Essentials of Management Information Systems PDF

Essentials of Management Information Systems Fourteenth Edition, Global Edition Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise...

Essentials of Management Information Systems Fourteenth Edition, Global Edition Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Copyright © 2020 Pearson Education Ltd. Learning Objectives 9.1 How do enterprise systems help businesses achieve operational excellence? 9.2 How do supply chain management systems coordinate planning, production, and logistics with suppliers? 9.3 How do customer relationship management systems help firms achieve customer intimacy? 9.4 What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies? Copyright © 2020 Pearson Education Ltd. Enterprise Systems Enterprise resource planning (ERP) systems Suite of integrated software modules and a common central database Collects data from many divisions of firm for use in nearly all of firm’s internal business activities Information entered in one process is immediately available for other processes Copyright © 2020 Pearson Education Ltd. Figure 9.1 How Enterprise Systems Work Copyright © 2020 Pearson Education Ltd. Enterprise Software Built around thousands of predefined business processes that reflect best practices – Finance and accounting – Human resources – Manufacturing and production – Sales and marketing To implement, firms: – Select functions of system they wish to use – Map business processes to software processes  Use software’s configuration tables for customizing Copyright © 2020 Pearson Education Ltd. Business Value of Enterprise Systems Increase operational efficiency Provide firm-wide information to support decision making Enable rapid responses to customer requests for information or products Include analytical tools to evaluate overall organizational performance and improve decision-making Copyright © 2020 Pearson Education Ltd. The Supply Chain Network of organizations and processes for: – Procuring materials – Transforming materials into products – Distributing the products Upstream supply chain Downstream supply chain Internal supply chain Copyright © 2020 Pearson Education Ltd. Figure 9.2 Nike’s Supply Chain Copyright © 2020 Pearson Education Ltd. Supply Chain Management Inefficiencies cut into a company’s operating costs – Can waste up to 25 percent of operating expenses Just-in-time strategy – Components arrive as they are needed – Finished goods shipped after leaving assembly line Safety stock: buffer for lack of flexibility in supply chain Bullwhip effect – Information about product demand gets distorted as it passes from one entity to next across supply chain Copyright © 2020 Pearson Education Ltd. Figure 9.3 The Bullwhip Effect Copyright © 2020 Pearson Education Ltd. Supply Chain Management Software Supply chain planning systems – Model existing supply chain – Enable demand planning – Optimize sourcing, manufacturing plans – Establish inventory levels – Identify transportation modes Supply chain execution systems – Manage flow of products through distribution centers and warehouses Copyright © 2020 Pearson Education Ltd. Global Supply Chains and the Internet Global supply chain issues – Greater geographical distances, time differences – Participants from different countries  Different performance standards  Different legal requirements Internet helps manage global complexities – Warehouse management – Transportation management – Logistics – Outsourcing Copyright © 2020 Pearson Education Ltd. Demand-Driven Supply Chains: From Push to Pull Manufacturing and Efficient Customer Response Push-based model (build-to-stock) – Earlier SCM systems – Schedules based on best guesses of demand Pull-based model (demand-driven) – Web-based – Customer orders trigger events in supply chain Internet enables move from sequential supply chains to concurrent supply chains – Complex networks of suppliers can adjust immediately Copyright © 2020 Pearson Education Ltd. Figure 9.4 Push- Versus Pull-Based Supply Chain Models Copyright © 2020 Pearson Education Ltd. Figure 9.5 The Emerging Internet- Driven Supply Chain Copyright © 2020 Pearson Education Ltd. Business Value of Supply Chain Management Systems Match supply to demand Reduce inventory levels Improve delivery service Speed product time to market Use assets more effectively – Total supply chain costs can be 75 percent of operating budget Increase sales Copyright © 2020 Pearson Education Ltd. Customer Relationship Management Knowing the customer In large businesses, too many customers and too many ways customers interact with firm CRM systems – Capture and integrate customer data from all over the organization – Consolidate and analyze customer data – Distribute customer information to various systems and customer touch points across enterprise – Provide single enterprise view of customers Copyright © 2020 Pearson Education Ltd. Figure 9.6 Customer Relationship Management (C RM) Copyright © 2020 Pearson Education Ltd. Customer Relationship Management Software (1 of 2) Packages range from niche tools to large-scale enterprise applications More comprehensive packages have modules for: – Partner relationship management (PRM)  Integrating lead generation, pricing, promotions, order configurations, and availability  Tools to assess partners’ performances – Employee relationship management (E RM)  Setting objectives, employee performance management, performance-based compensation, employee training Copyright © 2020 Pearson Education Ltd. Customer Relationship Management Software (2 of 2) CRM packages typically include tools for: – Sales force automation (SFA)  Sales prospect and contact information  Sales quote generation capabilities – Customer service  Assigning and managing customer service requests  Web-based self-service capabilities – Marketing  Capturing prospect and customer data, scheduling and tracking direct-marketing mailings or email  Cross-selling Copyright © 2020 Pearson Education Ltd. Figure 9.7 How C RM Systems Support Marketing Responses by Channel for January 2019 Promotional Campaign Copyright © 2020 Pearson Education Ltd. Figure 9.9 Customer Loyalty Management Process Map Copyright © 2020 Pearson Education Ltd. Operational and Analytical CR M Operational CRM – Customer-facing applications – Sales force automation call center and customer service support – Marketing automation Analytical CRM – Based on data warehouses populated by operational CRM systems and customer touch points – Analyzes customer data (OLAP, data mining, etc.)  Customer lifetime value (CLTV) Copyright © 2020 Pearson Education Ltd. Figure 9.10 Analytical CR M Copyright © 2020 Pearson Education Ltd. Business Value of Customer Relationship Management Systems Business value of CRM systems – Increased customer satisfaction – Reduced direct-marketing costs – More effective marketing – Lower costs for customer acquisition/retention – Increased sales revenue Churn rate – Number of customers who stop using or purchasing products or services from a company – Indicator of growth or decline of firm’s customer base Copyright © 2020 Pearson Education Ltd. Enterprise Application Challenges Expensive to purchase and implement enterprise applications – Multi-million dollar projects in 2018 – Long development times Technology changes Business process changes Organizational learning, changes Switching costs, dependence on software vendors Data standardization, management, cleansing Copyright © 2020 Pearson Education Ltd. Next-Generation Enterprise Applications (1 of 2) Enterprise solutions/suites – Make applications more flexible, web-enabled, integrated with other systems SOA standards Open-source applications On-demand solutions Cloud-based versions Functionality for mobile platform Copyright © 2020 Pearson Education Ltd. Next-Generation Enterprise Applications (2 of 2) Social CRM – Incorporating social networking technologies – Company social networks – Monitor social media activity; social media analytics – Manage social and web-based campaigns Business intelligence – Inclusion of BI with enterprise applications – Flexible reporting, ad hoc analysis, “what-if” scenarios, digital dashboards, data visualization Copyright © 2020 Pearson Education Ltd.