Chapter 8: Strengthening Business-to-Business Relationships via Supply Chain and Customer Relationship Management
Supply chain management (SCM) systems support business-to-business (B2B) transactions; customer relationship management (CRM) systems promote sales and long-term customer relationships
Chapter 8 Learning Objectives
Supply Chain Management
What Is a Supply Chain?
A collection of companies and processes involved in moving a product from the suppliers of raw materials to the suppliers of intermediate components, then to final production, and, ultimately, to the customer
Referred to as a chain as one supplier feeds into the next, then the next, then the next
A network is more accurate because businesses have multiple suppliers, who have multiple suppliers
A Typical Supply Network
Business-to-Business Electronic Commerce: Exchanging Data in Supply Networks
Business-to-Business (B2B) Electronic commerce
90% of all EC in the United States
Involve Proprietary Information
Originally facilitated using Electronic Data Interchange (EDI) prior to the Internet
Now suppliers use Web-based EDI protocols
Companies also use Extranets (Chapter 3), Portals and Marketplaces to facilitate B2B EC
Business-to-Business Electronic Commerce: Exchanging Data in Supply Networks
Portals
Supplier Portals
Customer Portals
B2B Marketplaces
Link many supplies and customers together
Allow smaller businesses to participate in the markets
Many focused on vertical markets
A vertical market is a market within an industry sector
Highly efficient
Some more general îAlibaba.com
Managing Complex Supply Networks
Benefits of Effectively Managing Supply Chains
Just-in-Time Production
Inventory delivered just as it is needed
Minimizes stock and handling costs
Reduces obsolescence charges
Vendor-Managed Inventory
Vendors track usage and replenish supplies
Reduces procurement and inventory replenishment costs
Benefits of Effectively Managing Supply Chains
Reducing the Bullwhip Effect
Ripple effects due to forecast errors
Coordinated supply chain helps mitigate this
Corporate Social Responsibility
Product recalls
Sustainable business practices
Optimizing the Supply Chain Through SCM
Supply Chain Management (SCM)
Supply Chain Planning
Supply Chain Execution
Supply Chain Visibility and Analytics
Functions the Optimize the Supply Network
Developing an SCM Strategy
Trade-offs
Supply Chain Efficiency
Minimizes cost, but increased risk of stock-outs
May sacrifice customer service
Supply Chain Effectiveness
Maximizes likelihood of meeting objectives
Increased costs associated with
Redundancy
Sticking levels
Cross-functionality
Developing an SCM Strategy
Supply Chain Planning (SCP)
SCP involves multiple SCM tools and modules working together to meet business needs and customer demand
SCP Processes
Demand Planning and Forecasting
Based on historical data, build a demand forecast
Distribution Planning
How to move products to distributors, transportation planning
Production Scheduling
Coordinate product/service creation, production plan
Inventory and Safety Stock Planning
Developing inventory estimates, determine optimal inventory levels, sourcing plan
Supply Chain Execution (SCE)
SCE focuses on the efficient and effective flow of materials, information, and financial transactions
SCE Flows
Product Flow
Movement of goods from supplier to production to distribution to consumer
RFID is an important enabling technology
Information Flow
Movement of information through supply chain (e.g., order processing and delivery status updates)
XML is an important enabling technology
Financial Flow
Movement of financial assets through supply chain
Payment schedules, consignment, ownership
Linkages to electronic banking and financial institutions
Financial Flow
Key Technologies for Enhancing SCM
Radio Frequency Identification (RFID)
Replaces bar codes
As low as 10 cents
Extensible Markup Language
XML, much like HTML for Web sites, creates a standard many businesses can use to help facilitate data exchange
Key Technologies for Enhancing SCM: Radio Frequency Identification
Key Technologies for Enhancing SCM: Extensible Markup Language
Managing B2B Financial Transactions
B2B Financial Transactions
B2C often uses e-payments such as PayPal
But B2C still primarily uses payment by check (75%)
Others: purchasing cards, letters of credit, Western union
Unknown suppliers and customers create significant fraud risk
Supply Chain Visibility and Analytics
Supply chain visibility
Product tracking
Anticipating adverse impacts
Weather impacts
Labor negotiations
Supply chain analytics
Monitoring SC performance
Identifying problem spots
Customer Relationship Management
Customer Relationships
Customer Relationship Management (CRM) Benefits
Developing a CRM Strategy
Key Elements of a CRM Strategy
Policies and Business Processes
Reflect a customer-focused culture
Customer Service
Quality, satisfaction, enhanced customer experience
Employee Training
For employees from all areas
Data Collection, Analysis, and Sharing
Track all aspects of the customer experience
Architecture of a CRM System
Operational CRM
Sales Force Automation (SFA)
Supports day-to-day sales force activities
Customer Service and Support (CSS)
Automates service requests, complaints, product returns, and information requests
