Enterprise Business Systems

Learning Objectives 1. Identify and give examples to illustrate the following aspects of Integrated Information Systems, customer relationship management, enterprise resource management, and supply chain management systems:
Business processes supported Customer and business value provided Potential challenges and trends

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Why? "many organizations are using information technology to develop integrated crossfunctional enterprise systems that cross the boundaries of traditional business functions (such as marketing and finance), in order to reengineer and improve vital business processes all across the enterprise and improve the efficiency and effectiveness of business objectives.
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How? Organizations view cross-functional enterprise systems as a strategic way to use IT to share information resources and improve the efficiency and effectiveness of business processes, and develop strategic relationships with customers, suppliers, and business partners.

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 Thus, instead of having functional mainframe-based legacy systems, organizations are shifting to integrated cross functional client/server applications, for example
ERP, SCM or CRM software systems from SAP, People Soft, Oracle, etc.

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Why Integrated solutions?

Enterprise software focuses on supporting integrated groups of business processes rather than information processing requirements of the respective business function.
ERP focuses on efficiency of a firms internal production logistics distribution, HR, and Financial processes. CRM focuses on acquiring and retaining profitable customers through marketing, sales and service processes SCM focuses on developing the most efficient and effective souring and procurement processes with suppliers for the products and services needed by a business. Knowledge management (KM) applications focus on providing a firms employees with tools that support group collaboration and decision support (Sawhney Mohan, and Jeff Zabin, 2001).
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What is Cross Functional Enterprise cross-functional components are a set of extremely powerful components designed for streamlining, simplifying and handling critical processes found within most industries and businesses. These processes include business performance, customer relationship management, supply chain management, business modeling, as well as document, quality and project management.
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 Business Modeler lets companies view their organization in terms of business processes. Through its PC-based tools, methods, and graphical models that make it easier to match a companys existing processes with the best-practice processes that IFS Applications supports, it gives insight into ways to re-engineer businesses to be more efficient, more profitable and focused on customer satisfaction.
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Corporate Performance Management Continuous improvement is essential for long-term profitability. Corporate Performance Management is an integrated performance management system for measuring functions and processes. It allows users to analyze areas for improvement and focus on results gained from changes, in order to make better strategic and operational decisions.
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Customer Relationship Management (CRM)

Customer Relationship Management is essential for all types of business situations, enabling support for business proposals and decisions in every interaction with the customer.

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Quality Management Quality management relies on two major considerations.

One a proactive decision making process. And two, failure prevention.

Therefore to maintain quality you need a Quality Management system that ensures you receive a steady flow of data via a totally integrated and highly accessible solution.
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Document Management With Document Management, you get full control over your company's documentation to focus on the things that really matter:
selling your products and services, keeping your plant and equipment in top shape, and ultimately meeting or exceeding your business goals.

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Project Management Without a progressive approach to project management a business runs the risk of allowing its operational efficiency to gradually decline. With the right project management enterprise tools a company can review its business projects, both new and old, and continually raise them to higher levels.

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Business Modeling Anticipating your customers changing requirements is the best way to maintain their loyalty. But it can only be successfully achieved when you have a business modeling solution that gives you a precise insight into what youll need to re-engineer your business to meet the change.

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Why Study Customer Relationship Management?

It is easier than ever for customers to comparison shop and, with a click of the mouse, to switch companies. As a result, customer relationships have become a companys most valued asset.

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Customer Relationship Management (CRM) Definition: The use of information technology to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes in sales, marketing, and customer services that interact with a companys customers

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Customer Relationship Management (CRM) CRM is application which takes care of the sales activities, customer interactions, marketing products and customer service. The role of CRM is restricted to the sales related activities only.

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CRM Application Clusters

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CRM Application Components

Contact and Account Management helps sales, marketing, and service professionals capture and track relevant data about every past and planned contact with prospects and customers, as well as other business and life cycle events of customers Sales provides sales reps with tools and company data sources needed to support and manage sales activities, and optimize crossselling and up-selling
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CRM Application Components

Marketing Fulfillment help marketing professionals accomplish direct marketing campaigns by automating such tasks as qualifying leads for targeted marketing, and scheduling and tracking direct marketing mailings Customer Service and Support provides service reps with software tools and real-time access to the common customer database shared by sales and marketing professionals
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CRM Application Components Retention and Loyalty Programs help a company identify, reward, and market to their most loyal and profitable customers

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Three Phases of CRM

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Three Phases of CRM

Acquire new customers by doing a superior job of contact management, sales prospecting, selling, direct marketing, and fulfillment Enhance relationship with customer by supporting superior service from a responsive networked team of sales and service specialists and business partners

Retain and expand business with customers by proactively identifying and rewarding the most loyal and profitable customers
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Benefits of CRM CRM allows a business to identify and target their best customers so they can be retained as lifelong customers for greater and more profitable services. CRM makes possible real-time customization and personalization of products and services based on customer wants, needs, buying habits, and life cycles.
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Benefits of CRM CRM can keep track of when a customer contacts the company, regardless of the contact point.

