TMI2053 Information

Systems
in Organisations
Learning Unit 7:
Achieving Operational Excellence & Customer Intimacy:
Enterprise Applications
 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 customers relationship management systems
help firms achieve customer intimacy? the business value
of security and control?
• What are the challenges that enterprise applications
pose and how are enterprise applications taking
advantage of new technologies?
 Statoil Fuel and Retail Competes Using Enterprise
Systems

• Problems
• Different processes in each country and market leading to massive
operational inefficiencies
• Maximize supply chain efficiency for fuel, grocery and lubricants.
• Solutions
• Force common data definitions by implementing enterprise
application
 Statoil Fuel and Retail Competes Using
Enterprise Systems
• ORACLE EnterpriseOne combined with Oracle Fusion
Middleware integrates data management and
communication across social, mobile and cloud
technologies.
• Illustrates: Need for enterprise-wide systems for
improved data gathering and sharing to improve
forecasting customer demand and inventory needs
• Demonstrates: Use of enterprise software to speed and
forecasting and reduce forecasting errors
Statoil Fuel and Retail Competes Using Enterprise Systems
How do enterprise systems help businesses achieve operational excellence?

Enterprise Systems
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 created by one process is immediately available

for other processes
How do enterprise systems help businesses achieve operational excellence?

Enterprise Software

• Built around thousands of Finance/

Accounting:
general ledger,
predefined business accounts
payable, etc.
processes that reflect best
practices Manufacturing
/Production:
purchasing,
shipping, etc.

Sales/
Human
Marketing:
Resources:
order
personnel
processing,
administration,
billing, sales
payroll, etc.
planning, etc.
How do enterprise systems help businesses achieve operational excellence?

• Select functions of system they wish to use.

• Map business processes to software processes.
To implement • Use softwares configuration tables for
enterprise customizing.
software, firms:

• Businesses can rewrite some portions, but this

can compromise information and process
If software
integration
doesn’t support • Changing business processes to match software
business processes is better alternative
processes
 How do enterprise systems help businesses achieve operational excellence?

How Enterprise Systems Work

Enterprise systems
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
 How do enterprise systems help businesses
achieve operational excellence?

Business Value of Enterprise Systems

• Increase operational efficiency.

• Standardize and coordinate business processes.
• 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.
 How do supply chain management systems coordinate planning, production,
and logistics with suppliers?

The Supply Chain

Network of organizations and processes for:
• Procuring raw materials
• Transforming them into products
• 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

How do supply chain management systems coordinate planning, production,
and logistics with suppliers?
Nike’s Supply Chain

This figure illustrates the major entities in Nike’s supply chain and
the flow of information upstream and downstream to coordinate
the activities involved in buying, making, and moving a product.
Shown here is a simplified supply chain, with the upstream portion
focusing only on the suppliers for sneakers and sneaker soles.
Information Systems and Supply Chain Management

Inefficiencies cut into a Can waste up to 25% of operating expenses

company’s operating costs

Components arrive as they are needed

Just-in-time strategy: Finished goods shipped after leaving assembly
line

Safety stock Buffer for lack of flexibility in supply chain

Information about product demand gets

Bullwhip effect distorted as it passes from one entity to next
across supply chain
How do supply chain management systems coordinate planning, production,
and logistics with suppliers?

The Bullwhip Effect

Inaccurate information
can cause minor
fluctuations in
demand for a product
to be amplified as one
moves further back in
the supply chain.
Minor fluctuations in
retail sales for a
product can create
excess inventory for
distributors,
manufacturers, and
suppliers.
 Supply Chain Management Software

• Supply chain planning systems

• Model existing supply chain.
• 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.
 Global Supply Chains and the Internet
• Global supply chain issues:
• Greater geographical distances
• Greater time differences
• Participants from different countries
• Different performance standards
• Different legal requirements
• Internet helps companies manage global complexities
• Warehouse management
• Transportation management
• Logistics
• Outsourcing
 DP World Takes Port Management to the Next Level with RFID
Interactive Session: Management
DP World Takes Port Management to the Next Level with RFID
• Read the Interactive Session and then discuss the following
questions:
• Why is port management so important at DP World? What business
processes are affected by the terminal operators’ ability or inability to
handle the port?

• What management, organization, and technology factors were

responsible for DP World’s problems with port management?

• How did implementing the RFID software change the way DP World
ran its business?

• Describe two decisions that were improved by implementing the RFID

system?
 Demand-Driven Supply Chains
• Supply Chain Management Systems
• Help businesses move from sequential supply chains to concurrent
supply chains

Push-based model
(build-to-stock)
Pull-based model
• Schedules based on
best guesses of demand (demand-driven)
• Customer orders trigger
events in supply chain
How do supply chain management systems coordinate planning, production,
and logistics with suppliers?

