Supply Chain Management, 5e (Chopra/Meindl)

Chapter 17 Information Technology in a Supply Chain

17.1 True/False Questions

1) Information is crucial to the performance of a supply chain because it provides the basis upon
which supply chain managers make decisions.
Answer: TRUE
Diff: 1
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

2) Information is the supply chain driver that serves as the glue allowing the other three drivers
to work together to create an integrated, coordinated supply chain.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

3) Information makes the supply chain visible to a manager so that he can make decisions to
improve the supply chain's performance.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

4) Information must be 100 percent correct in order to make good decisions.

Answer: FALSE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

5) To make good decisions, a manager needs to have accurate information regardless of how
long it takes to acquire it.
Answer: FALSE
Diff: 3
Topic: 17.1 The Role of IT in a Supply Chain
Learning Outcome: Compare common approaches to supply chain design

17-1
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
6) Often companies will have large amounts of data that are not helpful with decision making.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
Learning Outcome: Compare common approaches to supply chain design

7) The driver of IT in the supply chain has increasingly been the enterprise software developed to
enable processes both within and across companies.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

8) The unsuccessful categories of software will be those focused on the supply chain macro
processes.
Answer: FALSE
Diff: 1
Topic: 17.1 The Role of IT in a Supply Chain
Learning Outcome: Compare common approaches to supply chain design

9) This broadening of scope across which companies make decisions emphasizes the importance
of including processes all along the supply chain when making decisions.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
Learning Outcome: Compare common approaches to supply chain design

10) To increase the supply chain surplus (and therefore their firm's own profitability) most
effectively, firms must focus primarily on improving internal processes.
Answer: FALSE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

11) Functional performance is important to customers because it provides them with capabilities
to create a competitive advantage.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

17-2
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
12) Firms that work well with implementation partners and build up large groups of customers
trained on their solutions have built a highly defensible position.
Answer: TRUE
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

13) The goal of the CRM macro process is to negotiate an effective contract that establishes
parameters for a supplier in a way that best meets enterprise needs.
Answer: FALSE
Diff: 3
Topic: 17.3 Customer Relationship Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

14) Weakness in the CRM process results in demand being lost and a poor customer experience
because orders are not processed and executed effectively.
Answer: TRUE
Diff: 1
Topic: 17.3 Customer Relationship Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

15) CRM processes are crucial to the supply chain because of the lack of interaction between an
enterprise and its customers.
Answer: FALSE
Diff: 2
Topic: 17.3 Customer Relationship Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

16) When forecasting demand, ISCM interaction with SRM is essential as the SRM applications
have the most data and insight on customer behavior.
Answer: FALSE
Diff: 1
Topic: 17.4 Internal Supply Chain Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

17-3
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17) The ISCM processes should have strong integration with the SRM macro process, because
supply planning, fulfillment, and field service are all dependent on suppliers and therefore the
SRM processes.
Answer: TRUE
Diff: 2
Topic: 17.4 Internal Supply Chain Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

18) Every industry has the same key success factors.

Answer: FALSE
Diff: 1
Topic: 17.9 Supply Chain IT in Practice
Learning Outcome: Compare common approaches to supply chain design

19) Some of the worst IT disasters are due to the fact that companies try to implement IT systems
in a wide variety of processes at the same time.
Answer: TRUE
Diff: 1
Topic: 17.9 Supply Chain IT in Practice
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

20) Companies should use IT systems to make decisions, because the software available today
can make many supply chain decisions for management.
Answer: FALSE
Diff: 1
Topic: 17.9 Supply Chain IT in Practice
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

17-4
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
17.2 Multiple Choice Questions

1) Information technology (IT) consists of the tools

A) used to gain awareness of information.
B) to analyze information.
C) to act on information to improve the performance of the supply chain.
D) B and C only
Answer: D
Diff: 1
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

2) Information is
A) the supply chain driver that serves as the glue allowing the other three drivers to work
together to create an integrated, coordinated supply chain.
B) crucial to supply chain performance.
C) the key to the success of a supply chain.
D) all of the above
Answer: D
Diff: 1
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

3) Information Technology (IT)

