BITS/CM/HHSM ZC471

Management Information
Systems
BITS Pilani
Pilani Campus

BITS Pilani
Pilani Campus

Lecture Session-10
20 09 14

Part IV: Organizational

Applications
Chapter 10
Enterprise Systems: Supply
Chains, ERP, CRM and KM
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Content of the Chapter

Focuses on enterprise level systems: SCM, ERP,
CRM & KM
Presents an overview of concepts of SCs and their
business value
Problems of SCM are addressed using examples.
ERP is presented as a way to simplify & coordinate
business processes and SCs.
How SCM, ERP, and e-commerce work together to
achieve a competitive advantage for organizations
Appendix Case example on MITRE Corp.

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Section Overview
10.1 Essentials of Enterprise Systems and Supply
Chains Components of the supply chain; e-SC
10.2 SCM and its Business Value Collaboration in SC;
e-Business systems and SC; Inventory, e-procurement,
wireless solutions for SCM and business value of SCM.
10.3 ERP Systems Advantages, capabilities and
implementation. Successful ERP implementations;
Issues and limitations of its use.
10.4 CRM Classifications of CRM applications and
transition of CRM to WWW (e-CRM) and mobile world;
10.5 KM and IT Definition, characteristics and KM Life
Cycle; KM system implementation and its integration
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Learning Objectives
1. Essentials of enterprise systems
2. Advantages of computerized supply chain
management.
3. Major problems in implementing supply
chains
4. Need for integrated software and how ERP
meets it.
5. CRM and its support by IT.
6. KM and its support by IT.

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IT in Practice Information
Snippets
Opening Case: ChevronTexaco modernized its SC with IT
All operations; Two evils; e-monitoring with DSS; NetReady -150; Global
Information Link (GIL2); e-Guest; Global HRM; ..

IT at work 10.1 Trading in a Bear market Technosila

Case from Russia; Consumer electronics retailer founded in 1993 , as of 2005 it

had over 250 stores in 197 cities and annual turnover of $2 billion considered
Oracle and SAP for ERP, finally decided on SAP considering the total cost of
ownership; Accent - BestBuy

IT at work 10.2 Peacocks Retails uses wireless to

smooth its SC Operates about 490 retail stores selling clothes and home
furniture in Wales and the south of England; In 1997, it consolidated its six
warehouses to a single distribution centre (100,000 sq ft).
In 1998, co. started to replace the paper based system with a wireless system;
fully automated distribution centre is equipped with a hands-free and real time put
away and picking system; based on a combination of 28 wearable computers and
6 truck mounted terminals supported by WLAN.
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IT in Practice Information
Snippets
IT at work 10.3 Chinese Wal-Mart: how IT transformed
Bailians SCM merger of four state-owned enterprises
o With implementation of RFID the co. has improved the delivery cycle by a factor
of three increased put away efficiency by 66 per cent and reduced shrinkage by
52 per cent
o Also implemented CISCO Connected Warehouse system.

IT at work 10.4 1-800-FLOWERS.COM uses data mining

to foster CRM internet presence in 92 & e-store in 95; SAS
Enterprise Miner CRM

Identifying each customer: at the end of each day, the data mining software helps
the co. identify the many different types of customers and how each would like to
be treated;

IT at work 10.5 How companies use e-CRM

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Continental Airlines (monitors calls to its Data center using intelligent s/w from
Witness Systems to analyse recorded conversations), Micrel Inc. (IC Solutions- uses
sophisticated self-service search and navigation engine that directs customers to the
right information at the right time), Sheraton Hotels,
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IT in Practice Information
Snippets
Closer Look 10.1 How much is the knowledge in your
company worth?
Paul Strassman 7 step process 1. Market capitalization; 2. Shareholder
equity; 3. Find 2-1; If negative stop; No value; 4. Otherwise, 2-1 is
knowledge value; 5. Divide knowledge by shareholder equity (% value); 6.
Find no. of employees; 7. Divide (5) by no. of employees per employee

IT at work 10.6 KM at Infosys Technologies

1990s BOK initiative; KShop; KCUs;

IT at work 10.7 Spreading Knowledge Luxembourgs

MySchool Portal
MoE Multilingual educational working environment

End of chapter case ERP helps in productivity at Northern

Digital Inc.
Rapid growth and ageing technologies; ERP system (IMS); Flexibility;
Inventory management
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10.1 Essentials of Enterprise

