ERP and Related Technologies Chapter 4 PDF

ERP and Related Technologies Chapter 4  What will we study in this chapter? I. Background: Significant limitations of VI. Product Life Cycle Management (PLM) ERP VII. Supply chain management (SCM)...

ERP and Related Technologies Chapter 4  What will we study in this chapter? I. Background: Significant limitations of VI. Product Life Cycle Management (PLM) ERP VII. Supply chain management (SCM) II. Business intelligence (BI) VIII. Customer relationship management III. Business analytics (BA) (CRM) IV. Data warehousing and Data mining V. On-line analytical processing (OLAP) CS428 - Enterprise Resource Planning by Shardav Bhatt 2 I. Background: Significant limitations of ERP ERP systems have three significant limitations. 1. Managers cannot generate custom reports or queries without help from a programmer and this inhibits them from obtaining information promptly so that they can act on it for competitive advantage. 2. ERP systems provide current status only, such as open orders. Managers often need to look past the current status to find trends and patterns that aid better decision-making. 3. The data in the ERP application is not integrated with other enterprises or division systems and does not include external intervention. CS428 - Enterprise Resource Planning by Shardav Bhatt 3 ▪ There are many technologies that help to overcome these limitations. ▪ These technologies can be used in combination with the ERP package. ▪ This will overcome the limitations of a standalone ERP system. ▪ ERP systems along with these technologies will help in transforming the companies into e- businesses. ▪ We will discuss these technologies that when integrated with the ERP system, will enable the companies to do business at high speed. ▪ We will also discuss how each of these technologies is related to ERP systems. CS428 - Enterprise Resource Planning by Shardav Bhatt 4 ▪ Some of these technologies are 1. Business intelligence (BI) 2. Business analytics (BA) 3. Data warehousing and Data mining 4. On-line analytical processing (OLAP) 5. Product Life Cycle Management (PLM) 6. Supply chain management (SCM) 7. Customer relationship management (CRM) CS428 - Enterprise Resource Planning by Shardav Bhatt 5 ▪ The way in which these technologies fit into the e-business environment is shown in Figure. ▪ ERP vendors are searching for ways to propose new market segments and expand the existing ones by integrating these technologies into the ERP system. CS428 - Enterprise Resource Planning by Shardav Bhatt 6 II. Business intelligence (BI) Business intelligence (BI) is the intelligence of businesses. It is a new field in the application artificial intelligence technologies to support the management and decision-makers in different business problems. BI is a broad category of applications and technologies for gathering, providing access to, and analyzing data for the purpose of helping organizations make better business decisions. It is required for enterprise to have in-depth knowledge about factors such as customers, competitors, business partners, economic environment, and internal operations to make effective and good quality business decisions. Business intelligence enables to make these kinds of decisions. CS428 - Enterprise Resource Planning by Shardav Bhatt 7 ▪ BI enables organizations to make well-informed business decisions. ▪ From this, we can extrapolate information from indicators in the external environment and make accurate forecasts about future trends or economic conditions. ▪ Once BI is gathered effectively and used proactively, you can make decisions that benefit your organization before the competition does. ▪ The ultimate objective of BI is to improve the timeliness and quality of information. ▪ Timely and good quality information is like having a crystal ball that can give you an indication of what is the best course to take. ▪ Based on the information gathered, business adjustments can be made. CS428 - Enterprise Resource Planning by Shardav Bhatt 8 ▪ Using Business intelligence (BI), an enterprise can reveal following information: 1. The position of your firm in comparison to its competitors 2. The changes in customer behavior and spending patterns 3. The capabilities of your firm 4. The market conditions, future trends, demographic and economic information 5. The social, regulatory and political environment 6. The status of other firms in the market CS428 - Enterprise Resource Planning by Shardav Bhatt 9 ▪ Businesses realize that in this very competitive, fast-paced, and ever-changing business environment, a key competitive quality is how quickly they respond and adapt to change. ▪ BI enables them to use information gathered to quickly and constantly respond to changes. Importance of Information: 1. Regarded as the second most important resource after people. 