# Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications
From your reading of the chapter's opening case, which of the answers below is not a reason why Lenzing chose JDA's Sales & Operations Planning software?
Which of the following provides a suite of integrated software modules and a common central database that allows data to be used by multiple functions and business processes?
Enterprise software is built around thousands of predefined business processes that reflect:
Which of the following is not true about enterprise systems?
You have been asked to implement enterprise software for a manufacturer of kitchen appliances. What is the first step you should take?
Which of the following enables a company to tailor a particular aspect of enterprise software to the way a company does business?
To achieve the maximum benefit of a new ERP system, Tasty Baking implemented an enterprise system by:
Coca-Cola implemented enterprise software from SAP that enabled it to achieve all of the following except:
Enterprise systems improve management decision making in all the following ways except:
The total time it takes to complete a business process, from start to finish, is called its time.
Enterprise systems are built around a small number of predefined business processes.
Organizations can rewrite enterprise system software to support their existing business processes.
To reap the maximum benefits from enterprise software, companies should customize it to conform to their existing business processes.
What business processes are supported by enterprise systems? Give specific examples.
Answer
The four major business processes supported by enterprise systems are:
• Financial and accounting processes, including general ledger, accounts payable, accounts receivable, fixed assets, cash management and forecasting, product-cost accounting, cost-center accounting, asset accounting, tax accounting, credit management, and financial reporting.
• Human resources processes, including personnel administration, time accounting, payroll, personnel planning and development, benefits accounting, applicant tracking, time management, compensation, workforce planning, performance management, and travel expense reporting.
• Manufacturing and production processes, including procurement, inventory management, purchasing, shipping, production planning, production scheduling, material requirements planning, quality control, distribution, transportation execution, and plant and equipment maintenance.
• Sales and marketing processes, including order processing, quotations, contracts, product configuration, pricing, billing, credit checking, incentive and commission management, and sales planning.
- You have been hired by Santori, Inc., a small company that imports and distributes an Italian sparkling water. The company is interested in what benefits an enterprise system would bring. Would an enterprise system be appropriate for this company? What steps would you take in determining this?
Answer
An enterprise system may be too expensive, although there are versions of enterprise software packages that are designed for small and medium-sized businesses and on-demand software services running in the cloud. To determine whether this would be beneficial to Santori, I would first look at their existing business processes. It would be ideal to determine if their efficiency meets benchmarks in their industry and allows them to be competitive with other businesses in their niche. Then I would review the versions of enterprise software packages that are designed for small and medium-sized businesses and on-demand software services running in the cloud to see how the applications' business processes matched up with Santori's. It would be important to compare the costs of instituting new business processes with the benefits and cost savings.
- What is an ERP system and how does it enable a firm to integrate firmwide information?
Answer
An enterprise resource planning (ERP) system (also sometimes known as just an enterprise system) is based on a suite of integrated software modules and a common central database. The database collects data from many divisions and departments in a firm and from a large number of key business processes in manufacturing and production, finance and accounting, sales and marketing, and human resources, making the data available for applications that support nearly all an organization's internal business activities. When new information is entered by one process, the information is made immediately available to other business processes. For example, if a sales representative places an order for tire rims, the system verifies the customer's credit limit, schedules the shipment, identifies the best shipping route, and reserves the necessary items from inventory. If inventory stock is insufficient to fill the order, the system schedules the manufacture of more rims, ordering the needed materials and components from suppliers. Sales and production forecasts are immediately updated. General ledger and corporate cash levels are automatically updated with the revenue and cost information from the order. Users can tap into the system and find out where that particular order is at any minute. Management can obtain information at any point in time about how the business is operating. The system can also generate enterprise-wide data for management analyses of product cost and profitability.
A network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers is called a(n):
In the supply chain, components or parts are referred to as:
The includes a company's suppliers, the suppliers' suppliers, and the processes for managing relationships with them?
Distribution and delivery of products to retailers is part of the:
All of the following are examples of supply chain inefficiencies except:
Supply chain inefficiencies waste as much as percent of a company's operating costs?
To eliminate excessively high inventories of its Pampers disposable diapers at various points along its supply chain because of such distorted information, Procter & Gamble did all of the following except:
In a strategy, components arrive exactly at the moment they are needed and finished goods are shipped as soon as they leave the assembly line.
