Introduction to Information Technology Turban Rainer and Potter

Enterprise Systems: From Supply Chains to EPR to CRM “ Copyright 2005 John Wiley

Chapter Outline Essentials of enterprise systems and supply chains Supply chain problems and solutions Computerized enterprise systems: MPR, MRPII, SCM, and software integration Enterprise resource planning and supply chain management CRM and its support by IT “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 3

Learning Objectives Understand essentials of enterprise systems and computerized supply chain management. Describe the various types of supply chains Describe the problems of managing supply chains and some innovative solutions. Describe the major types of software that support activities along the supply chain Describe the need for integrated software and how ERP does it Describe CRM and its support by IT. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 4

8. 1 Essentials of Enterprise Systems and Supply Chains Enterprise systems: System or process that involve the entire enterprise or major portions of it. Enterprise resource planning (ERP): supports the internal SC Extended EPR: supports business partners as well Customer relationship management (CRM): provides customer care. Partner relationship management (PRM): is designed to provide care to business partners. Decision support systems (DSSs): support decision making throughout the enterprise. Knowledge management (KM) systems: support knowledge creation, storage, maintenance and distribution. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 5

Definitions Supply chain: The flow of materials, information, money, and services from raw material suppliers, through factories and warehouses to the end customer; includes the organizations and processes involved. Supply chain management (SCM): The planning, organizing and coordinating of all supply chain’s activities. E-supply chain: A supply chain that is managed electronically usually with Webbased software. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 6

The Flows in the Supply Chain Materials flows: These are all physical products, raw materials, supplies, and so forth, that flow along the chain. The concept of materials flows include reverse flows-returned products, recycled products and disposal of materials or products. Information flows: All data related to demand, shipments, orders, returns, and schedules. Financial flows: All transfers of money, payments, credit card information and authorization, payment schedules, e-payments and credit related data. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 7

The Structure and Components of Supply Chains The supply chain involves three segment: Upstream, where sourcing or procurement from external suppliers occur Internal, where packaging, assembly, or manufacturing take place Downstream, where distribution or dispersal take place, frequently by external distributors Supply chain also include the movement of a product or a service and the organizations and individuals involved, are part of the chain as well. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 8

An Automotive Supply Chain “ Copyright 2005 John Wiley & Sons Inc. ” Chapter

Types of Supply Chains Integrated make-to-stock, Continuous replenishment, Build-to-order, and Channel assembly. “ Copyright

8. 2 Supply Chain Problems and Solutions Problems along the supply chain from two sources: Uncertainties Need to coordinate several activities, internal units and business partners A major source of supply chain Uncertainties is the demand forecast. The actual demand may be influenced by several activities such as competition, prices, weather conditions, technological developments, customers’ general confidence, delivery times and more. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 11

Bullwhip Effect Erratic shifts in orders up and down the supply chain. It is related to properly setting inventory levels in various parts of the supply chain “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 12

Solution to Supply Chain Problems Vertical integration: the upstream part of the supply chain with the internal part, typically by purchasing up- steam suppliers, in order to ensure availability of supplier. Using inventories: The most common solution used by companies to solve supply chain problems is building inventories as an “insurance“ against supply chain uncertainties. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 13

Solutions to SC Problems cont… Information sharing: sharing information along the supply chain can improve demand forecasts. Such sharing can be facilitated by EDI, extranets, and groupware technologies. Vendor-managed inventory (VMI): allowing suppliers to monitor, the inventory levels of their products in the retailors’ stores and to replenish inventory when needed. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 14

Solutions to SC Problems cont… Changing a linear SC to a Hub: In linear supply chains, information is processed in a sequence , which slows down its flow. One solution is to change the linear chain into hub. Each partner in the supply chain can directly access the images in the data bank Supply chain collaboration: . Proper supply chain and inventory management requires coordination of all different activities and links of the supply chain. Successful coordination enables goods to move smoothly and on time from supplier to manufacturers to customers, which enables a firm to keep inventories low and costs down “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 15

Solutions to SC problems cont… SC Team: A group of tightly integrated businesses that work together to serve the customer; each task is done by the member of the team who is best capable of doing the task. Virtual factory: . Collaborative enterprise application that provides a computerized model of a factory. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 16

IT Supported Solutions to SC Problems Problem Area Solution Slow communication Use wireless devices to find vehicle locations to expedite salespeople’s contact with headquarters. Use hub supply chain to enable online access to information Difficult product configuration Use DSS and intelligent systems for rapid and accurate analysis Select and coordinate suppliers Use DSS to determine which suppliers to use, determine how to create strategic partnerships Supplier arrive when needed Use just-in-time approach and collaboration with suppliers. Handle peak demands use IT-enable outsource. Use DSS to determine what to outsource and when to buy and not make Expedite lead time for buying and selling Use e-commerce tools and business intelligence models Tool many or too few suppliers Use optimization models to decide and employ e-procurement Control inventory levels Manufacture only after order received (online). Use VMI and web-serviced Forecast fluctuating demand Use collaboration (like CPFR) or intelligent system Expedite flows in the chain Automaterial , information and money flows suppliers relationships Improve supplier relationship by using portals, web-based call center, and other CRM and PRM tools “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 17

8. 3 Computerized Enterprise Systems: MRP, MRPII, SCM, and Software Integration Material requirement planning (MRP). A planning model that integrates production, purchasing and inventory management of interrelated product. Manufacturing resource planning (MRP II). An enhanced planning model that adds labor requirements and financial planning to MPR. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 18

8. 3 Why system integration? Sandoe et al. (2001) list the following major benefits

Internal versus external integration Internal integration refers to integration within a company between (or among) application, and/or between application and data bases. External integration refers to integration of applications and databases among business partners. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 20

8. 4 Enterprise Resource Planning and Supply Chain Management n Enterprise resource planning (EPR): Software that integrates the planning, management and use of all resource in the entire enterprise. n SAP R/3 the leading EPR software (form SAP AG Crop. ): a highly integrated package containing more than 70 business activities modules. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 21

Generations of ERP The first generation of ERP concentrated on activities within the enterprise that were routine and repetitive in nature. The objective of second –generation EPR is to leverage existing information systems in order to increase efficiency in handling, transaction, improve decision making, and transform ways of doing business into ebusiness. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 22

8. 5 CRM and its Support by IT Customer relationship management (CRM): An enterprise wide effort to acquire and retain customers, often supported by IT. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 23

Type of CRM Operational CRM: activities involving customer services, order management, invoice /billing and sale/marketing automation and management. Analytical CRM: activities that capture, store, extract , process, interpret, and report customer data a corporate. user. Collaboration CRM: deals with all the necessary communication coordination and collaboration between vendors and customers. “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 24

Classification of CRM Application Customer-facing applications Customer-touching applications Customer-centric intelligence applications Online networking applications “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 25

E-CRM (Electronic CRM) The use of web brewers, the Internet and other electronic touchpoints

The Scope of E-CRM Foundational service Customer-centered services Value-added services “ Copyright 2005 John

Customer Service on the Web Search and comparison capabilities Free products and services Technical and other information and services Customized products and services Account or order status tracking “ Copyright 2005 John Wiley & Sons Inc. ” Chapter 8 28