2. Timely and accurate information leads to better decision-making. 3. Expedites decision-making, providing a competitive edge. 4. Improves customer experience with timely and appropriate responses to problems and priorities. CS428 - Enterprise Resource Planning by Shardav Bhatt 10 Benefits of BI: 1. Eliminates guesswork within an organization. 2. Enhances communication among departments. 3. Coordinates activities effectively. 4. Enables quick response to changes in financial conditions, customer preferences, and supply chain operations. 5. Improves overall company performance. CS428 - Enterprise Resource Planning by Shardav Bhatt 11 III. Business analytics (BA) Business analytics is Iterative, methodical exploration of an organization’s data with emphasis on statistical analysis. It is used by companies committed to data-driven decision- making. It involves skills, technologies, applications, and practices for continuous iterative exploration and investigation of past business performance. It aims to gain insight and drive business planning. It depends on data quality, and it requires skilled analysts who understand the technologies and the business. It also needs an organizational commitment to data-driven decision-making. CS428 - Enterprise Resource Planning by Shardav Bhatt 12 Objectives of BA: ▪ Developing new insights and understanding of business performance based on data and statistical methods. ▪ This is in in contrast to BI, which uses a consistent set of metrics to measure past performance and guide business planning. ▪ Both BA and BI are based on data and statistical methods. CS428 - Enterprise Resource Planning by Shardav Bhatt 13 Uses of BA: ▪ Exploring data to find new patterns and relationships using data mining ▪ Explaining why a certain result occurred with statistical analysis and quantitative analysis ▪ Experimenting to test previous decisions using A/B testing or split testing, multivariate testing. ▪ Forecasting future results with predictive modeling, predictive analytics, etc. ▪ Gaining insights that inform business decisions. ▪ Automating and optimizing business processes. ▪ Treating data as a corporate asset for competitive advantage. CS428 - Enterprise Resource Planning by Shardav Bhatt 14 ▪ The business analytics market is projected to grow more in future. ▪ The organizations using analytics being more likely to outperform their peers. ▪ BA systems help predict trends from large volumes of data, improve decision-making by providing better information availability. ▪ Thus, it enhance customer understanding through data analytics. ▪ They also offer new insights and correlations, improve financial management by using past data for future projections, and enhance knowledge sharing through mobile apps. ▪ Additionally, BA helps align resources with business strategies, ensuring efficient deployment to achieve organizational objectives. CS428 - Enterprise Resource Planning by Shardav Bhatt 15 Benefits of Business Analytics (BA): 1. Know Your Business: BA provides real-time, contextual information tailored to your industry and role, enabling faster, fact-based decisions. 2. Decide with Confidence: BA helps align goals, understand impacts, balance risks and opportunities, and model future directions for confident decision-making. 3. Act Effectively: BA allows you to respond quickly to events, maximize productivity, and improve competitive advantage through coordinated actions. 4. Proactive Decisions: BA enables real-time status viewing, trend prediction, cost reduction, and efficiency maximization, making the organization proactive. 5. Risk Mitigation: BA continuously monitors key risk indicators and compliance, aligning risks with strategic initiatives to manage and reduce costs effectively. CS428 - Enterprise Resource Planning by Shardav Bhatt 16 CS428 - Enterprise Resource Planning by Shardav Bhatt 17 IV. Data warehousing and Data mining ▪ Data warehouses are collections of data designed to support management decision-making by presenting a clear picture of business conditions at a single point in time. ▪ Development of data warehouse involves creating systems to extract data from operating systems and installing a warehouse database system for flexible data access. ▪ Data warehousing refers to combining different databases across an organization. ▪ Data mining extracts hidden predictive information from large databases, helping companies focus on important information in their data warehouses. CS428 - Enterprise Resource Planning by Shardav Bhatt 18 Data warehousing: ▪ The primary concept of data warehousing is to separate data for business analysis from operational systems for effective access. ▪ This separation has evolved over the years for various reasons. ▪ Legacy systems