Chapter 9

Achieving Operational Excellence &

Customer Intimacy

Management Information System _ Lai Vinh Phuc, MBA

 Learning Objectives
• How do enterprise systems help businesses achieve operational
excellence?
• How do supply chain management systems coordinate planning,
production, and logistics with suppliers?
• How do customer relationship management systems help firms
achieve customer intimacy?
• What are the challenges that enterprise applications pose, and how
are enterprise applications taking advantage of new technologies?

Management Information System _ Lai Vinh Phuc, MBA

 Content:
I. Enterprise System & Operational Excellence
II. Supply Chain Management Systems
III. CRM Systems in Achieving Customer Intimacy
IV. Enterprise Application Challenges

Management Information System _ Lai Vinh Phuc, MBA

 I. Enterprise System & Operational Excellence
1. Enterprise Systems:
• 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

Management Information System _ Lai Vinh Phuc, MBA

 I. Enterprise System & Operational Excellence

Management Information System _ Lai Vinh Phuc, MBA Figure 9.1: How Enterprise Systems Work
 I. Enterprise System & Operational Excellence
2. Enterprise Software
• Built around thousands of predefined business processes that reflect best
practices
- Finance and accounting
- Human resources
- Manufacturing and production
- Sales and marketing
• To implement, firms:
- Select functions of system they wish to use
- Map business processes to software processes
- Use software’s configuration tables for customizing

Management Information System _ Lai Vinh Phuc, MBA

 I. Enterprise System & Operational Excellence
3. Business Value of Enterprise Systems:
• 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

Management Information System _ Lai Vinh Phuc, MBA

 Discussion Question
What does it mean for the firm that enterprise systems enforce the use
of common standardized definitions and formats for data by the entire
organization?
ANSWER:
Easily find the necessary data at any moment
Determine which products are most/least profitable
Calculate the cost for the company

Management Information System _ Lai Vinh Phuc, MBA

 II. Supply Chain Management Systems
1. The Supply Chain
• Network of organizations and processes for:
• Procuring materials, transforming them into products, and distributing the
products
• 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
• Internal supply chain

Management Information System _ Lai Vinh Phuc, MBA

 II. Supply Chain Management Systems

Management Information System _ Lai Vinh Phuc, MBA Figure 9.2: Nike’s Supply Chain
 II. Supply Chain Management Systems
2. Supply Chain Management
• Inefficiencies cut into a company’s operating costs
- Can waste up to 25 percent 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

Management Information System _ Lai Vinh Phuc, MBA

 II. Supply Chain Management Systems

Management Information System _ Lai Vinh Phuc, MBA Figure 9.3: The Bullwhip Effect
 II. Supply Chain Management Systems
3. Supply Chain Management Software
• Supply chain planning systems
+ Model existing supply chain
+ Enable demand planning
+ Optimize sourcing, manufacturing plans
+ Establish inventory levels
+ Identify transportation modes
• Supply chain execution systems
+ Manage flow of products through distribution centers and warehouses

=> Solution “Planning Demand”

Management Information System _ Lai Vinh Phuc, MBA

 II. Supply Chain Management Systems
4. Global Supply Chains and the Internet
• Global supply chain issues
- Greater geographical distances, time differences
- Participants from different countries
- Different performance standards
- Different legal requirements
• Internet helps manage global complexities
+ Warehouse management
+ Transportation management
+ Logistics
+ Outsourcing

Management Information System _ Lai Vinh Phuc, MBA

 II. Supply Chain Management Systems
5. PUSH to PULL Manufacturing
• Push-based model (build-to-stock)
- Earlier SCM systems
- Schedules based on best guesses of demand
• Pull-based model (demand-driven)
- Web-based
- Customer orders trigger events in supply chain
• Internet enables move from sequential supply chains to concurrent supply
chains
- Complex networks of suppliers can adjust immediately

Management Information System _ Lai Vinh Phuc, MBA

 II. Supply Chain Management Systems

Management Information System _ Lai Vinh Phuc, MBA Figure 9.4: Pull-Push Based Model
 II. Supply Chain Management Systems

Management Information System _ Lai Vinh Phuc, MBA Figure 9.5: Emerging Internet Driven Supply Chain
 II. Supply Chain Management Systems
6. Business Value of Supply Chain Management
• Match supply to demand
• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more effectively
• Increase sales

