Chapter 7

Enterprise Systems:
From Supply Chains to ERP to CRM

Information Technology For Management 5th Edition

Turban, Leidner, McLean, Wetherbe
Lecture Slides by A. Lekacos,
Stony Brook University
John Wiley & Sons, Inc.
Learning Objectives

(enterprise systems)
(computerized supply chain
management)
(supply chain)
supply chain innovative
solutions.

supply chain
(integrated software)
ERP
CRM IT.
ChevronTexaco Modernized Its Supply
Chain With IT
The Business Problem
ChevronTexaco US



(Run-out)

(Retain)
Supply Chain
Supply Chain


match Supply Chain

 ChevronTexaco


(peak demand)

Spot market

ChevronTexaco
(mass production)
(Supply-driven strategy)

Supply Chain
 IT Solution
business model Push (
) Pull (
)


Electronic
Monitor (real
time) IT
main inventory system
main office
Advanced DSS-based planning system
logistic
DSS (Trucking
company)(airline company)
 Enterprise Resource Planning (ERP) Business
Planning System
Spot market




Supply Demand ERP
(Planner) Supply

Chain ( refinery, terminal management, station
management, transportation, production)

IT e-
business
 The Results
(integrated system)

Supply Chain
300 1999
100
Worthen (2002) 20% (
) Supply Chain
inventory

(20% )
minimize
Roadmap: Overview of enterprise
system

Intelligent
System
Business
Intelligence
7.1 Essentials of Enterprise Systems
and Supply Chains
Enterprise systems ( Enterprisewide system)


functional system
Enterprise system
Enterprise resource planning (ERP): Supply Chain
enterprise
Extended EPR: ERP
Customer relationship management (CRM):
Partner relationship management (PRM):

Decision support systems (DSSs):
enterprise data warehouse
Executive information system
Knowledge management (KM) systems:

 Relevant Definitions

Supply chain (flow)



Supply chain management (SCM) SCM
Optimize
supply chain
SCM Software
Supply Chain
decision making
optimization analysis
E-supply chain Supply chain
Web-based software
E-Commerce and Supply Chain
The Flows in the Supply Chain
Supply Chain ( )
(Materials flows)

materials flows reverse flows-returned products,
recycled products disposal of materials or products.
(Information flows)



(schedule)
(Financial flows)
credit card


 Supply Chain
(Service industry)

(hard and/or soft copies)
software, music
Supply chain
replaces materials
flow ( digitized software) supporting
information ( orders billing )
The Structure and Components of
Supply Chains
Supply chain
Supply chain ( ) :
(Upstream) sourcing procurement external
suppliers
(Internal) packaging, assembly,
manufacturing
(Downstream) distribution dispersal
external distributors
Supply chain


 SC


(Upstream)

(Internal)
(Downstream)
(Flow diagram)


Linear Supply
Chain
Toy industry supply chain
An Automotive
Supply Chain
Types of Supply Chains
Supply Chain
warehouse
chain

Supply Chain

(Integrated make-to-
stock)
(Continuous replenishment)
(Build-to-order)
(Channel assembly)
 Supply Chains Classifications

Supply Chain Value Chain Demand Chain

Benefits of Proper Supply Chain
Management
SC
(


)

(goal) Supply Chain Management (SCM)
(Uncertainty)
(Risk) Supply Chain
(inventory level), (cycle
time)
7.2 Supply Chain Problems and
Solutions

Problems with Santas Supply Chain, page

300
supply chain :
(Uncertainties)

( )

supply chain
(demand forecast)



Bullwhip Effect

(inventory level)
Supply chain Bullwhip Effect
Bullwhip Effect (Erratic shifts)
supply chain

supply chain

P&G 301
Solution to Supply Chain Problems
SC

(Vertical integration)
SC
Vertical integration
(upstream part) supply chain
(internal part) (
up- steam suppliers)

Supply
chain
Solutions to SC Problems cont
(Using inventories)

supply chain inventory
(building inventories) supply
chain uncertainties

(
supply chain
bullwhip effect )


Solutions to SC Problems cont
(Information sharing)
(sharing
information) supply chain
(demand forecasts)
EDI, extranets groupware technologies.