CRM systems can enable a company to provide a consistent customer experience and superior service and support across all the contact points a customer chooses.

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CRM Failures Lack of understanding and preparation Rely on CRM to solve business problem without first developing the business process changes and change management programs that are required CRM projects implemented without the participation of the business stakeholders involved
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Trends in CRM Operational Analytical

Collaborative Portal-based

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Operational CRM Supports customer interaction with greater convenience through a variety of channels.

Synchronizes customer interactions consistently across all channels Makes your company easier to do business with
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Analytical CRM
Extracts in-depth customer history, preferences, and profitability information from your data warehouse and other databases Allows you to analyze, predict, and derive customer value and behavior and forecast demand

Lets you approach your customers with relevant information and offers that are tailored to their needs
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Collaborative CRM Enables easy collaboration with customers, suppliers, and partners Improves efficiency and integration throughout the supply chain Allows greater responsiveness to customer needs through sourcing of products and services outside of your enterprise
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Portal-based CRM
Provides all users with the tools and information that fit their individual roles and preferences Empowers all employees to respond to customer demands more quickly and become truly customer-focused Provides the capability to instantly access, link, and use all internal and external customer information
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Partner Relationship Management (PRM) Definition: Applications that apply many of the same tools used in CRM systems to enhance collaboration between a company and its business partners, such as distributors and dealers, to better coordinate and optimize sales and service to customers across all marketing channels

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Enterprise Resource Planning (ERP) Definition: A cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company

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Enterprise Resource Planning (ERP) ERP is application software, which automates the internal functional departments of an organization. There will be a smooth flow of information across the functions like accounts, production, human resource and administration. ERP looks after the supply chain management, production management and accounts management. There is no such a tool available in the industry which can cater all the issues across the company.
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ERP Application Components

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ERP Process & Information Flows

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ERP Benefits Quality and Efficiency ERP creates a framework for integrating and improving a companys internal business processes that results in significant improvements in the quality and efficiency of customer service, production, and distribution

Decreased Costs Significant reductions in transaction processing costs and hardware, software, and IT support staff
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ERP Benefits Decision Support Provides vital crossfunctional information on business performance quickly to managers to significantly improve their ability to make better decisions in a timely manner Enterprise Agility ERP breaks down many former departmental and functional walls of business processes, information systems, and information resources
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Costs of ERP

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Causes of ERP Failures

Business mangers and IT professionals underestimate the complexity of the planning, development, and training needed Failure to involve affected employees in the planning and development phases Trying to do too much too fast in the conversion process Failure to do enough data conversion and testing
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Trends in ERP

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Enterprise Resources Planning (ERP) Definition 1 (Cont.)

Includes: Typical MRP II Functions Sales Force Automation Engineering Function / PDM Quality Functions Field Service Functions Complete Financial Functions

Advance Manufacturing Function Human Resources Functions

Distribution / Logistics Functions Management Reporting

ERP is a System for the Entire Company A Global Tightly Integrated Closed-Loop System (1) Source: APICS Complex Industries Special Interest Group

Typical ERP Functionality

Engineering / Product Date MGT.

Document Creation, Management & Control CAD Interface / Image Management Configuration Management - Change Order Creation & Control - Revision Control Engineering Data Management

Engineering / Product Date MGT. (Cont.)

Product Information Management
Technical Data Management Technical Information Management Engineering Item Data & BOMs

Manufacturing
MRPII Functionality - MPS, BOM, Routings, MRP, CRP, PAC

Sales & Operations Planning

Integrated Production Configuration Statistical Inventory Control Flexible Product & Job Costing Options Kanban / JIT / Flow Manufacturing Support Theory of Constraints / Advanced Planning Systems

Sales and Operations Planning

Balance market demand with resource capability Develops a contract between Manufacturing and Marketing A single set of numbers upon which to base plans

and schedules
Manages Inventory and Backlog Forecasting

Advance Planning and Optimizing Systems

Supply Chain optimization Constraint-based multi-location master planning - Generation of feasible production plans across multiple plants

Advance Planning and Optimizing Systems (Cont.)

