ISM3003 Chapter 2 Major Business Initiatives Companies use IT to separate from the competition and develop a competitive advantage Four of the most important IT implementation of business processes companies use Supply Chain Management Customer Relationship Management Enterprise Resource Planning Social Media Distribution Chain the path a product or service follows from the originator of the product or service to the end consumer Holding onto inventory costs money warehouse rental Buy hold and sell Tech products in inventory can become obsolete when waiting to be purchased Example Dell ships directly to customer no inventory in distribution chain Awesome Sell source and ship A Supply Chain Management Supply chain management SCM tracks inventory and information among business processes and across companies Supply chain management system IT system that supports supply chain management activities by automatically tracking the inventory and information among business processes and across companies Critical for large companies Just In Time JIT method for producing or delivering a product or service just at the time the customer wants it o This manufacturing process makes sure that the right parts are available as products in the process move down the assembly line o Products desired by customers are on shelves when customers walk in o Too many products money lost in keeping inventory o Too few products revenue lost when customers cannot buy due to out of Example Target stock item Inter Modal Transportation use of multiple channels of transportation railway train and boat to move products from origin to destination o Used by global companies Strategic and Competitive Opportunities Goal Squeeze every penny possible out of the supply chain process Primary focus of supply chain management Overall cost leadership Porter Running the organization RGT Framework Cooperation among supply chain partners for mutual success Lower costs in the supply chain lead to lower prices for consumers which increases market share and top line revenue Well designed supply chain management system optimizes the following supply chain activities 1 Fulfillment 2 Logistics 3 Production a Enduring that the right quantity of parts for production or products for sale arrive at the right time a Keeping the cost of transporting materials as low as possibly consistent with safe and reliable delivery a Ensuring product lines function smoothly because high quality parts are available when needed 4 Revenue and profit a Ensuring no sales are lost because shelves are empty a Keeping the cost of purchased parts and prices of products at acceptable 5 Cost and price levels Information partnership two or more companies cooperating by integrating their IT systems thereby providing customers with the best of what each can offer Manufacturing companies share product concepts with supplier early in the product development cycle letting suppliers contribute their ideas about how to make high quality parts at a lower cost This is possible through IT B Customer Relationship Management Acquiring customers and retaining them are the basic objectives of a business CRM system uses information about customers to gain insights into their needs wants and behavior in order to serve them better Multi channel service delivery term that describes a company s offerings multiple ways in which customers can interact with it o Example emails phone and Web o Fundamental Goal Tracking and managing these interactions o Overriding Goal Limit negative interactions and provide positive ones CRM Systems typically include functions such as Sales force automation SFA o SFA systems track all steps in the sales process o Empower sales reps with information and business intelligence focused on customer buying patterns and needs o Help people at all levels of the organization to forecast future sales which is fed to SCM system to ensure right amount of products is available at the right place and time Customer service and support o Support CRM after the sale o Multi channel Marketing campaign management o Help people design campaigns ID target audiences and their preferred media create campaign budgets and deliver marketing campaign assets o Most important help marketing managers measure the extent of success of a marketing campaign Analytics o Hard core numerical data that allow people to analyze operations and processes and make better decisions o Insight into success or failure of initiatives CRM is a total business objective including software hardware services support and strategic business goals and should provide the organization with detailed customer information It is more expensive to acquire a new customer than to retain an existing customer so some CRM systems focus on creating repeat customers CRM systems focus on increasing revenue through providing delightful experiences for the customers The primary focus is 1 Differentiation and focus Porter 2 Growing the organization RGT CRM results in competitive advantage specifically Devising more effective market campaigns based on more precise knowledge of customer needs and wants Assuring that the sales process is efficiently managed Providing superior after sale service and support Success with CRM results in buyers choosing your product or service instead of the competitor s IT Support for CRM Front office system primary interface to customers and sales channels o Sales and Manufacturing o Order Taking Back office system fulfill and support customer orders o Order Fulfillment Direct ties to supply chain management o Support Call centers Software as a Service SaaS System delivery model for software in which you pay for software on a pay per use basis instead of buying the software outright o Example NetSuite Oracle cloud computing o SaaS eliminates fixed cost of hardware etc because you pay based on how many sales reps you have which you decide based on number of customers o This cost becomes variable Front office systems and back office systems send all information collected about customers to database These two are analyzed by the CRM system and provide an overall view of the customer s experience with the business There is synergy between CRM and SCM systems C Enterprising Resource Planning Bringing IT all Together Enterprise Resource Planning ERP system collection of integrated software for business management accounting finance HR management project management inventory management service and