Systems and Supply Chains
Enterprisewide Systems
ERP designed to coordinate all the resources,
information, and activities needed to carry out and
complete business processes. Ex: MS Dynamics (GP
& AX), Infor, CDC, Epicor
Extended ERP extends support to business
partners
CRM to manage and improve customer related
processes; Information about customers and
customer interactions; Storing and accessing by
employees in organization. Ex: SAP, Oracle, CDC,
Ramco, WebCRM
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Enterprisewide Systems
contd
Knowledge Management Systems (KM) system for
managing knowledge in organizations; Creation,
capture, storage and dissemination of information.
Ex: SAS Text Analytics, Novo Solutions
Business Process Management (BPM)
Management approach that enhances business
effectiveness and efficiency while focusing on
innovation, flexibility and integration with
technology. Ex: IBM, Oracle, Software AG
Supply Chain Management (SCM) management of
interconnected businesses involved in providing of
products/services to customers. Ex: Demand
Foresight, SAP, IES Ltd, Sage, Oracle, Arena
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Enterprisewide Systems
contd
Materials Requirement Planning (MRP) Is a software based
PP & IC system to manage manufacturing processes. Ex:
123insight, Merlin
Decision Support Systems (DSS) specific class of
computerized ISs that support decision-making activities. Ex:
Vanguard, IBM, Oracle, SAS, SAP
Business Intelligence (BI) BI applications are reporting,
OLAP, analytics, data mining, business performance
management, benchmarks, text mining, and predictive
analytics. Ex: IBM Cognos, MAIA Intelligence
PRM Designed to provide care to business partners
Product life cycle management (PLM) Conceptualization,
design, building and support of products and services
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Overview of enterprise system

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SC and SCM
SC: Relationships among suppliers, manufacturers,
distributers and retailers
SCM: Efficient management of end-to-end SC
processes
IT implementation should consider:
Procurement and supplier decisions
Production decisions
Distribution
Information support
Material flow
Cash flow
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Supply chains and e-SC

Brewing Good Business

Deployed integrated enterprise system structured

around supply chain, financial management, ERP &
CRM.
Automated sales force & Campaign management tools
to improve marketing effectiveness.
e-SC?
Three parts of SC

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Upstream
Internal
Downstream

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10.2 SCM and Its business

value
Managing Collaboration
SCM and Inventory management require coordination of
all activities & links in supply chain.
Goods move smoothly & on time from supplier
manufacturer distributor customer
Partner collaboration is key success factor;
Sharing of information both in upstream & downstream
is essential.

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Collaborative Planning (CPFR)

Business practice collaboration in planning and FC
Designed to synchronize production & distribution plans,
and product flows
Optimize resource utilization
Increase customer responsiveness
Reduce inventories

CPFR model
Collaborative Planning,
Forecasting, and
Replenishment (Source:
VICS.org, 2004)
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Vendor Managed Inventory

Automatic information sharing.
Reduces warehousing costs for suppliers.
Inventory levels are monitored for trigger
level for immediate shipment as needed.
Efficient manufacturing schedules.
All participants should share in benefits of
efficiencies of scale.
Example: Wal-Mart and P&G
Ultimate Supply System

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E-Business Systems & Supply

Chains
Advantages of Internet use in SCM
Better cost performance from improved productivity & lower costs.
Enhanced customer service from improved quality of service.
Improved process capabilities from online business, quality consistency.

Higher productivity & dependability from increased control of material flows along the
supply chain.
Shortened cycle times due to fewer delays & higher speed.
Greater flexibility in planning & replanning.
Shorten the supply chain itself.
Smooth the related production processes.

E-Business Activities: CFNs, E-Marketplaces, EDI, EOFT

E-Procurement use of internet technologies
SC Teams, Virtual Factory (computerized model of a factory)
Mobility and Wireless Solutions (RFID, Lean SCs)

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Business Value of SCM

Effective transformation of raw materials into goods and/or
services.
Reduce uncertainty & risk.
Improved collaboration to decrease inventory levels & cycle
time.
Improved processes & customer service.
Increased profitability & competitiveness.

Examples of success stories

Supply chains and information integration

interval vs. external integration
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10.3 Enterprise Resource

Planning (ERP) Systems
Software integrating planning, management & use of all
resources in entire enterprise.
Comprises sets of applications that automate back-end
operations (financial, inventory management & scheduling).
Modules for cost control, accounts payable/ receivable,
treasury management & fixed assets.
Benefits range from increased efficiency to improved
quality, productivity & profitability.
Capabilities:
Combining LTLs; Dynamic sourcing of products; Showing a single
face to global customers; Consolidating of country wide sales;
Coordinating procurement and logistics across geographies;
Creating supplier portals, etc.

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Colgate-Palmolive ERP
implementation
Continuously seeks to streamline its supply chain
operations.
Must accelerate new product development.
Devises ways to offer customers greater choice of
better products at lower cost.
ERP allowed company to access more timely &
accurate data & reduce cost.

Successful ERP Implementations

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ERP application modules

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ERP Build, Buy or Lease?