Constraint-based factory level scheduling

- Generation of feasible schedules (integrated with

feasible production plan) Optimized distribution and transportation planning - Intelligent allocation of inventory through a network

Distribution / Logistics
Purchasing Supplier Reliability Analysis Distribution Requirement Planning Global Transportation Management Fleet Management

Shipping & Receiving

Import / Export Warehouse Management

Human Resources
Requisition Management Applicant Tracking Employee Master Job Descriptions Employee Evaluations

Training & Certification Management

Payroll Deduction Accounting Benefits Tracking

Quality
Quality Management Plans
Quality Specifications / Requirements Test / Inspection Results Cause and Corrective Action Tracking Process / Product Certification Statistical Quality Control Cost of Quality Reporting Equipment & Tool Calibration Mgt

Finance
Financial Budgets General Ledger Accounts Payable

Accounts Receivable
Payroll Fixed Assets Cash Management Activity Based Costing Financial Statements

Field Service
Installation Management As-maintained BOM Warranty Tracking

Preventative Maintenance Scheduling & Control

Service Order Planning & Control

Typical ERP Integration

Typical ERP Integration

System Wide Elements Project Management & Project Costing (EVM) Executive Management Information System Work Flow Management

Multi-Company

Typical ERP Integration

Multi-Currency Multi-Lingual Multi-Mode EDI / Electronic Commerce

Web Enabled / Internet Communications

Imaging & Multi Media

Features Each application has got its own features and benefits in a different way. With the help of ERP, the business owner integrates the internal business process by automating all the departments. CRM, tracks the marketing related activates, individual sales performances, customer services and all. CRM is restricted to only marketing and sales departments.
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Benefits of CRM
Automated sales and marketing process Regular work tracking of the sales person, which in turn leads to the higher sales productivity Helps the company in cross selling the products, if the company is into multiple product lines Ameliorated customer service as the system will automatically warns the sales person regarding the deadlines and this also leads to higher sales closures Reduced expenses Overall, higher profitability
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Benefits of ERP
Automated business environment leads to effective communication Smooth flow of information between the interdepartments and intra-departments Reduced lead time of the manufacturing products Availability of relevant and accurate information on timeliness Better decision making Helps in improving ROI in the long-run
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Supply Chain Management (SCM) Definition: A cross-functional interenterprise system that uses information technology to help support and manage the links between some of a companys key business processes and those of its suppliers, customers, and business partners

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SCM Life Cycle

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Electronic Data Interchange (EDI)

Definition: Involves the electronic exchange of business transaction documents over the Internet and other networks between supply chain trading partners

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EDI Activities

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Role of SCM

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SCM Planning Functions Supply Chain Design optimize network of suppliers, plants, and distribution centers

Collaborative Demand and Supply Planning develop an accurate forecast of customer demand by sharing demand and supply forecasts instantaneously across multiple tiers
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SCM Execution Functions

Materials Management share accurate inventory and procurement order information, ensure materials required for production are available in the right place at the right time, and reduce raw material spending, procurement costs, safety stocks, and raw material and finished goods inventory

Collaborative Manufacturing optimize plans and schedules while considering resource, material, and dependency constraints
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SCM Execution Functions

Collaborative Fulfillment commit to delivery dates in real time, fulfill orders from all channels on time with order management, transportation planning, and vehicle scheduling, and support the entire logistics process, including picking, packing, shipping, and delivery in foreign countries Supply Chain Event Management monitor every stage of the supply chain process, from price quotation to the moment the customer receives the product, and receive alerts when problems arise
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SCM Execution Functions Supply Chain Performance Management report key measurements in the supply chain, such as filling rates, order cycle times, and capacity utilization

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Porters Value Chain Model (1985)

PRIMARY ACTIVITIES In bound logistics (in puts) Supply Operations (manufacturing & testing) Chain Outbound logistics (storage & distribution) Marketing & sales Service

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SCM Objectives

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Case: How Dell Reengineered its Supply Chain

Problem: Dell pioneered the mail order approach to selling PCs In 1993, Compaq cuts prices to drive Dell out of the market. Dell experiences $65 million in losses. Solution: Dell implements the following re-engineering strategies:
mass customization just-in-time marketing electronic orders & shipments e-collaboration with major buyers reduction in testing period monitoring of productivity & returns on investments

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Case: How Dell Reengineered its Supply Chain

(cont.)
Results:

In 2001, Dell made over $4 million in computer web sales/ day. Becomes leader in Customer Relationship Management (CRM)
Online tracking of orders & shipments Viewer approved configurations and pricing

Customized home pages for clients.