used to archive inactive data onto tapes to minimize performance impact on operational systems. ▪ Business analysis was often conducted using batch reports from these tapes or mirror data sources during off-peak hours. ▪ These reports were scheduled to run at set times, regardless of specific needs during any given period. CS428 - Enterprise Resource Planning by Shardav Bhatt 19 ▪ The primary goals of a data warehouse are the following: 1. Provide access to the data of an organization 2. Data consistency 3. Capacity to separate and combine data 4. Inclusion of tools set up to query, analyze, and present information 5. Publish used data 6. Drive business re-engineering CS428 - Enterprise Resource Planning by Shardav Bhatt 20 ▪ The collection of data used by a data warehouse may be characterized as subject-oriented, integrated, non-volatile, and time variant. 1. Subject-oriented: Focuses on major subject areas like customer, product, transaction, and account. 2. Integrated: Combines data from multiple sources into a consistent database through filtering and translation. 3. Non-volatile: Data is loaded and accessed but not updated or changed. 4. Time variant: Maintains historical data for analysis, unlike operational systems which focus on current data. CS428 - Enterprise Resource Planning by Shardav Bhatt 21 ▪ The major components of a data warehouse are given below: 1. Summarized data 2. Operational systems of record 3. Integration/ transformation programs 4. Current detail 5. Data warehouse architecture or metadata 6. Archives CS428 - Enterprise Resource Planning by Shardav Bhatt 22 CS428 - Enterprise Resource Planning by Shardav Bhatt 23 Structure of a Data Warehouse: 1. Physical data warehouse: Here data are stored, along with metadata and processing logic for scrubbing, organizing, packaging, and processing the detail data. 2. Logical data warehouse: It contains metadata, including enterprise rules and processing logic for scrubbing, organizing, packaging, and processing the data, but does not contain actual data. 3. Data mart: It supports an enterprise element (department, region, function, etc.). As part of an iterative data warehouse development process, an enterprise builds a series of physical (or logical) data marts over time and links them via an enterprise-wide logical data warehouse or feeds them from a single physical warehouse. CS428 - Enterprise Resource Planning by Shardav Bhatt 24 CS428 - Enterprise Resource Planning by Shardav Bhatt 25 Advantages of a Data Warehouse: 1. Cost-effective decision-making: Reduces staff and computer resources needed for queries and reports, saving costs and reducing resource drain on production systems. 2. Better enterprise intelligence: Enhances quality and flexibility of analysis with accurate and reliable data from detailed transactions to high-level summaries. 3. Enhanced customer service: Improves customer relationships by consolidating all customer data into a single architecture. 4. Business reengineering: Provides insights into enterprise processes, aiding in reengineering efforts and setting better enterprise goals. 5. Information system reengineering: Establishes data standardization and system interoperability, serving as a cost-effective step in re-engineering legacy systems. CS428 - Enterprise Resource Planning by Shardav Bhatt 26 CS428 - Enterprise Resource Planning by Shardav Bhatt 27 Data Mining: ▪ Data mining tools predict future trends and behaviors, enabling proactive, knowledge-driven decisions. ▪ These tools go beyond analyzing past events, uncovering hidden patterns and predictive information. ▪ They can answer complex business questions quickly, which were time-consuming. ▪ Data mining techniques can be rapidly implemented on existing platforms and integrated with new systems. ▪ When used on high-performance computers, they can analyze massive databases to provide valuable insights, such as identifying potential clients for promotional campaigns. CS428 - Enterprise Resource Planning by Shardav Bhatt 28 ▪ These are all the questions that can probably be answered if information hidden among megabytes of data in your database can be found explicitly and utilize. 1. What goods should be promoted to this customer? 2. What is the probability that a certain customer will respond to a planned promotion? 3. Can one predict the most profitable securities to buy/sell during the next trading session? 4. Will this customer default on a loan or pay back on schedule? 5. What medical diagnosis should be assigned to a particular patient? 6. How large are the peak loads of a telephone or energy network going to be? 7. Why does the facility suddenly start to produce defective goods? CS428 - Enterprise Resource Planning by Shardav Bhatt 29 CS428 - Enterprise Resource Planning by Shardav Bhatt 30 ▪ Advantages of Data Mining: 1. Data mining automates the process of finding predictive information in large databases. 