Push- Versus Pull-Based Supply Chain Models

The difference between push- and pull-based models is summarized by the slogan
“Make what we sell, not sell what we make.”
 How do supply chain management systems coordinate planning, production,
and logistics with suppliers?
The Emerging Internet-Driven Supply Chain

The emerging Internet-

driven supply chain
operates like a digital
logistics nervous
system.
It provides
multidirectional
communication among
firms, networks of firms,
and e-marketplaces so
that entire networks of
supply chain partners
can immediately adjust
inventories, orders, and
capacities.
 Business Value of Supply Chain Management Systems

• Match supply to demand

• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more effectively
• Reduced supply chain costs lead to increased profitability
• Total supply chain costs can be 75% of operating budget

• Increase sales
How do customer relationship
management systems help firms Customer
achieve
customer intimacy? Relationship
Management (CRM)

• Knowing the customer

• In large businesses, too many customers and too many
ways customers interact with firm
 How do customer relationship management systems help firms achieve
customer intimacy?

Customer Relationship Management

• Customer Relationship Management (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.
 How do customer relationship management systems help firms achieve
customer intimacy?
Customer Relationship Management (CRM)

CRM systems examine customers

from a multifaceted perspective.
These systems use a set of
integrated applications to address
all aspects of the customer
relationship, including customer
service, sales, and marketing.
 CRM Software
• CRM packages range from niche tools to large-scale
enterprise applications.
• More comprehensive have modules for:
Partner • Integrating lead generation,
Relationship pricing, promotions, order
configurations, and availability
Management • Tools to assess partners’
(PRM) performances

Employee • Setting objectives, employee

Relationship performance management,
performance-based
Management compensation, employee
(ERM) training
 CRM Software
• CRM packages typically include tools for:
Sales force • Sales prospect and contact information,
automation (SFA) sales quote generation capabilities

• Assigning and managing customer

Customer service service requests, Web-based self-
service capabilities

• Capturing prospect and customer data,

scheduling and tracking direct-
Marketing marketing mailings or e-mail, cross-
selling
 How do customer relationship management systems help firms achieve
customer intimacy?

How CRM Systems Support Marketing

Customer relationship
management software
provides a single point for
users to manage and
evaluate marketing
campaigns across multiple
channels, including e-mail,
direct mail, telephone, the
Web, and wireless
messages.
 How do customer relationship management systems help firms achieve
customer intimacy?

CRM Software Capabilities

The major CRM software

products support business
processes in sales, service, and
marketing, integrating customer
information from many different
sources. Included are support for
both the operational and
analytical aspects of CRM.
 How do customer relationship management systems help firms achieve
customer intimacy?
Customer Loyalty Management Process Map

This process map shows how a best practice for promoting customer loyalty through
customer service would be modeled by customer relationship management software. The
CRM software helps firms identify high-value customers for preferential treatment.
 Operational and Analytical CRM

Operational CRM Analytical CRM

• Customer-facing applications
such as
• sales force automation
• call center and customer service
support
• marketing automation
• Based on data warehouses
populated by operational CRM
systems and customer touch
points
• Analyzes customer data (OLAP,
data mining, etc.)
• Customer lifetime value (CLTV)
 How do customer relationship management systems help firms achieve
customer intimacy?
Analytical CRM Data Warehouse
Analytical CRM uses
a customer data
warehouse and tools
to analyze customer
data collected from
the firm’s customer
touch points and
from other sources.
 Business Value of Customer Relationship Management

• Increased customer satisfaction

• Reduced direct-marketing costs
• More effective marketing
Business • Lower costs for customer acquisition/retention
benefits • Increased sales revenue

• Number of customers who stop using or purchasing

products or services from a company
Churn • Indicator of growth or decline of firm’s customer base
rate
 Enterprise Application Challenges
• Highly expensive to purchase and implement enterprise
applications
• Average cost of ERP system is over $7 million
• Average completion time is over 17 months

• Deep-seated technology changes

• Business process changes
• Organizational learning, changes
• Switching costs, dependence on software vendors
• Data standardization, management, cleansing
 Next-Generation Enterprise Applications

• To bring greater value from enterprise applications

• Enterprise solutions/suites: make applications more flexible, Web-enabled, integrated
with other systems
• Inclusion of SOA standards to link to 3rd party software
• Open-source applications
• Cloud-based, on-demand solutions
 Unilever Unifies Globally With Enhanced ERP

Interactive Session: Technology

Unilever Unifies Globally With Enhanced ERP

• Read the Interactive Session and then discuss the

following questions:
• Identify the problem facing Unilever in this case. What people,
organization, and technology factors were responsible for this
Problem?

• How is enterprise resource planning related to Unilever’s business

strategy? How did consolidating ERP systems support Unilever’s
business strategy?

• Why was using SAP HANA so helpful?

 Unilever Unifies Globally With Enhanced ERP

Interactive Session: Technology

Unilever Unifies Globally With Enhanced ERP
• How effective was the solution the company chose?

• How did Unilever’s new systems improve operations and

Management decision making? Give two examples.
 Next-Generation Enterprise Applications

• Incorporating social networking

technologies
• Company social networks
Social CRM • Customer interaction via Facebook
• E.g. Buzzient platform integrates
social media with enterprise
applications

• Inclusion of BI with enterprise

applications
Business • Flexible reporting, ad hoc analysis,
intelligence “what-if” scenarios, digital
dashboards, data visualization
 References

• Laudon, K. & Laudon, J. (2015). Essentials of MIS,

Global Edition (11th ed.). England: Pearson Education
Limited.