Self-develop an integrated system, either linking
together existing functional packages or by
programming a new custom-built system.
Purchase commercially available product (often
quicker &/OR less expensive).
Vendors: SAP, Oracle & Computer Associates

Lease from application service providers (ASP) to

get the best modules of different vendors.
ASP Provider: Alpha CSP, MVI Solutions
Yahoo! directory

Lease will typically be least expensive option making

it more affordable by even small firms.
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10.4 Customer Relationship

Management (CRM)
CRM Business Strategy
Customers are the core of the business; Success
depends upon company effectively managing
relationships with customers.
It is a good business strategy to select & manage
customers to optimize long-term value.
Requires a customer-centric business approach &
organizational culture to support effective marketing,
sales & service processes.
Concept treat different customers differently as
their needs are different; their value to the company
may also be different.
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Classification of CRM
Applications
Customer-facing include all areas where
customers interact with company (call centers, help
desks, sales force automation).
Customer-touching customers interact with the
applications (self-service, campaign management,
general purpose e-business applications).
Customer-centric intelligence analyze results of
operational processing & use results to improve
CRM applications.
Online networking methods that provide the
opportunity to build personal relationships (chat
rooms & discussion lists).
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Levels & Types of e-CRM

Foundational service Minimum necessary services
such as web site responsiveness.
Customer-centered services Order tracking,
product configuration/customization & security/trust.
Value-added services extra such as online
auctions, online training & education.
Loyalty programs recognize customers who
repeatedly use services (products) offered.
Tools for Customer Service
Personalized web pages (used to record purchases
& preferences), FAQs, Email & automated response,
Chat rooms, Live chat and Call centers
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Traditional vs. mobile CRM.

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Issues Related to CRM

Failures
Difficulty in measuring intangible benefits.
Failure to identify & focus on specific business
problems that the CRM can solve.
Lack of active senior management sponsorship.
Poor user acceptance.
Trying to automate poorly defined business process.
Tips on how to avoid failures in CRM implementation
Table 10.3

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Business Value of CRM

BUSINESS VALUE OF CRM
Increase in staff productivity.
Cost avoidance, Increased revenue, Margin increases.
Reduced inventory costs.
Increased customer satisfaction.
RISKS OF e-CRM
Taking on more than can be delivered.
Getting over budget & behind schedule.
Poor user adoption, Expensive maintenance & support.
Isolation, Garbage in-garbage out
Failure to measure success.
ON-DEMAND CRM Pros and Cons
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10.5 Knowledge Management

and IT
Data, information, and knowledge.
Information that is contextual, relevant & actionable.
Characteristics of Knowledge
Extraordinary leverage & increasing returns.
Fragmentation, leakage & the need to refresh.
Uncertain value.
Uncertain value of sharing.
Rooted in time.
Intellectual capital (intellectual assets) is another term
used for knowledge; financial value of knowledge.
Explicit Vs. Implicit Knowledge
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 Problem Need to keep large employee base up-to-date;

Spread lessons learned so not to repeat mistakes.
Solution Implementation of KM system.
Results Early problems, however, made modifications
to rate usefulness of knowledge.

KM System Cycle

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KMS Implementation
Expert location system of AskMe Corp.

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KM System Implementation
Components of KM System
Communication & Collaboration
Access, exchange of knowledge, solicitation of knowledge

Storage and Retrieval

Databases to electronic DMSs, Specialized storage systems
(Desktop search)

Finding experts electronically and using ELSs

Enterprise Knowledge portals
Using KM in training and learning
Integration of KM systems with Other Business
Information Systems

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Managerial Issues & Summary

Ethical responsibilities to employees as business
needs change; Risk How much to integrate
Organizational adaptability software versus
existing processes.
Customer is king/queen key success factor.
Going global complicate existing processes.
Summary
Enterprise systems and e-SCM
Problems in implementing supply chains
Need for integrated software and how ERP meets it.
CRM, KM and support by IT.
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Appendix KM in MITRE
Three government funded R & D centres
Started in 1958
SAGE Semi Automated Ground Environment
Aviation, Taxation and Security
6000 employees scattered across globally
60% with more than 20 years experience
Problem with knowledge intensive organizations?
1996 Information Infrastructure Project
Visit MITRE web site and collect more information
on the initiative
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Technologies for KM
Data
Mining

Internet
Create

Share

Expert
Systems

Intranet
Extranet

Identify

Modify

Feedback

Search
Engine

AI
Web 2.0
Machine
Learning

Act

Apply

Databases
Portals

Measurements
Culture
Knowledge
Representation

Process
Influencing factors

Practice
Web
Technologies

Outcome

Higher volume of work

Speed of delivery
Reduced operating costs
Improved productivity
Successful to very successful
Solutions that make a difference
Organic KMS
More information from www.mitre.org,
on-line resources

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