2. Questions that traditionally required extensive hands-on analysis can now be answered directly from the data—quickly. 3. Data mining uses data on past promotional mailings to identify the targets most likely to maximize return on investment in future mailings. 4. It is used to predictive problems include forecasting bankruptcy and other forms of default and identifying segments of a population likely to respond similarly to given events. CS428 - Enterprise Resource Planning by Shardav Bhatt 31 5. An example of pattern discovery is the analysis of retail sales data to identify seemingly unrelated products that are often purchased together. 6. Other pattern discovery problems include detecting fraudulent credit card transactions and identifying anomalous data that could represent data entry keying errors. 7. High-performance data mining allows users to explore the full depth of a database, without pre- selecting a sub-set of variables. 8. The data mining databases contains larger samples (more rows) as they yield lower estimation errors and variance and allows users to make inferences about small but important segments of a population. 9. When data mining tools are implemented on high-performance parallel processing systems, they can analyze massive databases in minutes. Faster processing means that users can automatically experiment with more models to understand complex data. CS428 - Enterprise Resource Planning by Shardav Bhatt 32 ▪ Technologies Used in Data Mining: The most used techniques in data mining are: 1. Neural networks 2. Rule induction 3. Evolutionary programming 4. Case-based reasoning (CBR) 5. Decision trees 6. Genetic algorithms 7. Non-linear regression methods CS428 - Enterprise Resource Planning by Shardav Bhatt 33 V. On-line analytical processing (OLAP) The term, on-line analytical processing (OLAP), was coined by E.F. Codd in 1993. It is a type of application that allows a user to interactively analyze data. An OLAP system is often contrasted to an OLTP (on-line transaction processing) system that focuses on processing transactions such as orders, invoices, or general ledger transactions. Before the term OLAP was coined, these systems were often referred to as decision support systems. OLAP is a key technology for successful management. It is a class of applications that require multi-dimensional analysis of business data. CS428 - Enterprise Resource Planning by Shardav Bhatt 34 ▪ OLAP is a method of analyzing data in a multi-dimensional format, often across multiple time periods, with the aim of uncovering the business information concealed within the data. ▪ OLAP enables business users to gain an insight into the business through interactive analysis of different views of the business data that have been built up from the operational systems. ▪ Using OLAP systems, managers and analysts can rapidly and easily examine key performance data. ▪ They can perform powerful comparison and trend analyses on very large data volumes. ▪ OLAP is used in many business areas: sales and marketing analysis, financial reporting, quality tracking, profitability analysis, manpower and pricing applications, budgeting and planning, pricing analysis and many others. CS428 - Enterprise Resource Planning by Shardav Bhatt 35 ▪ OLAP provides an insight into the business through the interactive analysis of different views of business information. ▪ The OLAP approach enables a more intuitive interactive analysis of business information. ▪ It allows business users to understand the current business position, and the factors contributing to that position, through detailed analysis of the underlying information. ▪ It also helps business users to identify important business trends and opportunities through the analysis of historical data and future projections in various ‘what-if’ scenarios. CS428 - Enterprise Resource Planning by Shardav Bhatt 36 Difference between OLAP and Data warehousing: ▪ OLAP is often confused with data warehousing, but It is different from it. ▪ OLAP is an integral part of a data warehousing solution. ▪ OLAP provides the facility to analyze the data held within the data warehouse in a flexible manner. ▪ OLAP is an integral component of a successful data warehouse solution; it is not in itself a data warehousing methodology or system. ▪ It converts raw data into business information through multi-dimensional analysis. ▪ OLAP is useful to identify business strengths and weaknesses, business trends and the underlying causes of these trends. CS428 - Enterprise Resource Planning by Shardav Bhatt 37 Multidimensional database: ▪ The majority of the established OLAP products use multi-dimensional databases as opposed to