Use of Intelligent Agents in production process. Increased communication with suppliers. By 1999, Dell becomes the number two PC seller and is a leader in
management & profitability.

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Lessons from the Case

By introducing a new business model , one can change the manner
in which business is done.

To implement this model on a large scale, one needs to build superb

supply chain management.

Another major success factor in Dells plans was the improvements

made in its logistics system along the entire supply chain. Dells CRM program, are the cornerstones of its success.

Improved communications and customer service, which are part of

Dell was using c-Commerce with its business partners.

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Supply Chain & Value Chain Definitions

SUPPLY CHAIN flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses, to the end customers. DEMAND CHAIN the process of taking orders. SUPPLY CHAIN MANAGEMENT (SCM) to plan, organize, and coordinate all the supply chains activities.

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Benefits of SCM

Reduces uncertainty & risks in the supply chain.

This positively affects inventory levels, cycle time, business processes & customer service.

Contributes to overall increase in profitability & competitive advantage.

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Components of Supply Chain

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Components of Supply Chains

Upstream Supply Chain
Organizations first tier suppliers & their suppliers.

Internal Supply Chain Processes used by an organization to transform their inputs to

outputs.

Downstream Supply Chain Processes involved in delivering the product to the final
customers.
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The Supply Chain

Involves the life of a product from dirt to dust. Involves movement of tangible & intangible inputs. Can come in all shapes and sizes and may be fairly complex. Can be bi-directional and involve the return of products (reverse
logistics)

The flow of goods, services, information & financial resources

must be followed with an increase in value.

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Sources of Supply Chain Problems

UNCERTAINTY
In demand forecast In delivery times & production delays

POOR COORDINATION
With Internal units and business partners Ineffective customer service High inventory costs, loss of revenue & extra cost for expediting services.

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The Bull Whip Effect

The most persistent SCM problem. Erratic shifts in orders up & down the supply chain. Distributor orders fluctuate because of poor demand forecast, price fluctuation, order batching & rationing with supply chain. Example: Porter & Gambles distortion in SCM for manufacturing of disposable diapers. Avoidable with proper interorganizational EC. EDI, Extranets & Groupware technology
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Solutions to Supply Chain Problems

Vertical Integration
Purchasing & managing the supply source.

Building Inventories
Insurance against supply chain shortages. Main problem: It is difficult to correctly determine inventory level for each product & part. This can be costly.

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CASE: How Littlewoods Improved its SCM

Problem:

Littlewoods Large British clothing retailer with 136 stores in the UK &
Ireland. Overstocking problems in the supply chain management.

Solution: Introduced web-based performance reporting system. Enabled merchandising personnel to make more accurate stock, sales and supplier decisions. Results: In 1997, Littlewoods saves $1.2 million as a direct result of its strategic price merchandizing.

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Other Solutions to SCM Problems

During peak times, outsource rather than do-it-yourself. Buy rather than make production inputs when appropriate. Configure optimal shipping plans. Create strategic partnerships with suppliers. Use the just-in-time approach to purchasing. Reduce the lead time for buying and selling. Use fewer suppliers. Improve supplier-buyer relationships. Manufacture only after orders are in. Achieve accurate demand by working closely with suppliers.
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Two Tools for Reducing Supply Chain Problems

Supply Chain Teams
Teams of tightly integrated business that work together and serve the customers

Measurements & Metrics

Use of IT for measuring areas in need of improvement. For example;

Delivery on time Quality at unloading area Cost performance Lead time for procurement
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COMPUTERIZED SYSTEMS & S.C.M.

PHASE 1: 1950s - 60s, the first software programs to support the supply chain arrive. PHASE 2: Development of the Material Requirement Protocol (MRP).

PHASE 3: Enhanced MRP known as Material Resource Planning become available.

PHASE 4: Enterprise Resource Planning (ERP) integrates transaction processing activities. PHASE 5: Extended ERP/SCM software.

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COMPUTERIZED SYSTEMS & S.C.M.

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Benefits of Systems Integration

Source: Sandoe & Saharia (2001)

TANGIBLE BENEFITS

Inventory reduction Personnel reduction Productivity improvement Order management improvement Financial-close cycle improvements IT cost reduction Procurement cost reduction Revenue/profit increases,

INTANGIBLE BENEFITS

Information visibility New/improved processes Customer responsiveness Standardization Flexibility Globalization and business performance

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Value Chain Integration

The process by which multiple enterprises within a shared

market channel collaboratively plan, implement, and manage (electronically as well as physically) the flow of goods, services, and information along the entire chain in a manner that increases customer-perceived value.