A) consists of the hardware and software throughout a supply chain that gather, analyze, and act
on information.
B) serves as the eyes and ears (and sometimes a portion of the brain) of management in a supply
chain.
C) can have a significant impact on a firm's performance.
D) all of the above
Answer: D
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

17-5
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
4) Which of the following is not a characteristic information must have to be useful when
making supply chain decisions?
A) Information must be accurate.
B) Information must be accessible in a timely manner.
C) Information must be interesting.
D) Information must be of the right kind.
Answer: C
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

5) To be accurate, information must

A) give the true picture of the state of the supply chain.
B) be 100 percent correct.
C) paint a picture of reality that is at least directionally correct.
D) A and C only
Answer: D
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

6) To be accessible in a timely manner, information must be

A) out of date.
B) current.
C) easily accessible.
D) B and C only
Answer: D
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

7) To be of the right kind, information needs to be

A) useful.
B) irrelevant.
C) meaningless.
D) B and C only
Answer: A
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Use of Information Technology
Learning Outcome: Compare common approaches to supply chain design

17-6
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
8) Information is a key ingredient
A) at each stage of the supply chain.
B) within each phase of supply chain decision making.
C) only at each stage of the supply chain.
D) A and B only
Answer: D
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

9) The successful categories of software in the evolution taking place in enterprise software will
be
A) those focused on the supply chain macro processes.
B) those not focused on the supply chain macro processes.
C) those focused on basic functions.
D) both A and C
Answer: B
Diff: 2
Topic: 17.2 The Supply Chain IT Framework
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

10) The emergence of supply chain management has broadened the scope across which
companies make decisions to
A) the supplier.
B) the enterprise.
C) the entire supply chain.
D) the customer.
Answer: C
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

11) Which of the following is not one of the supply chain macro processes?
A) Customer Relationship Management (CRM)
B) Internal Supply Chain Management (ISCM)
C) Supplier Relationship Management (SRM)
D) Transaction Management Foundation (TMF)
Answer: D
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

17-7
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12) Processes that focus on downstream interactions between the enterprise and its customers are
included in
A) Customer Relationship Management (CRM).
B) Internal Supply Chain Management (ISCM).
C) Supplier Relationship Management (SRM).
D) Transaction Management Foundation (TMF).
Answer: A
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

13) Processes that focus on internal operations within the enterprise are considered
A) Customer Relationship Management (CRM).
B) Internal Supply Chain Management (ISCM).
C) Supplier Relationship Management (SRM).
D) Transaction Management Foundation (TMF).
Answer: B
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

14) Processes that focus on upstream interactions between the enterprise and its suppliers are part
of
A) Customer Relationship Management (CRM).
B) Internal Supply Chain Management (ISCM).
C) Supplier Relationship Management (SRM).
D) Transaction Management Foundation (TMF).
Answer: C
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

15) Software that provides the foundation upon which the macro processes rest through basic
ERP systems, infrastructure software, and integration software is
A) Customer Relationship Management (CRM).
B) Internal Supply Chain Management (ISCM).
C) Supplier Relationship Management (SRM).
D) Transaction Management Foundation (TMF).
Answer: D
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

17-8
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
16) Which of the following is not a factor determining the success of software firms focused on
a macro process?
A) Functional performance
B) Color and images on working screens
C) Integration with other macro processes
D) Strength of the software firm's ecosystem
Answer: B
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

17) The ability to integrate is important to a customer because

A) applications that are easy to integrate are generally easier to get implemented and produce
value.
B) applications that integrate across macro processes will be able to provide the benefits of
making decisions for the extended supply chain.
C) firms that do not have integrated solutions in all three macro processes have a competitive
advantage.
D) both A and B
Answer: D
Diff: 1
Topic: 17.2 The Supply Chain IT Framework
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

18) The goal of the CRM macro process is to

A) negotiate an effective contract that best meets enterprise needs.
B) improve the design of products.
C) fulfill demand generated by ISCM processes.
D) generate customer demand and facilitate transmission and tracking of orders.
Answer: D
Diff: 2
Topic: 17.3 Customer Relationship Management
Learning Outcome: Compare common approaches to supply chain design

19) Weakness in the CRM process results in

A) orders that are not processed and executed effectively.
B) demand being lost.
C) a poor customer experience.
D) all of the above
Answer: D
Diff: 1
Topic: 17.3 Customer Relationship Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

17-9
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
20) Which of the following is a key process under CRM?
A) Strategic Planning
B) Fulfillment
C) Field Service
D) Order Management
Answer: D
Diff: 2
Topic: 17.3 Customer Relationship Management
Learning Outcome: Compare common approaches to supply chain design

21) Which of the following is not a key process under CRM?

