C11 - BUSI 1401: Customer Relationship Management and Supply Chain Management

Chapter Outline

• Learning Objectives

  • 11.1: Defining Customer Relationship Management

  • 11.2: Operational Customer Relationship Management Systems

  • 11.3: Other Types of Customer Relationship Management Systems

  • 11.4: Supply Chains

  • 11.5: Supply Chain Management

  • 11.6: Information Technology Support for Supply Chain Management

Introduction

• Information systems extend outside the organization to customers and suppliers.

• CRM (Customer Relationship Management) and SCM (Supply Chain Management) are vital for all enterprises.

• Organizations are adopting a customer-centric approach.

• SCM enhances customer service and reduces operating costs.

11.1 Defining Customer Relationship Management

• CRM Definition: A customer-focused and customer-driven organizational strategy.

  • Treats customers based on differing needs and value to the company.

• CRM Process:

  • Target potential customers;

  • Understand customer segments: loyal, high-value, low-value, and lost customers.

CRM Systems

• Purpose: Information systems designed to support CRM strategies.

  • Low-end CRM Systems: For many small customers (e.g., Amazon).

  • High-end CRM Systems: For few large customers (e.g., Boeing).

• Basic Elements of Successful CRM Policies:

  • Identifying customer touch points.

  • Consolidating customer data.

Customer Touch Points

• Interactions between customers and organizations.

  • Omni-channel Marketing: Ensures seamless customer experience across various channels.

Data Consolidation

• Importance of managing customer data effectively.

  • Data Warehouses: Provide comprehensive customer data for a 360-degree view.

CRM Components

• Major Components:

  • Operational CRM Systems: Support front-office processes like sales, marketing, and service.

  • Analytical CRM Systems: Analyze customer data for strategic decision-making.

11.2 Operational Customer Relationship Management Systems

• Support Front-Office Processes: Interact directly with customers through various applications.

  • Customer-Facing Applications:

  • Customer Support: Automates service requests and support processes.

  • Salesforce Automation: Automates sales processes, including tracking leads and sales forecasting.

  • Marketing: Targets customers effectively, selling more through various strategies (cross-selling, upselling).

• Customer-Touching Applications (e-CRM):

  • Enable direct customer interaction through technology, offering self-service features like FAQs and product customization.

11.3 Other Types of Customer Relationship Management Systems

• On-demand CRM systems (SaaS).

• Mobile CRM systems.

• Open-source CRM systems.

• Social CRM systems.

• Real-time CRM systems.

11.4 Supply Chains

• Definition: The flow of materials, information, money, and services from suppliers to end customers.

• Components of Supply Chains:

  • Segments:

  • Upstream: Procurement from suppliers.

  • Internal: Manufacturing and packaging.

  • Downstream: Distribution.

• Bidirectional Flow: Includes reverse logistics (returns of damaged or unwanted products).

11.5 Supply Chain Management

• Definition: Process of planning, organizing, and optimizing activities throughout the supply chain.

• Five Components of SCM:

  1. Plan: Develop strategy and metrics for resource management.

  2. Source: Identify suppliers and establish delivery and pricing.

  3. Make: Focus on manufacturing processes and quality.

  4. Deliver (Logistics): Coordinate order receipt and transportation planning.

  5. Return: Manage reverse logistics for returns and customer support.

Models in Supply Chain Management

• Push Model: Production begins with a forecast (Make-to-stock).

• Pull Model: Production starts with customer orders (Make-to-order).

Challenges in Supply Chain Management

• Sources of Problems:

  • Uncertainties: Fluctuations in demand forecasts.

  • Coordination Issues: Challenges among internal units and partners.

• Bullwhip Effect: Erratic order shifts throughout the supply chain, impacting inventory levels.

Solutions to Supply Chain Problems

• Vertical Integration: Purchasing upstream suppliers.

• Just-in-time (JIT): Keeping inventory levels low, stock is ordered and received as needed.

• Information Sharing: Collaboration tools like Vendor-Managed Inventory (VMI).

11.6 Information Technology Support for Supply Chain Management

• Technologies Supporting SCM:

  • Electronic Data Interchange (EDI): Standards for exchanging documents electronically (e.g., purchase orders).

  • Extranets: Enable secure collaboration between business partners over the Internet.

  • Portals and Exchanges: Single points of access for critical business information (procurement and distribution portals).