koch MIS ch. 8

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koch

integrations

connections, allow separate systems to communicate directly with each other, eliminating the need for manual entry into multiple systems. Allows the sharing of information across databases along with increasing its quality.

Two common methods used for integrating databases?

1. Create forward and backward integration that link processes in the value change.
2. Build a central repository for a particular type of information

Forward integration

takes information entered into a given system and sends it automatically to all downstream systems and processes.

backward integration

takes information entered into a given system and sends it automatically to all upstream systems and processes

True or false? Both integration methods entirely eliminate information redundancy, ensuring information consistency among multiple systems.

FALSE, duh again. They do not entirely eliminate information redundancy, but they do ensure information consistency among multiple systems.

Enterprise systems

provide enterprisewide support and data access for a firm's operations and business processes.
Can also manage customer information across the enterprise.

Enterprise application integration (EAI)

connects the plans, methods, and tools aimed at integrating separate enterprise systems.

Reviews how legacy systems fit into the new shape of the firm's business processes and devises ways to efficiently reuse what already exists while adding new systems and data.

Legacy system

current or existing system that will become the base for upgrading or integrating with a new system.

Middleware, def and what is achieved

integrations are achieved using middleware.
Definition: several different types of software that sit between and provide connectivity for two or more software applications.
Translates information between disparate(different) systems.

Enterprise application integration middleware (EAI middleware) -- What does it do?

takes a new approach to middleware by packaging commonly used applications together, reducing the time needed to integrate applications from multiple vendors.

Three enterprise systems most organizations use to integrate??

1. Supply Chain Management (SCM)
2. Customer Relationship management
3. Enterprise resource planning (ERP)

How much does the average company spend on suppliers and raw materials to manufacture products?

Half of EVERY dollar!!!!!!!!!!

Supply chain

consists of all parties involved, directly or indirectly, in obtaining raw materials or a product.

5 basic supply chain activities

1. Plan
2. Source
3. Make
4. Deliver
5. Return

Plan

Prepare to manage all resources required to meet demand

Source

Build relationships with suppliers to procure raw materials

Make

Manufacture products and create production schedules

Deliver

Plan for transportation of goods to customers

Return

Support customers and product returns

Supply Chain Management

SCM is the management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and corporate profitably.

What is the main goal of SCM?

creating fast, efficient, and low-cost networks of business relationships that take products from concept to market

SCM performs three main business processes which are..

1. Materials flow from suppliers and their upstream suppliers at all levels.
2. Materials are transformed into semifinished and finished products -- the organization's own production processes
3. Products are distributed to customers and their downstream customers at all levels.

Impact of effective and efficient SCM systems on Porters 5 Forces

- Decrease the power of its buyers (Buyer power)
- Increase its supplier power
- Increase buyers' switching costs to reduce the threat of substitute products or services
- Create entry barriers to reduce the threat of new entrants
- increase effciencies while seeking a competitive advantage through cost leadership.

Benefits of improved SCM

Improved visibility
Increased profitability

Supply chain visability

the ability to view all areas up and down the supply chain in real time.

How does a firm increase supply chain visibility?

By using SCM systems and supply chain execution systems

Supply chain planning systems

use advanced mathematical algorithims to improve the flow and efficiency of the supply chain while reducing inventory.

They require information inputs that are correct and up-to-date regarding customers, orders, sales, manufacturing, and distribution capabilities.

Supply chain execution systems

ensure supply chain cohesion by automating the different activities of the supply chain.

ex. a supply chain execution system might electronically route orders from a manufacturer to a supplier using electronic data interchange.

Electronic data interchange

a standard format for the electronic exchange of information between supply chain participants.

What is a good example of inventory issues that occur when a company does not have a clear vision of its entire supply chain?

THE BULLWHIP EFFECT!!!!

When does the bullwhip effect occur?

When distorted product-demand information ripples from one partner to the next throughout the supply chain.

Get magnified as it moves through the supply chain.

How do SCM's increase profitability?

Because we live in a world full of technology so unless you keep up with it but implementing systems, you fall behind.

Demand planning systems

generate demand forecasts using statistical tools and forecasting techniques so companies can respond faster and more effectively to consume demands through supply chain enhancements.

A supply chain is only as strong as....

Its weakest link!

Some metrics SCM systems use to identify weak links include

1. Back order
2. Inventory cycle time
3. Customer order cycle time
4. Inventory turnover

Challenges of SCM

1. Costs
2. Complexity
3. Move towards globalization

Some of the fastest growing SCM components

1. Collaborative demand planning
2. Collaborative engineering
3. Selling chain management
4. Supply chain event management

Customer relationship management (def, and what does it do)

a way of managing all aspects of a customer's relationship with an organization
increases customer loyalty and retention and the organization's profitability

Primary component of managing a customer relationship?

