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Chapter 9 - Summary Management Information Systems

Managing Information Systems (University of Regina)

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Chapter 9
Enterprise Applications to Manage Supply Chains and Respond to Customers

- Enterprise Systems
 What are Enterprise Systems?
o Feature a set of integrated software modules and a central database that
enables data to be shared by many different business processes and
functional areas throughout the enterprise
 Enterprise Software: built around thousands of predefined business processes
that reflect best practices
o To implement, firms must select the functions of the system the business
wishes to use and then map business processes to the predefined
business processes in the software
o Use configuration tables to tailor a particular aspect of the system to the
way it does business
o Companies can rewrite some of the software to support the way their
business processes work, but may degrade system performance as
enterprise software is unusually complex
 Business Value of Enterprise Systems
o Provide value by increasing operational efficiency and providing firm-
wide info to help managers make better decisions
o Includes analytical tools for using data captured by the system to
evaluate overall organizational performance
o Allow senior mgmt. to easily find out at any moment how a particular org
unit is performing, determining which products are most/least profitable,
and calculate costs for the company as a whole
- Supply Chain Management Systems
 Supply Chain: a network of organizations and business processes for procuring
raw materials, transforming these materials into intermediate and finished
products, and distributing the finished products to customers
o Links suppliers, manufacturing plants, distribution centres, retail outlets,
and customers to supply goods and services from source through
consumption
o Materials, info and payments flow through in both directions
o Goods as raw materials  intermediate products  finished products 
shipped to distribution centres  retailers and customers
 Return items flow the opposite way
o Upstream portion = company’s suppliers, suppliers’ suppliers, and the
processes for managing relationships with them
o Downstream portion = orgs and processes for distributing and delivering
the products to the final customers
o Some companies have internal supply chains for transforming materials,
components and services furnished by their suppliers into finished
products/intermediate products for their customers and for managing
materials and inventory

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 Info Systems and Supply Chain Management

o Insufficiencies in the supply chain caused by inaccurate/untimely info
 Ex: manufacturers may keep too many parts in inventory because
they don’t know when they will receive their next shipments from
suppliers
o Just-in-time Strategy: components arrive exactly at the moment they are
needed, and finished goods shipped as soon as they left the assembly line
 Possible when manufacturers have perfect info about exactly how
many units of products customers want, when they want them,
and when they could be produced
o Bullwhip Effect: info about the demand for a product gets distorted as it
passes from one entity to the next across the supply chain
 Tamed by reducing uncertainties about demand and supply when
all members of the supply chain have accurate and up-to-date
info
 Supply Chain Management Software
o Supply Chain Systems: enable the firm to model its existing supply chain
generate demand forecasts for products, and develop optimal sourcing
and manufacturing plans
 Help companies make better decisions such as determining how
much of a specific product to manufacture in a given time period
o Demand Planning: determines how much product a business needs to
make to satisfy all of its customers’ demands
o Supply Chain Execution Systems: manage the flow of products through
distribution centres and warehouses to ensure products are delivered to
the right locations in the most efficient manner
 Track the status of goods/mgmt of materials/warehouse and
transportation operations/financial info involving all parties
 Global Supply Chains and the Internet
o Global Supply Chain Issues
 Performance standards vary from region to region/region or
nation/nation; supply chain mgmt. may need to reflect foreign
gov’t regulations and cultural differences
o Demand-driven Supply Chains: From Push to Pull Manufacturing and
Efficient Customer Response
 Supply chain mgmt. systems facilitate efficient customer
response, enabling the workings of the business to be driven
more by customer demand
 Push-based Model: production master schedules are based on
forecasts/best guesses of demand for products and products are
“pushed” to customers