relational databases. ▪ The data consolidation process creates the physical multi-dimensional database structure and the indexing applied to it. ▪ It stores pre-calculated and aggregated values in arrays, with extensive indexing to facilitate rapid retrieval. ▪ However, this data structure does not offer the flexibility needed to easily modify the data warehouse dimensions as the business processes change. CS428 - Enterprise Resource Planning by Shardav Bhatt 38 Key Features of OLAP: 1. Multi-dimensional views of data 2. Calculation-intensive capabilities 3. Time intelligence Different Styles of OLAP: 1. Multi-dimensional OLAP 2. Hybrid OLAP 3. Desktop OLAP 4. Relational OLAP CS428 - Enterprise Resource Planning by Shardav Bhatt 39 Uses of OLAP: ▪ Finance departments use OLAP for applications such as budgeting, activity-based costing (allocations), financial performance analysis, and financial modeling. ▪ Sales analysis and forecasting are two of the OLAP applications found in sales departments. ▪ Marketing departments use OLAP for market research analysis, sales forecasting, promotions analysis, and customer analysis and market / customer segmentation. ▪ Manufacturing OLAP applications include production planning and defect analysis. ▪ OLAP is able to provide managers with the information they need to make effective decisions about an organization’s strategic directions. ▪ OLAP systems can respond to changing business requirements as needed. CS428 - Enterprise Resource Planning by Shardav Bhatt 40 ▪ OLAP enables analysts, managers, and executives to gain insight into data through fast, consistent, interactive access to a wide variety of possible views of information. ▪ OLAP transforms raw data so that it reflects the real dimensionality of the enterprise as understood by the user. ▪ While OLAP systems have the ability to answer ‘who?’ and ‘what?’ questions, it is their ability to answer ‘what if?’ and ‘why?’ that sets them apart from data warehouses. ▪ OLAP enables decision-making about future actions. ▪ A typical OLAP calculation is more complex than simply summing data, for example, ‘what would be the effect on production cost of “G110” fasteners to distributors if metal prices went up by Rs.100/ton and transportation costs went down by Rs 0.50/kilometer?’ CS428 - Enterprise Resource Planning by Shardav Bhatt 41 ▪ OLAP plays the role of a mediator to the various types of data sources and front-end interfaces. ▪ Figure illustrates the mediating role that an OLAP server provides with respect to the various types of databases and files in which data may be stored and the numerous types of front-end packages that the end users may need. CS428 - Enterprise Resource Planning by Shardav Bhatt 42 Benefits of OLAP: ▪ Successful OLAP applications increase the productivity of business managers, developers, and whole organizations. ▪ Business users of OLAP applications can become more self-sufficient. ▪ Managers are no longer dependent on IT to make schema changes, to create joins, or worse. ▪ OLAP enables managers to model problems that would be impossible using less flexible systems with lengthy and inconsistent response times. ▪ IT developers also benefit from using the right OLAP software. ▪ Developers can deliver applications to business users faster and provide better service. CS428 - Enterprise Resource Planning by Shardav Bhatt 43 ▪ OLAP reduces the applications backlog still further by making business users self-sufficient enough to build their own models. ▪ Unlike stand-alone departmental applications running on PC networks, OLAP applications are dependent on data warehouses and transaction processing systems to refresh their source level data. ▪ As a result, IT gains more self-sufficient users without relinquishing control over the integrity of the data. ▪ OLAP enables the organization as a whole to respond more quickly to market demands. ▪ OLAP often yields improved revenue and profitability. CS428 - Enterprise Resource Planning by Shardav Bhatt 44 VI. Product Life Cycle Management (PLM) A product’s life cycle can be divided into several stages as shown in the figure: CS428 - Enterprise Resource Planning by Shardav Bhatt 45 CS428 - Enterprise Resource Planning by Shardav Bhatt 46 ▪ The first stage of the PLC is product development. ▪ Once the product is developed, it is introduced into the market. ▪ As the product progresses through its life cycle, changes in the marketing mix (product, price, distribution place, and promotion usually are required to adjust to the evolving challenges and opportunities. ▪ After a period of development, it is introduced or launched into the market, it gains more and more customers as it grows, eventually the market stabilizes, and the product becomes mature. ▪ Then after a period the product is overtaken by development