Knowing when and why the customer is communicating with the company

Complicated part of CRM

Customers have many communication channels they can use to contact a company including:
-Call centers
-Websites
-email
-faxes
-telephone

With a CRM system, a company can obtain an overview of the customer's

-products
-preferences
-account information
-communications
-purchasing history

Benefits of a CRM

-best positioned to achieve success
-Operate more efficiently and effectively
-enables a firm to treat customers as individuals
-generally see higher profits

RFM formula

Recently, frequency, monetary value

How RECENTLY a customer purchased items
How FREQUENTLY a customer purchases items
The MONETARY value of each customer purchase

3 phases in the evolution of CRM

1. Reporting
2. Analyzing
3. Prediciting

CRM reporting technologies

help organizations identify their customers across applications

CRM analysis technologies

help organizations segment their customers into categories such as best and worst customers

CRM predicting technologies

help organizations predict customer behavior, such as which customers are at risk of leaving

Two primary components of a CRM strategy

Operational CRM
Analytical CRM

Operational CRM

supports traditional transactional processing for day-to-day front office operations or systems that deal directly with the customers (Sales systems, marketing systems, customer service systems)

Analytical CRM

supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers. (data mining and data warehouse)

3 operational CRM technologies marketing can use

1. List generator
2. campaign management
3. cross-selling and up-selling

List generator

compile customer information from a variety of sources and segment it for different marketing campaigns.

Campaign management systems

guide users through marketing campaigns by performing such tasks as campaign definition, planning, scheduling, segmentation, and success analysis.

Cross-selling

selling additional productions or services to an existing customer.
(ex. buy movie, then prompted to buy the soundtrack as well)

up-selling

increasing the value of the sale
(ex. upsizing a value meal)

Who were the first to begin developing CRM systems?

Sales departments

Two primary motivations to track customer information electronically include...

1. Sales reps were struggling with the overwhelming amount of customer account information they were required to maintain and track
2. Managers found themselves hindered because their vital customer and sales information remained in the heads of their sales reps, even if the sales reps left the company

Sales force automation (SFA)

automatically tracks all the steps in the sales process. Focus on increasing customer satisfaction, building relationships, and improving sales.

3 operational CRM systems sales can use

1. Sales management CRM
2. Contact management CRM
3. Opportunity management CRM

Sales management CRM systems

automate each phase of the sales process, helping each sales rep manage information on customers. Also can track how well individual sales reps are doing

Content management CRM system

maintains customer contact information and identifies prospective customers for future sales
(ex. caller ID)

Opportunity management CRM systems

target sales opportunities by finding new customers or companies for future sales

3 operational CRM systems customer service can use

1. Contact center
2. Web-based self-service
3. call scripting

Contact center

is where customer service reps answer customer inquiries and solve questions usually by email, chat, or phone

Web-based self-service

allows customers to use the web to find answers to their questions or solutions to their problems

click to talk functions

Call scripting

gather product details and issue resolution information that can be automatically generated into a script for the reps to read to the customer

Analytical CRM

provides information about customers and products that was once impossible to locate. It uses business intelligence to identify patterns in product sales and customer behaviors

website personalization

when a website has enough information about a persons likes and dislikes to fashion offers more likely to appeal to that person,

What can analytical CRM do?

1. Find new profitable customers
2. Exceed customer expectations
3. Discover the activities the firm performs the best
4. eliminate competition
5. care about customers

Sales metrics

1. number of new customers
2. number of sales calls
3. number of prospective customers
4. number of retained customers

Customer service metrics

1. number of service calls
2. average time to resolution
3. customer satisfaction level
4. number of cases handled by agent

Marketing metrics

1. new customer retention rates
2. number of responses by marketing campaign
3. customer retention rate
4. number of new leads by product

Challenges of CRM

The customer is always right, even if he isn't.

The future of CRM (3 key business areas)

1. Supplier relationship management (SRM)
2. Partner relationship management (PRM)
3. Employee relationship management (ERM)

Enterprise Resource Planning (ERP)

integrates all departments and functions throughout a single IT system so employees can make decisions by viewing enterprisewide information about all business operations

ERP systems provide companies with ...

CONSISTENCY!!! EFFECTIVE PLANNING and CONTROLLING!

What did the first generation of ERP systems focus on?

improving the manufacturing process through automation.
primarily dealt with back-office rig-a-ma-roll.

What did the second generation of ERP systems do?

extended the first generation to the front office jazz.

What did the third generation of ERP systems do?

ERP-II, allows a company to compete on a functional level by adopting an enterprisewide approach using the Internet to connect all participants in the value chain

What is the current generation of ERP and what does it consist of?

ERP-II, composed of core and extended

CORE ERP components, three most common

the traditional components included in most ERP systems and primarily focus on internal operations

-accounting and finance
-production and materials management
-human resources

Extended ERP components

the extra components that meet organizational needs not covered by the core components and primary focus on external operations

business intelligence
customer relationship management
supply chain management
Ebusiness

One of the best methods of measuring ERP success?

the balanced scorecard

The balanced scorecard

is a management system, as well as a measurement system that a firm uses to translate business strategies into executable tasks. It provides feedback for both internal and external business processes, allowing continuous improvement

4 perspectives on the balanced scorecard

1. The learning and growth perspective.
2. The internal business process perspective
3. The customer perspective.
4. The financial perspective

The challenges of ERP

1. Cost
2. Complexity

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