Enterprise Marketing Management (EMM)
Improves the management of promotional campaigns
Operational CRM: Sales Force Automation
Operational CRM: Customer Service and Support
Customer interaction centers (CIC) support multiple communication channels
Evolved from help desks and call centers
Phone îautomatic call distribution systems, virtual hold technologies
Web îself-service technologies
Facebook
Industry blogs
Face-to-face
Operational CRM: Customer Service and Support
Operational CRM: Enterprise Marketing Management
Analytical CRM
Analyzing customer behavior and perceptions in order to provide the business intelligence necessary to identify new opportunities and to provide superior customer service
Key Analytical Technologies (Chapter 6)
Data mining
Decision support
Other business intelligence technologies
Analytical CRM: Digital Dashboards
Analytical CRM: Online Identities
Social CRM
Customers use Facebook and Twitter to comment on products and services
Monitoring social media conversations helps to understand public perceptions
Analytical CRM applications
Microsoft’ s Social Networking Accelerator
Google Alerts
Dell’ s Social Media Listening Command Center
Collaborative CRM
Systems for providing effective and efficient communication with the customer from the entire organization
Greater Customer Focus
Understanding customer history and current needs
Lower Communication Barriers
Personnel have complete customer information
Personnel use customer-preferred communication methods
Increased Information Integration
Personnel know prior and ongoing communication
Ethical Concerns with CRM
CRM systems may facilitate coercive sales practices
Systems may categorize customers in a way customers take offense to
Personalized communication may become too personal
End of Chapter Content
Managing in the Digital World: Walmart
Walmart is known for cutting costs and prices
Effective use of technology for supply chain
Vendor-managed inventory
Suppliers monitor inventory in Walmart’ s warehouses
Cross-docking: direct transfers from inbound to outbound truck trailers
Powerful CRM capabilities
When Things Go Wrong: Switching Switches îFailure at a Global Scale
Supply chains are increasingly global
Failure to carefully monitor partnerships can lead to expensive product recalls
Example: GM’ s faulty ignition switches took 10 years to resolve
An engineer covered up a mistake by leaving part number unchanged
Led to difficulty identifying faulty switches
Brief Case: The Formula for Success: Demand Media
Demand Media, Inc. focuses on providing answers to common questions
Uses search data and auction data to identify topics with high interest
Demand Media crowdsources solutions as articles and video clips and posts them to its own sites and YouTube
The traffic to view the answers generates advertising revenue
Demand Media has created a very large content base
45 sites with more traffic than ESPN and NBC combined
Now collaborating with Google
Coming Attractions: Saving Lives Through 3D Bioprinting
3D printing is an alternative to cutting and milling materials to create a part
3D printing builds a part up, eliminating waste
3D printing is now very precise and accurate
3D printing now moving into the world of medicine
Researchers in the Netherlands used 3D printing to replace a patient’ s skull
A UK-based company is using 3D printing to print up to 150 prosthetic eyes an hour
3D bioprinting researchers attempting to print complete organs for transplants
Key Players: Salesforce.com
CRM software is becoming key to business success
Critical for most medium to large organizations
Becoming a necessity for many small businesses
Small business often don’ t have the infrastructure to host complete CRM solutions
Salesforce.com hosts a CRM SaaS in an online cloud
The Sales Cloud
The Service Cloud
Chatter
Who’ s Going Mobile: The Power of Mobile CRM
In many organizations, the sales staff is often in the field
Mobile CRM allows staff to use CRM features on the road
The best mobile CRM has all the functionality of desktop CRM
Mobile CRM promotes efficiency and effectiveness, with many benefits
Increased revenue growth and customer renewals
Larger deal size
Increased user adoption and higher quota attainment
Lower sales force turnover
CRM, including mobile CRM, spending is increasing faster than any other application software investment
Ethical Dilemma: CRM: Targeting or Exploiting?
CRM systems allow companies to look closely at customer behavior and send targeted offers to select customers
Benefits include less advertising to uninterested parties
Fine segmentation may allow companies to take advantage of population groups
Some companies also sell data, without user knowledge or consent, at times in violation of their own stated practices
Verizon’ s Relevant Mobile Advertising campaign monitors customers’ Internet browsing habits
Often these practices are legal, but are they ethical?
Industry Analysis: Manufacturing
Computer-Aided Design (CAD)
Facilitates drawing, design, sharing, and collaboration
CAD design prototypes can be printed on 3D printers
This is called fabbing, and speeds up creation of models
3D printing adds successive layers of materials
SCP and ERP are used for inventory planning, job scheduling, and warehouse management
