resisted the EDI value added network • Could not be motivated to use the Web based extranet • Have not been willing to upgrade current legacy systems and enable connectivity to MMC’s ERP system

  23. Enterprise System: Case Study • SOA Solution • Leverage ERP system for a solution that is … • Interoperable • Flexible and scalable • Cost effective for MMC and its customers • Leveraging existing investments in ERP

  24. Enterprise System: Case Study MMC Customer UK Customer UK Enterprise System Enterprise System Legacy Legacy System System Response Response Order Order Text File Text File Text File Text File New Order New Order Files? Files? Web Web WS WS Adapter Adapter Service Service WS WS Customer DE Customer DE Virtual Interface for Virtual Interface for Adapter Adapter Z_BAPI_SALESORDER_CREATE SALESORDER_CREATE exposed as Web Service exposed as Web Service WS WS Customer FR Customer FR Adapter Adapter