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Integrating the Supply Chain & Value Chain

A Supply Chain transforms into an integrated Value Chain
when it.. Extends the chain all the way from sub-suppliers to customers. Integrates the back-office operations with those of the front office. Becomes highly customer-centric, focusing on demand generation and customer service. Is proactively designed by chain members to compete as an extended enterprise. Seeks to optimize the value added by information and utility-enhancing services.
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Value Chain Integration

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Case: Warner-Lamberts Integrated Supply Chain

Problem:

WL requires assistance with demand forecast of products.

Solution: They use Manugistic Inc.s Demand Planning Information System to analyze their manufacturing, distribution and sales data.
The system is able to anticipate seasonal impact or a production line problem.

Results: WL increases its shelf fill rate from 87% to 98%, earning them $8 million/year in additional sales.

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Enterprise Resource Planning

ERP = Process of planning & managing all resources & their use in the entire enterprise.
MAIN OBJECTIVE of ERP

Leading ERP software producers SAP, Oracle, J.D. Edwards, Computer Associates, People Soft

to integrate all departments & functions across a company onto a single computer system.

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Functions of ERP
Provides a single interface for managing routine manufacturing
activities.

Facilitates customer interaction & manages relationships with

suppliers & vendors.

Forces discipline & organization around business. Supports administrative activities.

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Post- ERP: 2nd Generation ERP

By the late 1990s, the major benefits of ERPs had been
fully exploited.

There was a need for planning systems oriented towards

decision-making.

Emergence of SCM systems that complement ERP

systems. Provide intelligent decision support capabilities. Overlay existing system & pull data from every step of the supply chain.

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How is SCM Integration Achieved?

FIRST APPROACH SECOND APPROACH

Work with different

software products from different vendors (i.e. one for ERP & one for SCM).

ERP vendors add

decision support and business intelligence capabilities.

Creation of 2nd

generation ERP.

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3 Ways to Provide Supply Chain Intelligence

1) Use an enhanced ERP package that includes business
intelligence capabilities

2) Integrate the ERP with business intelligence software from

a specialized vendor such as Brio, Cognus, or Comshare.

3) Create a best of breed system by using components

from several vendors that will provide the required capabilities.

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Componentization
Breaking large ERP systems into individual
components that work together.

Makes it easier for ERP vendors to enhance their

solutions and for customers to upgrade their software.

Helps vendors extend the core ERP system with

supply chain, sales force automation solutions, and customer relationship management (CRM).
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ERP Implementation
To avoid failures, the following factors should be considered;

The customers expectations. The ERP product capabilities, and The customers organization
gaps. and culture.

The level of change the customer

has to go through to make the system fit.

The risks presented by politics

within the customer organization.

The level of commitment within

the customer organization to see the project through.

The consultants capabilities,

responsibilities and role (if applicable).

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Application Service Providers & ERP Outsourcing

ASP alternative = A popular option today for businesses
that want ERP functions but lease applications rather than building systems. that offers to lease ERP-based applications to other businesses.

Application Service Provider (ASP) is a software vendor

The ASP concept is especially useful in ERP projects,

which are expensive to install and take a long time to implement, and for which staffing is a major problem.

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Global Supply Chains

Some of the issues involved in
global supply chains; legal issues, customs fees and taxes language and cultural differences fast changes in currency exchange rates political instabilities.

Global Supply Chains = Supply chains that involve suppliers and/or customers in other countries.

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CASE: LEGO Struggles with Global Issues

Problem: In a rush to get its innovative product to market, Lego did not first solve all necessary issues, for example;
The need for a supportive distribution & service system. Merging the offline and online operations Existing warehouses were not optimized to handle distribution to individual customers How to handle returns around the globe. Invoicing must comply with the regulations of many countries.

Results: Lego closed the Web site for business. It took almost a year to solve all global trade-related issues.

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How EC contributes to SCM

Digitizes products such as Change the nature and structure
software, which expedites the flow of materials.
with electronic documents. telegrams with electronic messaging system. information sharing.

of the supply chain from linear to a hub.

and minimum inventories.

Replaces all paper documents Replaces faxes, phone &

Results in shorter supply chain Facilitates customer service. Introduces efficiencies in buying
& selling through the creation of e-marketplaces.