VMI
Vendor-managed inventory (VMI)
(monitor)
inventory
 RFID Supply chain
 RFID
 Solutions to SC Problems cont
linear SC Hub
linear supply chain
(
)
linear chain hub
supply chain

Solutions to SC Problems cont
SC (Supply chain collaboration)
supply chain inventory

supply chain

supplier manufacturers customer




IT at Work 7.1 How Warner-Lambert
applies an integrated supply chain page 306
Supply Chain Management
Solutions to SC problems cont
Other IT-Assisted Solution to SCM Problems
SC: linear SC hub
SC Team SC Team tightly integrated
businesses


(Virtual factory):
IT

Wireless Solution
IT at Work 7.2 Peacocks retails uses
wireless to smooth its supply chain, page 308
 IT Supported Solutions to SC
Problems
Problem Area Solution
Use wireless devices to find vehicle
Slow
locations to expedite salespeoples
communication
contact with headquarters. Use hub
supply chain to enable online access
Difficult product Use DSS and intelligent systems for
to information
configuration rapid and accurate analysis
Select and Use DSS to determine which
coordinate suppliers to use, determine how to
 IT Supported Solutions to SC
Problems
Expedite lead Use e-commerce tools and business
time for buying intelligence models
and
Toolselling
many or too Use optimization models to decide
few suppliers and employ e-procurement
Control inventory Manufacture only after order received
levels (online) . Use VMI and web-serviced
Forecast Use collaboration (like CPFR) or
fluctuating intelligent system
demand
Expedite flows in Automate material , information and
 7.3 Computerized Enterprise Systems:
MRP, MRPII, SCM, and Software
Integration
The Evolution of Computerized Aids
SCM
SC
inventory management system, scheduling billing
Supply Chain Management (SCM)
MRP ERP
Material requirement planning (MRP).


Manufacturing resource planning (MRP II).

MPR.
 Why system integration?
20 Functional
oriented ( )
21





platform
( (integrate) (systems)

)
Sandoe (2001) major benefits
(systems integration):
(Tangible benefits)
inventory,

(Intangible benefits)

Internal versus external integration

) Internal integration (
) ( ) /



CRM

) External integration

supplier
buyers e-procurement
 7.4 Enterprise Resource Planning and
Supply Chain Management
ERP ?
enterprisewide client/server computing


ERP
Enterprise resource planning (EPR):



Rolls-Royce, page 311
Consolidation Application via ERP, page 311
SAP R/3 EPR software ( SAP AG Crop.):
70 business activities
modules
ERP Online file W7.4
Generations of ERP

ERP

ERP



e-business.
ERP


SCM SC
 ERP SCM
ERP SCM

(Order processing)
ERP How can I best take or fulfill you
order ? (
) SCM
Should I take your order ? (
()
)
SCM optimization

Supply chain ERP

( )
 How IBM is using SCM, page 313
ERP SCM
SAP ERP SCM
(
middleware vendor
)
decision support analysis ERP
Business Intelligence (BI)
DSS, ESS, data mining Intelligent
system ( business intelligence function
second generation ERP decision support
CRM, e-commerce data warehouse data mining
knowledge management )
Colgate-Palmolive Uses ERP to Smooth Its Supply
Chain, page 315
Third-Generation ERP

(distribution center)
truckloads
Dynamically sourcing products
Shared services for manufacturing
Global order management

/
Supplier portals
 Integrating ERP with Other Enterprise Systems
IT at Work 7.4 Integrating EC and ERP
at Cybex, page 316
ERP Failure and Their Prevention

ERP Integration Problems at Hershey, page 316
Rushing Resulted in Damage, page 317
Did ERP Bankrupt FoxMeyer?, page 317
Gores ERP Cost Too Much, page 317
7.5 CRM and its Support by IT
Customer relationship management (CRM):
enterprisewide

IT
CRM IT
Operational CRM: customer
services, order management, invoice /billing
sale/marketing automation management .
Analytical CRM: capture, store, extract ,
process, interpret, report customer data a corporate user.
Collaboration CRM: all the necessary communication
coordination collaboration vendors customers.
CRM Application
 Classification of CRM Application
Customer-facing applications

Customer-touching applications

self-service, e-commerce application
Customer-centric intelligence applications
operational processing
CRM Application
Online networking applications
online
E-CRM (Electronic CRM)
web browsers, Internet electronic touch-
points

E-CRM
E-CRM
1) Foundational service (minimum necessary services)
2) Customer-centered services (focus on customer
need)
3) Value-added services (extra service)
Customer Service on the Web
e-CRM Web
1)
2)
3)

4)

5)

Other tools for customer service

1) Personalized Web pages
2) FAQs
3) E-mail and automated response
4) Chat rooms
5) Call center
6) Troubleshooting tools
CRM Failure
7.2 323
 MANAGERIAL ISSUES

Ethical issues.
supply chain management project lay
off, retrain, transfer employees

retrain
How much to integrate?
project
ERP, SCM, e-commerce long
complex supply chain segments
upstream, inside-company,
downstream
MANAGERIAL ISSUES
Role of IT.
major SCM projects IT
IT

IT SCM
Organizational adaptability.
ERP
software
software

 MANAGERIAL ISSUES
Going global
EC
long and complex supply chains
logistics supply chain
regulations payment issues.
The Customer is king/queen.
IT application
customer/end-user
Set CRM policies with care.
CRM


 7

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