Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

Enterprise and Business Process Integration

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications LEARNING OBJECTIVES

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Demonstrate how enterprise systems achieve operational excellence by integrating and coordinating diverse functions and business processes in the firm.

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Demonstrate how supply chain management systems coordinate planning, production, and logistics with suppliers.

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Demonstrate how customer relationship management systems achieve customer intimacy by integrating all customer information and making it available throughout the firm.

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications LEARNING OBJECTIVES (cont’d)

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Assess the challenges posed by enterprise applications.

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Describe how enterprise applications can be used in platforms for new cross-functional services.

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Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Whirlpool Fixes Its Supply Chain

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Problem: Uncontrollable supply chain, outdated systems.

Solutions: Eliminate manual procedures and implement supply chain software suite to allocate inventory more accurately and forecast demand.

i2 Technologies forecasting software and SAP ERP software reduce inventory and increase sales.

Demonstrates IT’s role in coordinating supply chains.

Illustrates digital technology as part of a solution that can benefit both a firm and its customers.

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2007 by Prentice Hall

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Systems

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What are enterprise systems?

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Consulting Firms

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Enterprise software – Builds industry expertise working with many clients

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Best practices

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SAP-R3, Oracle (Peoplesoft), Microsoft (Dynamics Software Systems

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Business value of enterprise systems – increased operational efficiency and firm-wide information to help managers make better decisions.

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Systems 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.

Figure 9-1

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

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The supply chain – network of organizations and business processes for: Procuring raw materials, - Transforming them into intermediate & finished product, and - Distributing to customers Information and Supply Chain (Flow of Information)

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Upstream – portion of supply chain that includes company’s suppliers, the suppliers’ suppliers, and the processes for managing relationships.

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Downstream – organizations and processes for distributing and delivering products to the final customer.

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems 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. Figure 9-2

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Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems Information and Supply Chain

 Inefficiencies – caused by inaccurate or untimely information (25% Operating costs)     Parts shortage Underutilized plant capacity Excessive inventory Transportation Costs  Just-in-time strategy – components would arrive when needed, finished goods would be shipped as they left assembly line (excess inventory is expensive, low fill rates are also costly – order cancellation)  Uncertainties – events cannot be foreseen  Product demand  Late shipments from suppliers   Defective parts or raw materials Production Process Breakdown  Bullwhip Effect – information about demand gets distorted along the supply chain (stockpile inventory)

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2007 by Prentice Hall

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems THE BULLWHIP EFFECT 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. Figure 9-2

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems Supply Chain Management Applications –

enable firms to generate demand forecasts for a product and develop sourcing and manufacturing plans for the product. Companies can make better operating decisions (

e.g

How much of a specific product to manufacture in a given time, determine inventory levels of raw and intermediate as well as finished products, transportation mode for delivery).

Impact of last minute order (cancellation, modification, upscaling), Job Scheduling, delivery reschedule (adjustments to production and distribution) Demand Planning – determines how much product a business needs to make to satisfy all of its customers’ demands Supply Chain Execution Systems – manage flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner . They track the physical status of goods, the management of materials, warehouse and transportation operations, and financial information involving all parties

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SCM Applications (Systems)

The primary goal of all supply chain management systems is to automate flow of information between company and supply chain partners.

Two major types: Supply chain planning systems: Generate demand forecasts for a product (demand planning) and help develop sourcing and manufacturing plans for that product.

Supply chain execution systems: parties. Track the physical status of goods, the management of materials, warehouse and transportation operations, and financial information involving all ©

2007 by Prentice Hall

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Supply Chain Planning and Execution Systems (Examples)

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2007 by Prentice Hall

Intranets and Extranets Play a Major Role in SCM

Ovals represent extranet users.

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Figure 11-6 ©

2007 by Prentice Hall

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

Supply chain management and the Internet

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Demand-driven supply chains: From push to pull manufacturing and efficient customer response

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Intranet and extranet Supply Chain Models - Push-based Model – (build to stock) – - Pull-based Model – (demand driven or build to order) Customer triggers supply chain, E Business.

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Push Vs Pull Model

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2007 by Prentice Hall

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Internet Driven Supply Chain Digital Logic Nervous System

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2007 by Prentice Hall

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

Business value of supply chain management systems -

Streamline Internal and External Supply Chain Processes - Provide Management with more accurate information about what to produce, store and move.

- Companies match supply to demand - Reduce Inventory Levels - Improve delivery - Speed product time to market - Uses assets more effectively - Helps increase sales

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems

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What is customer relationship management Customer relationship management software

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Sales force automation (SFA) Customer service Marketing Operational and analytical CRM Business value of customer relationship management sytems

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 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.

Figure 9-7

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems IHOP Cooks Customer Data to Order

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Read the Interactive Session: Technology, and then discuss the following questions:

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How does knowledge of customers impact IHOP’s business performance?

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Why did IHOP have trouble getting to know its customers?

How has the company chosen to improve its knowledge of customers? Analyze the management, organization, and technology dimensions of the solution.

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Did IHOP choose the best solution? Explain your answer.

Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Applications: New Opportunities and Challenges

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Enterprise application challenges

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Extending enterprise software

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Service platforms Security outsourcing