The Role of Technology
and the Web on Global Supply Chains is the central theme of this week. The
intention is to explore the application of information technology in a supply
chain management system including how the information technology transforms
traditional businesses, the complexity and problems caused by enterprise
software. Additionally in this week, we walked around the cloud computing as
the answer to chain woes and how beneficial it is to strengthen the network for
online market. In relation to this week reading I decided to explore on the
Customers Relationship Management Software as the right path to supply chain
basing on the advancement of technology.
Introduction of Software Solutions to the World Market
and Supply Chain
During early 1990s the
world observed rapid increase of the number and varieties of software
categories aimed at the business firms. This was due to advances and growing
trends of information, process as well as communication technologies mostly
related to internet. This transformed the way the businesses were operated
toward their expansion. This development in technology could not leave behind
the area of Supply Chain Management which is much cantered on a complex chain
of processes including coordinating supply and demand.
On the supply side,
Supply Chain Management (SCM) systems
may employ enterprise resource planning (ERP) software to boost enterprise
efficiency, improve decision-making by providing greater visibility into
operations, and promote collaboration via information sharing. On the demand
side, Customer Relationship Management (CRM) offers the opportunity to gain
more information in real time about current and prospective customers,
providing functionality for contact management, sales force automation, and
customer service.
Early Hurdles
Earlier, most of the
business firms’ anticipation was very highly placed on the investment on the
Supply Chain Management and Customer Relationship Management software solutions.
However, SCM and CRM software solutions delivered at least partially to some of
the firms’ anticipation and to most of the business firms the results were far
less than anticipated despite significant investments in these resources. The
reason behind was that most companies were not prepared for the implementation
difficulties.
During the first wave of
their infusion into businesses, in which individual SCM and/or CRM software
modules were generally treated as separate installations, the integration with
existing legacy systems proved most troublesome. The Standish Group reported
that the average cost overrun was 178 percent of budget; and the implementation
schedules exceed 230 percent of plan[i]. Estimates of
implementation failures of CRM ranged from 55 – 75 percent according to the
Meta Group[ii]. From a survey of 162
senior managers conducted by Bain and Co.[iii], researchers concluded
that SCM which was long touted as an avenue to control costs, reduce risks, and
increase service performance was mismanaged by most companies.
The Value of Supply Chain Management Solutions
Many companies discovered
that the advancement of information, process and communication technologies and
hence progress made on the CRM software solutions allowed them to concurrently
reduce costs as well as enjoy the competitive advantages in different markets
through better management of their supply chain networks.
Source:http://annanagurney.blogspot.com.au/2012/01/how-us-can-compete-and-win-in-global.html
SCM is an approach to
managing a complex range of business
activities that are associated with the coordination of supply network
entities, channels, and resources for the effective delivery of value-added
products and services to customers. At the heart of SCM is the optimization of
material, information, financial and service flows through a supply network to
effectively coordinate business activities that are geographically dispersed.
It is well known that SCM
focuses on the operational and strategic processes of the entire network of
business entities that transform inputs (e.g., raw materials and information)
into value-added, finished products and services for end customers, it enables
firms to integrate, leverage, and monitor the continual flows throughout the
chain. In addition SCM enables knowledge flows among business entities[iv]; and opportunities for
global marketplaces, including emerging markets[v].
The
Value of CRM Solutions
In today’s world the key
assets to most of the business is customers, this new view of the firms require
a right portfolio of the right customers. The portfolio of right customers
enables the business to develop and maintain relationships with these customers
as well as to manage the portfolio effectively and efficiently.
Thus the fundamental principle
of CRM is to leverage customer data to build profitable relationships by
optimizing the value delivered to and realized from each customer. CRM is not a
technology, but it is made possible by technology that allows a business to
integrate, analyze, and act upon large volumes of customer data. Successful CRM
applications must start with a business strategy, which in turn drives changes
in business processes that are made possible by information technology.
Businesses are increasingly
realizing that a 360° view of the customer with all customer-related
data in a single data warehouse is a key factor for enterprise-wide CRM
success. This 360 view of the customer consolidates all bits of information
about the customer, including purchases, channel preferences, demographic and
psychographic data, payment history, marketing contacts, service records,
complaints or inquiries, and other communications with the company as shown on
the figure below.
A single 360° view of the
customer integrates all customer information[vi]
Where Does CRM
Provide Value?
CRM is prevalent across
many industries, but has been most aggressively adopted in the financial and
services sectors, including banks, credit cards, airlines, hotels, and
retailers. CRM solutions are
typically split into two areas: operational CRM and analytical CRM. Operational
CRM includes the customer-facing applications that focus on managing customer interactions.
Analytical CRM supports and aids decision-making with a range of tools from
simple spreadsheet analyses to sophisticated data mining. Operational CRM and
analytical CRM support each other in a feedback loop[vii]. Operational CRM captures critical
data for input into analytical analyses. Insights into customers' behaviors
obtained from analytical CRM are then tied into operational CRM solutions. The
most common CRM applications focus on sales, marketing, or customer service
processes.
- Sales
force automation (SFA):
Regarded as the
foundation of CRM tools[viii], sales force automation
is designed to help salespeople acquire and retain customers, and manage their
accounts. Key components of SFA solutions include lead distribution and
tracking, contact management, sales process management, pipeline management,
sales forecasting tools, and automated generation of quotes and orders.
- Customer
interaction center applications:
The most prevalent of the
applications focusing on customer service and support are call center
applications, which aid call routing and assignment, queue management, call
tracking, entitlement processing, problem resolution, and performance
measurement.