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Chapter 9
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 Pull-based Model: aka demand-driven/build-to-order model,

actual customer orders/purchases rigger events in the supply
chain
 Business Value of Supply Chain Management Systems
o Implementing networked and integrated supply chain mgmt. system=
companies match supply to demand, reduce inventory levels, improve
delivery service, speed product time to market, and use assets more
effectively
o Reducing supply chain costs = major impact on firm profitability
o Help increase sales (if a product isn’t available when a customer wants it,
they go elsewhere)
- Customer Relationship Management Systems
 What is Customer Relationship Mgmt?
o Capture and integrate customer data from all over the org., consolidate
the data, analyze it, and distribute the results to various systems and
customer touch points across the enterprise
o Touch Point: a method of interaction with the customer (ex: telephone,
email, social media)
o Good CRM systems provide data and analytical tools for answering
questions such as “What is the value of a particular customer to the firm
over his/her lifetime?”
 Use these questions to acquire new customers, provide better
service and support to existing ones, customize their offerings
more precisely to customer preferences, and provide ongoing
value to retail profitable customers
o Can cost 6x more to acquire a new customer than sell to an existing one
 CRM Software
o The major CRM software products support business processes in sales,
service and marketing, integrating customer info from many different
sources. Included are support for both the operational and analytical
aspects are CRM
o Partner Relationship Mgmt (PRM): uses many of the same data, tools
and systems as CRM to enhance collaboration between a company and
its selling partners
 Helps distributors and retailers sell to customers directly
 Provides a firm with tools to assess partners’ performances to
make sure they receive the support they need to close more
business
o Employee Relationship Mgmt (ERM): deals with employee issues that
are closely related to CRM, such as setting objectives, employee
performance mgmt., performance-based compensation, and employee
training

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o Sales Force Automation (SFA)

 Help sales staff increase their productivity by focusing sales efforts
on the most profitable customers, those who are good candidates
for sales and services
 Can assembly info about a particular customers past purchases to
help the salesperson make personalized recommendations
o Customer Service
 Provide info and tools to increase the efficiency of call centres,
help desks, and customer support staff
 Have capabilities for assigning and managing customer service
requests
o Marketing
 Provide capabilities for capturing prospect and customer data,
providing product and service info, qualifying leads for targeted
marketing, and for scheduling and tracking direct-marketing
mailings/email
 Cross-selling: the marketing of complementary products to
customers
 Operational and Analytical CRM
o Operational CRM: includes customer-facing applications, such as tools
for sales force automation, call centre and customer service support, and
marketing automation
o Analytical CRM: includes applications that analyze customer data
generated by operational CRM applications to provide info for improving
business performance
o Customer Lifetime Value (CLTV): based on the relationship between the
revenue produced by a specific customer, the expenses incurred in
acquiring and servicing hat customer, and the expected life of the
relationship between the customer and the company
 Business Value of CRM Systems
o Increased customer satisfaction
o Reduced direct-marketing costs
o More effective marketing
o Lower costs for customer acquisition and retention
o Increases sales revenue by identifying most profitable customers and
segments for focused marketing and cross-selling
- Enterprise Applications: New Opportunities and Challenges
 Enterprise Application Challenges
o Complex pieces of software that is very expensive to purchase and
implement
o Require deep-seated tech changes and fundamental changes in the way
the business operates

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o Each participant in the system may have to change some of its processes
and the way its uses info to create a system that best serves the supply
chain as a whole
 Some firms experience operating problems and losses when they
first implement them because they don’t realize how much
change was required
o Introduce switching costs
o Require some data cleansing work
o Enterprise software vendors address the problems by offering pared-
down versions for their software and fast-start programs for
small/medium businesses
 Next-Generation Enterprise Application
o Enterprise solutions, enterprise suites/e-business suites to make their
CRM, SCM and enterprise systems work closely with each other
o Include open source and on-demand solutions and more functionality
available on mobile platforms
o Social CRM and Business Intelligence
 CRM software vendors enhancing their products to take
advantage of social networking technologies to help identify new
ideas more rapidly, improve team productivity and deepen
interactions with customers
 Social CRM: tools that enable a business to connect customer
conversations and relationships from social networking sites to
CRM processes
 Business intelligence features help managers obtain more
meaningful info from the massive amounts of data generated by
these systems

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