and the introduction of superior competitors; it then goes into decline and is eventually withdrawn. CS428 - Enterprise Resource Planning by Shardav Bhatt 47 Product Life Cycle Management (PLM): ▪ In today’s challenging global market, enterprises must innovate in product to survive. ▪ For products to be developed faster at lower cost, companies must ensure that all product- specific information is consistent and readily available. ▪ PLC processes are typically cross-departmental, cross-discipline, and even cross-enterprise, making data sharing difficult. ▪ The PLM solution provides a system to help streamline product development. ▪ PLM gives a holistic view of all product-related business processes. ▪ PLM supports new product development and introduction processes. CS428 - Enterprise Resource Planning by Shardav Bhatt 48 PLM has facilities like 1. Product-specific information 2. Cross-company product development 3. Strategic sourcing 4. Prototyping and production ramp-up 5. Handovers to sales 6. Service and maintenance groups; 7. Quality engineering and improvement 8. Product costing CS428 - Enterprise Resource Planning by Shardav Bhatt 49 ▪ PLM helps transform requirement structures into concept structures and finally into product structures. ▪ PLM manages all types of specifications and formulations. ▪ PLM has Multi-level recipe management functions. It allow you to transform enterprise-wide recipes at the general or site level into master recipes used for production. ▪ Trial management functionality of PLM allows you to optimize a recipe before the data is handed over to production. ▪ Quality management and product costing support of PLM helps ensure that final products meet strict requirements and that costs are well managed. ▪ PLM is helpful for Reduction in the Time and Cost to Market for product. CS428 - Enterprise Resource Planning by Shardav Bhatt 50 ▪ With help of PLM Concurrent Engineering can be achieved. It is a process by which different functional areas can work together to design and develop a product that meets the needs of the customer. ▪ PLM offers all the functionality you need for integrated product management, which includes: 1. Life cycle data management 2. Program and project management 3. Life cycle collaboration 4. Quality management 5. Enterprise asset management 6. Environment, health, and safety CS428 - Enterprise Resource Planning by Shardav Bhatt 51 Benefits of PLM: ▪ PLM solutions enable companies to turn their innovation power into profit. ▪ It addresses issues related to increased product individualization, successful launches, time- to-market demands, product quality, program management, and risk management practices. ▪ PLM solutions offer methods to speed engineering and product development processes and to get to market faster simultaneously reducing costs. ▪ PLM solutions provide an integrated set of methodologies, software, tools and services to address business requirements associated with product planning, concept development, design, engineering, analysis, testing, launch, and support. ▪ PLM can help you develop innovative products more quickly, efficiently, and cost-effectively. CS428 - Enterprise Resource Planning by Shardav Bhatt 52 ▪ With PLM you gain the following benefits: 1. Faster development and reduced costs—The solution reduces time-to-market and time-to-volume through its integrated, collaborative approach to PLM. 2. Seamless integration with enterprise systems—Integrating PLM with other software such as CAD (Computer aided design) systems lets you align other core business functions for streamlined operations. 3. Improved product quality—PLM helps you effectively manage product quality throughout every phase of the product life cycle. 4. Better business results—With PLM you can explore new market opportunities, gain a larger market share, and increase customer satisfaction. 5. Better business decision-making—PLM supports decision-making regarding product design, development, pricing, quality, and other critical areas to ensure success. CS428 - Enterprise Resource Planning by Shardav Bhatt 53 ▪ Some product life cycle management software are: 1. Aras Innovator 2. Odoo 3. OpenPLM 4. PTC Windchill 5. OpenBom 6. beCPG 7. FusePLM CS428 - Enterprise Resource Planning by Shardav Bhatt 54 VII. Supply chain management (SCM) Few concepts have revolutionized business more profoundly in recent years, SCM is one of them. The streamlining of communications and materials delivery from vendors to operations and on to customers can yield following business benefits: 1. improved customer service, 2. reduced inventory, 3. shorter cycle times, 4. increased agility, 5. higher asset utilization levels. CS428 - Enterprise Resource Planning by Shardav Bhatt 55 ▪ After establishing itself in the manufacturing and