Enhances collaboration &

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Buying & Selling along the Supply Chain

A major role of EC is to facilitate buying and selling along the supply chain. The major activities are;

UPSTREAM INTERNAL SCM DOWNSTREAM COMBINED UPSTREAM / DOWNSTREAM

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Integration of EC with ERP

Since most middle-sized and large companies already have an
ERP system, and since EC needs to interface with ERP, it makes sense to interconnect the two.
organizations not only leverage their investment in the ERP solution, but also speed up the development of EC applications. inflexible (difficult to change), so it is difficult to achieve easy, smooth, and effective integration.

By extending the existing ERP system to support e-commerce,

The problem is that the ERP software is very complex and

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Order Fulfillment in EC
When a company sells direct to customers it is involved in the
following activities: Quickly find the products to be shipped, and pack them. Arrange for the packages to be delivered quickly to the customers door. Collect the money, either in advance, in COD, or by individual bill. Handle the return of unwanted or defective products.

Many companies find it very difficult to fulfill these activities

effectively & efficiently. This reveals that they have problems in their own supply chains.
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Online Order Fulfillment & Logistics

While order fulfillment is a part of the back-office operations, it is
strongly related to front-office operations.

Recently, e-Tailors have faced continuous problems in order

fulfillment, especially during the holiday season. For example, Amazon.com had to add physical warehouses in order to expedite deliveries and reduce order fulfillment costs. order, frequently a customized one. In the pull case it is more difficult to forecast demand. Furthermore, in a B2C pull model, the goods need be delivered to the customers door.

EC is based on the concept of pull operations, which begin with an

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Innovative Solutions to Supply Chain Problems

Galleryfurniture.com
Uses dozens of cameras, (Webcam) to demonstrate its product inventory on the Web. This is an alternative to paper or electronic catalogs.
Developed a logistics system that determines whether a customer is entitled to a return & refund. .

Garden.com

Developed proprietary software that allows it to collaborate with its 70 suppliers efficiently and effectively.

Mail Boxes Etc. & Return.com Rightfreight.com

Manages a marketplace that helps companies with goods to find "forwarders" -- the intermediary that prepare goods for shipping.

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Automated Warehouses
Traditional warehouses are built to deliver large quantities to a small
number of stores and plants. But in B2C EC, companies need to send small quantities to large number of individuals.

Large-volume EC fulfillment requires special automated warehouses.

This may include robots and other devices that expedite the pick up of products.

Most B2C is shipped via outsourcers.

Fingerhut handles the logistics of mail orders (including online orders) for Wal-Mart, Macys, and many others.

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Options for Dealing with Returns

Return an item to the place where it was purchased.
This only works when there is a small amount of returns.

Returns are shipped to an independent unit and handled separately

inside the company.

May be more efficient, but the buyer is still unhappy.

Allow the customer to physically drop the returned items at collection

stations.

Such as convenience stores or Mail Boxes, Etc.

Completely outsource returns.

Several outsourcers, including UPS provide such services.
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MANAGERIAL ISSUES
Ethical issues. Conducting a supply chain management project may
result in the need to lay off, retrain, or transfer employees. Other ethical issues may involve sharing of personal information and computer programs. integration projects, including ERP, SCM, and electronic commerce, they should recognize that integrating sometimes results in failure.
important to remember that technology plays a supportive role to organizational and managerial issues.

How much to integrate? While companies should consider extreme

Role of IT. Almost all major SCM projects use IT. However, it is

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SCM Benefits Faster, more accurate order processing Reductions in inventory levels

Quicker times to market

Lower transaction and material costs Strategic relationship with suppliers
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Causes of SCM Failures

Lack of proper demand planning knowledge, tools and guidelines Inaccurate or overoptimistic demand forecasts Inaccurate production, inventory and other business data provided by a companys other information systems Lack of adequate collaboration among marketing, production, and inventory management departments within a company Immature, incomplete or hard to implement SCM software tools
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Trends in SCM

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Summary Customer relationship management is a cross-functional enterprise system that integrates and automates many of the customer-serving processes in sales, marketing, and customer services that interact with a companys customers.

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Summary Enterprise resource planning is a crossfunctional enterprise system that integrates and automates many of the internal business processes of a company, particularly those within the manufacturing, logistics, distribution, accounting, finance, and human resource functions of the business.

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Summary Supply chain management is a crossfunctional inter-enterprise system that integrates and automates the network of business processes and relationships between a company and its suppliers, customers, distributors, and other business partners.

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Chapter

End of Chapter

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