A) Market
B) Demand Planning
C) Order Management
D) Sell
Answer: B
Diff: 3
Topic: 17.3 Customer Relationship Management
Learning Outcome: Compare common approaches to supply chain design

22) The CRM processes are crucial to the supply chain because
A) all demand, and therefore revenue, ultimately arises from the customer.
B) CRM processes (and also CRM software) must be integrated with internal operations to
optimize performance.
C) customer-focused units should be working independently from internal operations.
D) A and B only
Answer: C
Diff: 2
Topic: 17.3 Customer Relationship Management
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

23) Which of the following is a key process under ISCM?

A) Design Collaboration
B) Negotiate
C) Supply Collaboration
D) Supply Planning
Answer: D
Diff: 3
Topic: 17.4 Internal Supply Chain Management
Learning Outcome: Compare common approaches to supply chain design

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Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
24) Which of the following is not a key process under ISCM?
A) Strategic Planning
B) Fulfillment
C) Supply Collaboration
D) Demand Planning
Answer: C
Diff: 2
Topic: 17.4 Internal Supply Chain Management
Learning Outcome: Compare common approaches to supply chain design

25) The ISCM processes should have strong integration with the SRM macro process because
A) SRM applications have the most data and insight on customer behavior to be used in
forecasting.
B) supply planning, fulfillment, and field service are all dependent on suppliers.
C) order management must integrate closely with fulfillment and be an input for effective
demand planning.
D) A and B only
Answer: B
Diff: 2
Topic: 17.4 Internal Supply Chain Management
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

26) Which of the following is a major SRM process?

A) Strategic Planning
B) Order Management
C) Design Collaboration
D) Supply Planning
Answer: C
Diff: 2
Topic: 17.5 Supplier Relationship Management
Learning Outcome: Compare common approaches to supply chain design

27) Which of the following is not a major SRM process?

A) Supply Planning
B) Buy
C) Design Collaboration
D) Source
Answer: A
Diff: 3
Topic: 17.5 Supplier Relationship Management
Learning Outcome: Compare common approaches to supply chain design

17-11
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
28) Select an IT system that addresses the company's key success factors because
A) every industry has the same key success factors.
B) IT systems need to give a company an advantage in the areas most crucial to the success of
the business.
C) these elements do not determine whether or not a company is going to be successful.
D) A and B only
Answer: B
Diff: 2
Topic: 17.9 Supply Chain IT in Practice
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

29) Take incremental steps and measure value because

A) some of the worst IT disasters are due to the fact that companies try to implement IT systems
in a wide variety of processes at the same time.
B) companies should not take a big picture perspective.
C) the big picture perspective should be implemented in digestible pieces.
D) A and C only
Answer: D
Diff: 2
Topic: 17.9 Supply Chain IT in Practice
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

30) Align the level of sophistication with the need for sophistication because
A) there is a trade-off between the ease of implementing a system and the system's level of
complexity.
B) erring on the less sophisticated side leaves the firm with a competitive weakness.
C) trying to be too sophisticated leads to a higher possibility of the entire system failing.
D) all of the above
Answer: D
Diff: 2
Topic: 17.9 Supply Chain IT in Practice
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

17-12
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
31) Use IT systems to support decision making, not to make decisions because
A) the software available today can make many supply chain decisions for management.
B) companies need to maintain the amount of managerial effort they spend on supply chain
issues.
C) management needs to be able to make adjustments in the supply chain because the
competitive and customer landscape changes.
D) B and C only
Answer: C
Diff: 2
Topic: 17.9 Supply Chain IT in Practice
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