retail sectors, the principles of SCM are now used in every industry. ▪ SCM is no simple task. It has challenges like shrinking product life cycles, shifting competitive landscapes and drastic changes to consumer buying patterns. ▪ But powerful new tools are helping to replace guesswork about planning, scheduling, and execution, with systematic and scientific insight. ▪ These powerful modeling tools are presented under the banners of supply chain management (SCM). ▪ The concept of SCM encompasses all activities relating to the supply chain. CS428 - Enterprise Resource Planning by Shardav Bhatt 56 ▪ SCM is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain. ▪ SCM spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. ▪ SCM includes the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally. ▪ This includes vendor selection, negotiation, relations, and performance. ▪ It accommodates the planning, procurement and delivery processes, and personnel recruitment and training. CS428 - Enterprise Resource Planning by Shardav Bhatt 57 ▪ It deals with vendor owned buffer stocks, on-site inventory levels, off-site warehouse management, the efficient use of transportation, and the tracking of in-transit items. ▪ Other issues include duty, import documentation, and foreign currency management. A true supply chain application package will support all these activities. ▪ SCM enables collaboration, planning, execution, and coordination of the entire supply chain, empowering companies to adapt their supply chain processes to an ever-changing competitive environment. ▪ The SCM solutions transform traditional supply chains from linear, sequential steps into an adaptive supply chain network. ▪ Here communities of customer-centric, demand-driven companies share knowledge intelligently adapt to changing market conditions and proactively respond to shorter, less predictable life cycles. CS428 - Enterprise Resource Planning by Shardav Bhatt 58 CS428 - Enterprise Resource Planning by Shardav Bhatt 59 ▪ The advantages of Supply chain management are… 1. Lower inventories and therefore, lower financing costs 2. Shorter receivables cycles 3. Optimal use of production resources, costly work forces and transportation fleets 4. Faster response to market changes 5. Greater satisfaction and loyalty among customers 6. Greater profitability ▪ The most successful companies maximize these benefits by selecting SCM solutions CS428 - Enterprise Resource Planning by Shardav Bhatt 60 Benefits of Supply Chain Management: 1. Faster response to changes in supply and demand—With increased visibility into the supply chain and adaptive supply chain networks, you can be more responsive. You can sense and respond quickly to changes and quickly capitalize on new opportunities. 2. Increased customer satisfaction—By offering a common information framework that supports communication and collaboration, SAP SCM enables you to better adapt to and meet customer demands. 3. Compliance with regulatory requirements—You can track and monitor compliance in areas such as environment, health, and safety. CS428 - Enterprise Resource Planning by Shardav Bhatt 61 4. Improved cash flow—Information transparency and real-time business intelligence can lead to shorter cash-to-cash cycle times. Reduced inventory levels and increased inventory turns across the network can lower overall costs. 5. Higher margins—With SCM, you can lower operational expenses with timelier planning for procurement, manufacturing, and transportation. Better order, product, and execution tracking can lead to improvements in performance and quality—and lower costs. You can also improve margins through better coordination with business partners. 6. Greater synchronization with business priorities—Tight connections with trading partners keep your supply chain aligned with current business strategies and priorities, improving your organization’s overall performance, and achievement of goals CS428 - Enterprise Resource Planning by Shardav Bhatt 62 VIII. Customer relationship management (CRM) The need to manage customer relationships is not a new concept. Around 1998, a phrase emerged, which attempted to encapsulate everything relating to this. It was called, customer relationship management (CRM) One significant feature of CRM was that it focused attention upon revenue-generating activities. This contrasts with the more traditional focus of ERP, which is on operations, with improvements and benefits having an impact upon the cost aspects of doing business. CS428 - Enterprise Resource Planning by Shardav Bhatt 63 ▪ Its emergence is the outcome of several developments in the sales and marketing domains. ▪ Customer contact management, product and price lists, and direct mailing were among the first applications to be developed, after evolution