Management Information System _ Lai Vinh Phuc, MBA

 III. CRM Systems in Achieving Customer
Intimacy
1. What is Customer Relationship Management
• Customer relationship management (CRM)
- Knowing the customer
- In large businesses, too many customers and too many ways customers interact with
firm
• CRM systems
- 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

Management Information System _ Lai Vinh Phuc, MBA

 III. CRM Systems in Achieving Customer
Intimacy

Management Information System _ Lai Vinh Phuc, MBA Figure 9.6: Customer Relationship Management (CRM)
 III. CRM Systems in Achieving Customer
Intimacy
2. CRM Software:
• Packages range from niche tools to large-scale enterprise applications
• More comprehensive packages have modules for:
- Partner relationship management (PRM)
+ Integrating lead generation, pricing, promotions, order configurations, and
availability
+ Tools to assess partners’ performances
- Employee relationship management (ERM)
+ Setting objectives, employee performance management, performance-based
compensation, employee training

Management Information System _ Lai Vinh Phuc, MBA

 III. CRM Systems in Achieving Customer
Intimacy
2. CRM Software
• CRM packages typically include tools for:
• Sales force automation (SFA)
• Sales prospect and contact information
• Sales quote generation capabilities
• Customer service
• Assigning and managing customer service requests
• Web-based self-service capabilities
• Marketing
• Capturing prospect and customer data, scheduling and tracking direct-
marketing mailings or e-mail
• Cross-selling
Management Information System _ Lai Vinh Phuc, MBA
 III. CRM Systems in Achieving Customer
Intimacy

Management Information System _ Lai Vinh Phuc, MBA Figure 9.7: How CRM Systems Support Marketing
 III. CRM Systems in Achieving Customer
Intimacy

Management Information System _ Lai Vinh Phuc, MBA Figure 9.8: CRM Software Capabilities
 III. CRM Systems in Achieving Customer
Intimacy

Management Information System _ Lai Vinh Phuc, MBA Figure 9.9: Customer Loyalty Management Process Map
 III. CRM Systems in Achieving Customer
Intimacy
3. Types of CRM Software
• Operational CRM
- Customer-facing applications
- Sales force automation
Call center and customer service support
- Marketing automation
- E.g: Now, Grab
• Analytical CRM
- Based on data warehouses populated by operational CRM systems and customer
touch points
- Analyzes customer data (OLAP, data mining, etc.)
- Customer lifetime value (CLTV)
Management Information System _ Lai Vinh Phuc, MBA
 III. CRM Systems in Achieving Customer
Intimacy

Management Information System _ Lai Vinh Phuc, MBA Figure 9.10: Customer Loyalty Management Process Map
 III. CRM Systems in Achieving Customer
Intimacy
4. Business Value of CRM Systems
• Business value of CRM systems
• Increased customer satisfaction
• Reduced direct-marketing costs
• More effective marketing
• Lower costs for customer acquisition/retention
• Increased sales revenue
• 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

Management Information System _ Lai Vinh Phuc, MBA

 IV. Enterprise Application Challenges
1. Challenges
• Highly expensive to purchase and implement enterprise applications
- Average cost of ERP project in 2015—$6.1 million
• Technology changes
• Business process changes
• Organizational learning, changes
• Switching costs, dependence on software vendors
• Data standardization, management, cleansing

Management Information System _ Lai Vinh Phuc, MBA

 IV. Enterprise Application Challenges
2. Next-Generation Enterprise Applications
• Enterprise solutions/suites
- Make applications more flexible, web-enabled, integrated with other systems
• SOA standards
• Open-source applications
• On-demand solutions
• Cloud-based versions
• Functionality for mobile platform

Management Information System _ Lai Vinh Phuc, MBA

 IV. Enterprise Application Challenges
2. Next-Generation Enterprise Applications
• Social CRM
- Incorporating social networking technologies
- Company social networks
- Monitor social media activity; social media analytics
- Manage social and web-based campaigns
• Business intelligence
- Inclusion of BI with enterprise applications
- Flexible reporting, ad hoc analysis, “what-if” scenarios, digital dashboards, data
visualization

Management Information System _ Lai Vinh Phuc, MBA

 Recap
 Enterprise System & Operational Excellence
 Supply Chain Management Systems
 CRM Systems in Achieving Customer Intimacy
 Enterprise Application Challenges

Management Information System _ Lai Vinh Phuc, MBA

 Next Week
Chapter 10: E-Commerce: Digital Market & Digital Goods

Management Information System _ Lai Vinh Phuc, MBA