32) Companies need to think about the future because

A) trends in a company's industry regarding insignificant characteristics could become crucial in
the future.
B) managers need to explore how flexible the systems will be when changes are required in the
future.
C) IT systems often last for many more years than originally planned.
D) all of the above
Answer: D
Diff: 2
Topic: 17.9 Supply Chain IT in Practice
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

33) Which of the following is not true concerning information supporting supply chain
decisions?
A) Information must be accurate
B) Information must be accessible in a timely fashion
C) Information must be of the right kind
D) Information needs to be kept confidential
Answer: D
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

17-13
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
34) Information on product margins, prices, quality, delivery lead times, and so on, are all
important in making sourcing decisions. Which supply chain driver is relevant here?
A) Transportation
B) Facilities
C) Sourcing
D) Inventory
Answer: C
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

35) The textbook defines three macro supply chain processes. Which of the following is not one
of these?
A) Customer relationship management
B) External supply chain management
C) Internal supply chain management
D) Supplier relationship management
Answer: B
Diff: 3
Topic: 17.2 The Supply Chain IT Framework
Learning Outcome: Compare common approaches to supply chain design

36) The key processes under CRM are

A) production.
B) sales.
C) marketing.
D) order management.
Answer: A
Diff: 1
Topic: 17.3 Customer Relationship Management
Learning Outcome: Compare common approaches to supply chain design

37) Internal supply chain management is focused on operations internal to the enterprise. Which
of the following would not fall into this category?
A) Supply planning
B) Customer support
C) Fulfillment
D) Field service
Answer: B
Diff: 2
Topic: 17.4 Internal Supply Chain Management
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

17-14
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38) Key decisions include location and capacity planning of facilities. Which process of the
ICSM would this describe?
A) Demand planning
B) Strategic planning
C) Supply planning
D) Fulfillment
Answer: B
Diff: 2
Topic: 17.4 Internal Supply Chain Management
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design

39) The ________ process links each order to a specific supply source and means of
transportation.
A) Demand planning
B) Field service
C) Supply planning
D) Fulfillment
Answer: D
Diff: 1
Topic: 17.4 Internal Supply Chain Management
Learning Outcome: Compare common approaches to supply chain design

40) There are 4 major SRM processes. Which of the following is not one of these?
A) Sell
B) Negotiate
C) Source
D) Buy
Answer: A
Diff: 2
Topic: 17.5 Supplier Relationship Management
Learning Outcome: Compare common approaches to supply chain design

41) In the textbook, Gartner listed the top five ERP software vendors in 2010. Which of the
following is not one of these?
A) SAP
B) Microsoft
C) Peoplesoft
D) Oracle
Answer: C
Diff: 2
Topic: 17.6 The Transaction Management Foundation
Learning Outcome: Compare common approaches to supply chain design

17-15
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
42) Which of the following is not listed as an important trend that will affect IT in the supply
chain?
A) Improved speed of hardware and software
B) Growth as software as a service
C) Increased availability of real-time data
D) Increased use of mobile technology
Answer: A
Diff: 3
Topic: 17.7 The Future of IT in the Supply Chain
Learning Outcome: Compare common approaches to supply chain design

17.3 Essay Questions

1) Explain the role of information in the supply chain.

Answer: Information is crucial to the performance of a supply chain because it provides the
basis upon which supply chain managers make decisions. Information is the supply chain driver
that serves as the glue allowing the other three drivers to work together to create an integrated,
coordinated supply chain. Information is crucial to supply chain performance because it provides
the foundation on which supply chain processes execute transactions and managers make
decisions. Therefore, information makes the supply chain visible to a manager. With this
visibility, a manager can make decisions to improve the supply chain's performance. In many
ways, information is the most important of the four supply chain drivers because without it, none
of the other drivers can be used to deliver a high level of performance.