of ERP. ▪ Later, campaign management, call center services, and market intelligence management were included. ▪ CRM is a business strategy, which optimize profitability, revenue, and customer satisfaction by organizing around customer segments, fostering customer-satisfying behaviors, and implementing customer-centric processes. ▪ CRM technologies enable greater customer insight, increased customer access, more effective interactions and integration throughout all customer channels and back-office enterprise functions. CS428 - Enterprise Resource Planning by Shardav Bhatt 64 ▪ CRM can be described as the development and implementation of a strategy for handling interactions with past, existing, or future customers. ▪ It covers all customer-oriented activities from potential market identification to customer loyalty retention. ▪ It is technology enabled and involves data capture and analysis, information, generation and distribution, and customer-orientated activity. ▪ CRM has a central database and integrates with an ERP system and different channels of interaction. ▪ CRM involves different participants and has the facility to manage these participants. ▪ It distinguishes different emphasis in dealing with the customer, including account management, and opportunity exploitation. CS428 - Enterprise Resource Planning by Shardav Bhatt 65 ▪ CRM is about acquiring and retaining customers, improving customer loyalty, gaining customer insight, and implementing customer-focused strategies. ▪ A true customer-centric enterprise helps your company drive new growth, maintain competitive agility, and attain operational excellence. ▪ CRM helps in streamlining processes and providing sales and service personnel with better, more complete customer information thus allowing organizations to identify, attract, engage, and retain its customers. ▪ Automating the sales process includes activities like implementing simple contact, account, and opportunity management to forecasting, territory management, and pipeline management. ▪ These tools allow organizations to shorten the cycle by having all relevant customer information at their fingertips. CS428 - Enterprise Resource Planning by Shardav Bhatt 66 CS428 - Enterprise Resource Planning by Shardav Bhatt 67 ▪ Customer service department can use CRM to provide executives with the most up-to-date information on all customer service transactions. ▪ By automating service request management, knowledge bases, and call routing, customer care executives can become more productive by ensuring that all service requests are resolved to the satisfaction of the customer in a timely fashion. ▪ There are a few potential benefits in following the CRM route. ▪ These are increased automation facilitates, better use of existing resources, better quality of information, faster response time, improved customer targeting, better customer retention, and increased sales. CS428 - Enterprise Resource Planning by Shardav Bhatt 68 ▪ The CRM also provides enough data for business analytics that can be used by the management to 1. Identify new markets and opportunities 2. Simplify marketing processes 3. Improve productivity while lowering customer acquisition costs 4. Enable higher cross-sell and up-sell rates 5. Increase customer retention 6. Reduce response times and request-resolution times 7. Increase call center efficiency and lower costs CS428 - Enterprise Resource Planning by Shardav Bhatt 69 ▪ Functions of CRM: 1. Identify factors important to clients 2. Promote a customer-oriented philosophy 3. Adopt customer-based measures 4. Develop end-to-end processes to serve customers 5. Provide successful customer support 6. Handle customer complaints 7. Track all aspects of sales 8. Create a holistic view of customers’ sales and services information CS428 - Enterprise Resource Planning by Shardav Bhatt 70 Components of a CRM System: ▪ There are three fundamental components in CRM: 1. Operational—automation of basic business processes (marketing, sales, service) 2. Analytical—analysis of customer data and behavior using business intelligence 3. Collaborative—communicating with clients CS428 - Enterprise Resource Planning by Shardav Bhatt 71 USES OF CRM: ▪ Providing on-line access to product information and technical assistance around the clock ▪ Identifying what customers value and devising appropriate service strategies for each customer ▪ Providing mechanisms for managing and scheduling follow-up sales calls ▪ Tracking all contacts with a customer ▪ Identifying potential problems before they occur ▪ Providing a user-friendly mechanism for registering customer complaints ▪ Providing a mechanism for handling problems and complaints ▪ Providing a mechanism for correcting service deficiencies CS428 - Enterprise Resource Planning by Shardav Bhatt 72