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Chapter 3b: Business Functions and Supply Chains(p101-115)

Business Functions:

CRM,

HR,

Supply Chain ERP

Revision:

Page 15: Each business function is like a puzzle piece.

Each piece is important and should fit well with adjacent pieces, but the entire picture should always be kept in view.

OR: One of an IS’s most important contributions to the sound workings of an organization is the automation of information exchange among subsystems ERP

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Revision (continued):

Example: Customer’s orders taken via the web site by the Sales Department, should be AUTOMATICALLY routed to the – Manufacturing and– Shipping units

And processed by their OWN IS for their specific purpose.

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Introduction to CRM:

No company can survive without selling its products or services:– Providing products that customers want– Marketing efforts to pinpoint demographic groups,

features that consumers desire– Providing efficient/effective ways to execute a sale to

a customer

IS support the sale effort IS support customer services

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CRM:

Customer Relationship Management: supporting relationships with customers– Supports three areas

Marketing Sales Customer service

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Market Research:

To promote products successfully, organizations must perform market research

Market research: discover populations and regions that are most likely to purchase product– Conduct interviews with consumers and

retailers– Statistical models predict sales volumes of

different products

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Targeted Marketing

Targeted Marketing: promote to people most likely to purchase products

Principle: to define the prospective customer as accurately as possible– Can direct promotional spending to customers most

likely to buy your products

Internet: Mass communication of unsolicited promotional email SPAM

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Marketing (continued):

To define target markets companies collect data– Sales transactions– Loyalty cards– Buy databases with info about organizations/individual

Database technology manipulate data pools– Sort and categorize consumers by– Age, gender, income, previous purchases of related products, or

other combinations

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Marketing (continued):

With this vast information, corporations can prepare electronic dossiers on the– Interest– Tastes– Buying habits of customers

‘Market of one’

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Marketing (continued):p104

Telemarketing: marketing over the telephone– PC connected to large database

Computer telephony integration: allows computer to use telephone line as input

Data mining: using large data warehouses to find trends on consumer habits

Set-top box….’personalize marketing’

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Customer Service

Web-based customer service provides automated customer service 24/7– Saves labor costs– Saves paper costs– Let customers pay their bills electronically: invoice

to payment cycle is 41days, now it is 6 days

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Customer Service (continued)

Artificial intelligence used to emulate a real-life customer service representative for FAQ

Sales force automation:– Equips traveling salespeople with information

technology (example PDA)– Makes sales presentations more efficient– Let salespeople present different options for

products and services on net

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Human Resource Management

Employee record management Promotion and recruitment Training Evaluation Compensation and benefits management

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Employee Record Management

Keep personnel records to satisfy laws Payroll and tax calculation Human Resource information systems are now

digitized– Saves space, time and costs

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Promotion and Recruitment

Select best-qualified person for position Selection process automated with IS Intranet: inter-organizational network that

supports Web applications– Helps HR manager post position vacancy

announcements

Automated recruiting and selection software saves costs of publishing ads

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Training

Improving employee skills Multimedia software training replacing

classrooms and teachers Training software emulates situations where

employee must act Information technology reduces training

costs dramatically

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Evaluation

Employee ability must be periodically evaluated by supervisors

Often is a subjective process, which is a problem Evaluation software tries to solve this problem by

standardizing evaluation process– Provide tools to aid in fairly evaluating every

employee

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Compensation and Benefits Management

Compensation includes salary, hourly pay, and bonus

Programs calculate pay and taxes– Automatically generates pay slips and performs

direct deposits

Programs help manage benefits– Benefits database accessible through intranet

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Inter-organizational Supply Chain Management Systems:p111-115

Inventory is decreasing while gross domestic product is increasing

Money saved from inventory can be spent elsewhere Reduction in inventory attributed to supply chain

management systems– Streamline operations throughout chain

Newer SCM systems connect multiple organizations

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The Importance of Trust

Supply chain systems work best when all businesses are sharing information

Trust between allied companies facilitates collaboration

Nissan UK: parts come from UK and Europe, and the systems are linked to Nissan’s Production Control System– 97% of parts are delivered on time– 98% of cars are completed well within time

Distrust:

Risk of disclosing important figures is present, like taking advantage of demand figures:– If Comp A buys from Comp B and has access to

Comp B’s demand figures, it might disclose the information to competitors, stirring competition forcing prices down!

GM and Goodyear– Goodyear can have lower inventory if it knows the

demand schedule for tyres.25

Goodyear:

It could then calibrate its own order for raw materials

Manufacturing capacity to suit GM– Save money and pass some of the savings to its

client in the form of cheaper products

It could replenish the client’s inventory of tyres before GM run out of them OR– It could deliver it straight to the assembly line, just

as needed and save warehouse costs!26

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The Musical Chairs of Inventory

Small enterprises do not use SCM systems– Affects more powerful organization that small

enterprise is linked to Inventory turns: the number of times the business

sells its inventory per year:– Sales revenue/average value of inventory

Example: – GM has an increase of 55%– Goodyear decreased in the same period by 21%

Why?

GM avoided buying tyres from Goodyear until they needed them on the assembly line

Goodyear did not have that information when the tyres will be needed and kept overstock!– When SCM of companies are not linked, supplier

requirements unknown so companies must overstock inventory

– One company sits with lean inventory while other stands, hence musical chairs

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Collaborative Logistics

Web allows organizations from different industries to collaborate

Businesses combine freight, sharing trucks– Optimize logistics by connecting SCM systems

SCM systems help collaborative warehousing– Share warehouse space

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Enterprise Resource PlanningStudy p115

Replace old, disparate information systems with enterprise applications, supporting all or most of the business activities.

Enterprise resource planning: manages daily operations– Complex– Require special tailoring for specific organizations– Relatively expensive

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Summary

Effectiveness is the degree to which a task is accomplished

Efficiency is the ratio of output to input Productivity is the measure of people’s efficiency Information systems have been integrated into

accounting services Financial information systems help managers track

cash

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Summary (continued)

Computer-aided design systems help engineers design new projects

Computer-aided manufacturing systems direct machines that assemble parts

Supply chain management systems optimize workload, speed, and cost in supply chains

Customer relationship management includes the entire cycle of relationships with customers

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Summary (continued)

Human resource management systems facilitate staff selection and record keeping

Multiple companies’ SCM systems can be linked, facilitating cooperation, which requires trust

Installing an enterprise resource planning system can encompass all business processes