Marketing automation uses
information technology to automate the marketing process and get the right
message to the right person at the right time using the right media. Marketing
automation encompasses analytics to segment customers and target campaigns,
campaign management to execute marketing campaigns including personalization,
and detailed response tracking.
New classes of
customer-centric metrics are used to measure and monitor CRM initiatives. These
include customer profitability and lifetime value, share of customer or share
of wallet, retention or attrition rates, customer satisfaction, loyalty,
up-sell and cross-sell rates, and cost to serve. Common benefits of successful
customer relationship management initiatives include the following:
A larger share of
customer wallet and increased revenues can result from increased usage or
purchases of the products and services customers already use or increased
revenues from sales of additional or higher-margin products and services.
Additionally, satisfied loyal customers may be less-price sensitive, so fewer
price promotions are needed to drive sales.
- Improved
customer loyalty and retention:
Satisfied customers often
stay longer, are less likely to churn, are less likely to consider taking their
business elsewhere, and more likely to generate referrals of desirable new
prospects. These result in a reduced need to solicit new customers and lower
new customer recruiting costs.
- Reduced
costs of serving customers:
Predictive modeling to
better target marketing communications can produce significant reductions in
unproductive advertising and marketing campaign costs. Initiatives to move
customers from higher cost (e.g., phone) to lower cost (e.g., Internet) channels
can realize significant cost savings.
- Improved resource allocation:
Knowing which customers
are highly profitable, which are marginally profitable, which are unprofitable,
and which have upside profit potential allows firms to better to allocate marketing
and customer service resources.
- Improved
product portfolio:
Through capture and
analysis of interactive customer feedback, the portfolio of products can be
better tailored to customers' needs and desires.
Bottom line results
achieved from CRM initiatives vary widely depending, in large part, on how well
the people-process-technology triangle is implemented.
Challenges of
Implementing and Integrating CRM and SCM Solutions[ix]
Choosing the right path for any organization
requires making short-term and long-term trade-offs. As companies move toward
higher levels of integration, most will be hard pressed to keep their home
grown or bolt-on solutions current. The pace of technological change is
dizzying.
Though the potential benefits of fully integrated CRM and SCM solutions are great, the challenges can be formidable and success is not automatic. Despite the promise, statistics show that many CRM - SCM implementations failed to achieve their business goals. Beyond the matching of maturity elements, the common pitfalls among the failures includes but not limited to non-integrated business and technology strategy, inconsistent top management support, lack of trust, and inadequate understanding of technology. In order to overcome these bottlenecks the firms should embark the pitfalls into promise by:
- Building
a strong business case:
The system is only as
good as the business strategy that it supports. Successful SCM and CRM
solutions require a sound underlying business case coupled with metrics to
measure and monitor the results. This business strategy must be clearly
articulated and communicated to all stakeholders.
- Securing
management support and commitment:
SCM and CRM solutions
reflect a business approach that extends far beyond mere technology tools.
Successful implementation requires the involvement of and commitment from
personnel spanning sales and marketing, operations, and information technology.
Support and commitment from the top help ensure that all are aligned and
working towards the same objectives. The CEO and the team should 'own' the
implementation. Once implemented, the integration is a key strategic tool
around which critical business decisions are to be made - and this should not
be relegated to technical experts.
- Building
communication and trust:
In corporate politics,
information is power and this can result in an environment in which information
is not shared. Successful integration of SCM and CRM solutions requires the
sharing of information across the organization, and potentially with partner
organizations as well. Build teams and constantly share expectations and
lessons learned.
- Developing an understanding of the technologies:
Although technology is
just one component of the solution, it is vital to its overall success. Factors
such as scalability, integration, and functionality need to be considered
up-front. Inherent capabilities of the technologies should be understood in
advance.
Conclusion
In
today’s world it is inevitable for the business firms to successful concur the
market without investing massively and prudently in the Technology and Web
based solutions to ensure that these business firms operate effectively and
efficiently the Global Supply Chains. However, a careful consideration should
be in place so as to understand the right time for implementing the right technology
with the right investment strategies. Once these are taken into consideration
there is likely chance for the firms to emerge on top of the market competition
when fully utilize the benefit and competitive advantage of Right Technology
for Global Supply Chains.
[ii] J. Johnson,(2004). Making
CRM Technology Work. British Journal of Administrative Management, 39, 22–23.
[iii] M., &
Cook,R. Hagey,(2003). Why Companies flunk supply supply-chain 101: Only 33
percent correctly measure supply-chain performance; few use the right
incentives. Journal of Business Strategy, 24(4), 35–42.
[iv] D., & E.
Rosenzweig,A.V. Roth,(2007). B2B Seller
Competence: Construct Development and Measurement Using an Operations Strategy
Lens.Journal of Operations Management, 25(6), 1311–1331.
[v] X., Zhao,B.,
& Flynn,A.V. Roth,(2007). Decision Science
Research in China: Current Status, Opportunities and Propositions for Research
in Supply Chain Management, Logistics, and Quality Management. Decision
Sciences, 38(1), 39–80.
[vi] D. Gupta,
Jatinder N., Sushil K. Sharma, and Mohammad A. Rashid (eds). Handbook
of Research on Enterprise Systems.IGI Global. ©
2009.
[vii] O. J. Chan,(2005). Towards a Unified View of Customer Relationship Management. The
Journal of American Academy of Business, 6(1), 32–38.
[ix] D. Gupta,
Jatinder N., Sushil K. Sharma, and Mohammad A. Rashid (eds). Handbook
of Research on Enterprise Systems.IGI Global. ©
2009.