Information is the key to the success of a supply chain because it enables management to make
decisions over a broad scope that crosses both functions and companies. Successful supply chain
strategy results from viewing the supply chain as a whole, rather than looking only at the
individual stages. By taking a global scope across the entire supply chain, a manager is able to
craft strategies that take into account all factors that affect the supply chain, rather than just those
factors affecting a particular stage or function within the supply chain. Taking the entire chain
into account maximizes the profit of the total supply chain, which then leads to higher profits for
each individual company within the supply chain.
Diff: 3
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

17-16
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
2) Explain the role of information technology in the supply chain.
Answer: Information is crucial to the performance of a supply chain because it provides the
basis upon which supply chain managers make decisions. Information technology (IT) consists
of the tools used to gain awareness of information, analyze this information, and act on it to
improve the performance of the supply chain. Information is crucial to supply chain performance
because it provides the foundation on which supply chain processes execute transactions and
managers make decisions. Given the role of information in a supply chain's success, managers
must understand how information is gathered and analyzed. This is where IT comes into play. IT
consists of the hardware and software throughout a supply chain that gather, analyze, and act on
information. IT serves as the eyes and ears (and sometimes a portion of the brain) of
management in a supply chain, capturing and analyzing the information necessary to make a
good decision. Using IT systems to capture and analyze information can have a significant
impact on a firm's performance.
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

3) Explain the characteristics information must have to be useful for decision making in a supply
chain.
Answer: Information must have the following characteristics to be useful when making supply
chain decisions:
1. Information must be accurate. Without information that gives the true picture of the state of
the supply chain, it is very difficult to make good decisions. That is not to say all information
must be 100 percent correct but rather that the data available paint a picture of reality that is at
least directionally correct.
2. Information must be accessible in a timely manner. Often accurate information exists, but by
the time it is available, it is either out of date or if it is current, it is not in an accessible form. To
make good decisions, a manager needs to have up-to-date information that is easily accessible.
3. Information must be of the right kind. Decision makers need information that they can use.
Often companies will have large amounts of data that are not helpful with decision making.
Companies must think about what information should be recorded so that valuable resources are
not wasted collecting meaningless data while important data goes unrecorded.

When managers have good information, they have supply chain visibility, enabling them to take
a global scope. With this global scope, they are able to make the best decisions for the supply
chain. Therefore, information is a key to supply chain success.
Diff: 2
Topic: 17.1 The Role of IT in a Supply Chain
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

17-17
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
4) Discuss how the three supply chain macro processes interface in order to be successful.
Answer: The goal of the CRM macro process is to generate customer demand and facilitate
transmission and tracking of orders. Weakness in this process results in demand being lost and a
poor customer experience because orders are not processed and executed effectively. CRM
processes are crucial to the supply chain as they cover a vast amount of interaction between an
enterprise and its customers. The customer must be the starting point when trying to increase the
supply chain surplus because all demand, and therefore revenue, ultimately arises from them.
Thus, the CRM macro process is the starting point when improving supply chain performance. It
is also important to note that CRM processes (and also CRM software) must be integrated with
internal operations to optimize performance. Too often companies operate with their customer-
focused units working independently from their internal operations. The need for integration
between CRM and internal operations emphasizes the importance of CRM to an effective supply
chain.

ISCM includes all processes involved in planning for and fulfilling a customer order. Given that
the ISCM macro process aims to fulfill demand that is generated by CRM processes, there needs
to be strong integration between the ISCM and CRM macro processes. When forecasting
demand, interaction with CRM is essential, as the CRM applications are touching the customer
and have the most data and insight on customer behavior. Similarly, the ISCM processes should
have strong integration with the SRM macro process. Supply planning, fulfillment, and field
service are all dependent on suppliers and therefore the SRM processes. It is of little use for your
factory to have the production capacity to meet demand if your supplier cannot supply the parts
to make your product. Order management, which we discussed in CRM, must integrate closely
with fulfillment and be an input for effective demand planning. Again, good supply chain
management requires that we integrate across the macro processes.

Significant improvement in supply chain performance can be achieved if SRM processes are
well integrated with appropriate CRM and ISCM processes. For instance, when designing a
product, incorporating input from customers is a natural way to improve the design. This would
require inputs from processes within CRM. Sourcing, negotiating, buying, and collaborating
primarily tie into ISCM as supplier inputs are needed to produce and execute an optimal plan.
But even these segments have the need to interface with CRM processes such as order
management.

Integrating the three macro processes is crucial for improved supply chain performance.
Diff: 2
Topic: 17.2 The Supply Chain IT Framework
AACSB: Reflective Thinking Skills
Learning Outcome: Compare common approaches to supply chain design

17-18
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall