CHAPTER 11

Customer Relationship Management and

Supply Chain Management
Announcements
Fridays Class
Project 6 Solver Case due by midnight
Review Project 7 Decision Support
Review of all functions and formulas used

Coming Weeks
Quiz 3 Excel Solver
Chapter 12 & Tech Guide 4
Chapter 13
Final Exam Review
CHAPTER OUTLINE
11.1 Defining Customer Relationship Management
11.2 Operational CRM Systems
11.3 Analytical CRM Systems
11.4 Other Types of CRM Systems
11.5 Supply Chains
11.6 Supply Chain Management
11.7 IT Support for Supply Chain Management
Chapter Opening Case: The Next Step
in Customer Relationship Management
Source: Maxx-Studio/Shutterstock
Taste
Profiling
Persuasion
Profiling
11.1 Customer Relationship Management
Customer-Focused
&
Customer-Driven







Designed to Achieve:
Customer Intimacy
From Neighborhood Stores.
Personal
MONKEY BUSINESS-LBR/Age Fotostock America, Inc.
.To Today
Impersonal
Giant malls
The Web
Mobile population
Why do we need CRM?
Cost

Dissatisfied customer impacts

Increasing the customer retention rate

Odds of selling to new customers

Retention of complaining customers


Why do we need CRM?
Value of a customer
Duration of the relationship

Number of relationships (e.g. more than one product)

Profitability of the relationship
GOAL of CRM:
Maximize lifetime
value of a customer
Tenets of CRM
One-to-one relationship between a customer
and a seller.

Treat different customers differently.

Keep profitable customers and maximize
lifetime revenue from them.
Customer Touch Points
Data Consolidation
Accounting
Finance
Marketing
MIS
HR
Customer
Data Consolidation =
360-Degree View of
Customers
Collaborative
CRM
Primary Components of a
CRM Strategy
A
N
A
L
Y
T
I
C
A
L

O
P
E
R
A
T
I
O
N
A
L

Sales
Marketing
Customer Service and Support
Campaign Management
Customer-facing Applications
Search and Comparison
Customized Products
Technical Information
Personalized Web Pages
FAQ
E-mail / Auto Response
Loyalty Programs
Customer-touching Applications
Data Mining
Decision Support
Business Intelligence
OLAP

Customer
Data
Warehouse
11.2 Operational CRM
Supports the front-office business processes
(i.e. those that directly interact w/customers)




Two major components:

1. Customer-facing applications
2. Customer-touching applications
Marketing
List Generator
Campaign Mgmt
Cross Selling /
Up Selling
Sales
Sales Mgmt
Contact Mgmt
Opportunity Mgmt
Customer Service
Contact Center
Web-Based
Self Service
Call Scripting
Operational CRM:
Customer-Facing Applications
Customer service and support
Sales force automation
Marketing
Cross Selling
Up Selling
Bundling
Campaign management
Mustafa Almir Mahmoud/Age Fotostock America, Inc.
Operational CRM:
Customer-Touching Applications
Search and comparison capabilities
Technical and other information
and services
Customized products and services
Loyalty programs
Source: Spencer Grant/PhotoEdit
11.3 Analytical CRM Systems
Analyze customer behavior and perceptions in order to
provide actionable business intelligence.

A
N
A
L
Y
T
I
C
A
L

Data Mining
Decision Support
Business Intelligence
OLAP

Customer
Data
Warehouse
11.4 Other Types of Customer
Relationship Management Systems
On-demand CRM
Hosted by an external vendor in the vendors data center


Mobile CRM
Interacting directly with customers through mobile
devices


Open-source CRM
Source code openly available to developers and users
Challenges and Future of Customer
Relationship Management Systems
Challenges
Social Media



Future
Supplier Relationship Management
Partner Relationship Management
Employee Relationships Management
11.5 Supply Chains
The flow of materials, information, money, and services
from raw material suppliers, through factories and
warehouses, to the end consumers.

Components of Supply chain:
The Flows of the Supply Chain




Material flows



Information flows



Financial flows
Material
Information
Financial
11.6 Supply Chain Management
The function of planning, organizing, and
optimizing the various activities performed along
the supply chain

These systems are considered to be a type of
Interorganizational information system (IOS).
Goal of an SCM System:
Reduce problems along supply chain
Push & Pull Models
Problems Along the Supply Chain
Problems:
Poor customer service
Poor quality product
High inventory costs
Loss of revenues

The Bullwhip
Effect
Solutions to Supply Chain Problems
Using inventories:
Just-in-time inventory



Information sharing:
Vendor-managed inventory
11.7 Information Technology Support
for Supply Chain Management
Electronic data interchange (EDI)
Enables business partners to exchange routing
documents electronically
Example

EDI is accomplished through the use of Extranets
The main goal of extranets is to foster
collaboration between business partners.
An extranet is open to selected B2B suppliers,
customers and other business partners.

The Structure of an Extranet
Comparing Purchase Order Fulfillment
Without EDI
Source: Drawn by E. Turban
Comparing Purchase Order Fulfillment
With EDI
Source: Drawn by E. Turban
EDI Benefits
Minimize data entry errors
Length of messages are shorter
Messages are secured
Reduces cycle time
Increases productivity
Enhances customer service
Minimizes paper usage and storage
EDI Limitations
Significant initial investment to implement
Ongoing operating costs are high due to
the use of expensive, private VANs
Traditional EDI system is inflexible
Long startup period
Multiple EDI standards exist
Chapter Review
Define customer relationship management and
collaborative CRM, and identify the primary
functions of both processes.





Chapter Review (cont.)
Describe the two major components of
operational CRM systems and provide at least
one example of how businesses use each
application.



Chapter Review (cont.)
Describe analytical CRM systems.




Chapter Review (cont.)
Define the term, supply chain, and describe the
three components and the three flows of a supply
chain.

Chapter Review (cont.)
Define the terms electronic data interchange
(EDI), and extranet. Explain how each of these
applications helps support supply chain
management.