A distortion of information about the demand for a product as it passes from one entity to the next across the supply chain is called the effect.
Supply chain software can be classified as either supply chain systems or supply chain systems.
Which of the following enables a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product?
Supply chain planning systems perform all of the following functions except:
Which supply chain planning function determines how much product is needed to satisfy all customer demands?
Which of the following manages the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner?
Supply chain execution systems provide all of the following functions except:
A supply chain driven by forecasts or best guesses of consumer demand follows a(n) model.
A supply chain driven by actual customer orders is called a model.
Schneider National is an example of which of the following?
The business value of an effective supply chain management system includes all of the following except:
The bullwhip effect can be countered by:
Which of the following is the last entity in the downstream portion of a supply chain?
Which of the following is not a major entity in Nike's supply chain?
A company having difficulty with timely delivery of parts to its manufacturing plants should implement a system.
The difference between push- and pull-based models is summarized by which of the following slogans?
Walmart's continuous replenishment system is an example of a(n) model.
The WMS that Haworth Incorporated uses is an example of which of the following?
Managing a global supply chain is more complex than managing a domestic supply chain.
The upstream portion of the supply chain consists of the organizations and processes for distributing and delivering products to the final customers.
In some industries, total supply chain costs can approach 75 percent of a company's operating budget.
Firms in the supply chain develop safety stocks in order to reduce the cost of inventory.
The bullwhip effect leads to declining inventory costs across the entire supply chain.
Supply chain planning systems enable the firm to model its existing supply chain.
Before the Internet, supply chain coordination was hampered by the difficulties of making information flow smoothly among different internal supply chain processes.
Inefficiencies in a supply chain are caused by inaccurate or untimely information.
In a push-based model, transactions to produce and deliver only what customers have ordered move up the supply chain from retailers to distributors to manufacturers and eventually to suppliers.
Contemporary supply chain management systems are driven by a push-based model in which production master schedules are based on forecasts of demand for products.
Procter & Gamble (P&G) experienced a growth in its Pampers diapers inventory due to the bullwhip effect.
The emerging Internet-driven supply chain provides multidirectional communication among firms, networks of firms, and e-marketplaces.
Identify two classifications for supply chain software. What are the capabilities of each type?
Answer
Supply chain planning systems and supply chain execution systems are two classifications for supply chain software. Supply chain planning systems enable a firm to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans for those products. Capabilities include determining how much of a specific product to manufacture in a given time period; establishing inventory levels for raw materials, intermediate products, and finished goods; determining where to store finished goods; and identifying the transportation mode to use for product delivery. Supply chain execution systems manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations. Capabilities include tracking the physical status of goods, managing materials, managing warehouse operations, and managing the financial information involving all parties.
- What additional complexities are faced in global supply chains? How does the Internet help in managing global supply chains?
Answer
Global supply chains typically span greater geographic distances and time differences than domestic supply chains and have participants from a number of different countries. Although the purchase price of many goods might be lower abroad, there are often additional costs for transportation, inventory, and local taxes or fees. Performance standards may vary from region to region or from nation to nation. Supply chain management may need to reflect foreign government regulations and cultural differences. All of these factors impact how a company takes orders, plans distribution, organizes warehousing, and manages inbound and outbound logistics throughout the global markets its services.
The Internet helps companies manage many aspects of their global supply chains, including sourcing, transportation, communications, and international finance. As goods are being sourced, produced, and shipped, communication is required among retailers, manufacturers, contractors, agents, and logistics providers. The Internet and Internet technology make it possible to move from sequential supply chains, where information and materials flow sequentially from company to company, to concurrent supply chains, where information flows in many directions simultaneously among members of a supply chain network. Complex supply networks of manufacturers, logistics suppliers, outsourced manufacturers, retailers, and distributors can adjust immediately to changes in schedules or orders.
- How does a push-based model of manufacturing differ from a pull-based model? Which is better and why?
Answer
A push-based model of manufacturing refers to a supply chain driven by production master schedules based on forecasts or best guesses of demand for products. A pull-based model refers to a supply chain driven by actual customer orders or purchases so that members of the supply chain produce and deliver only what customers have ordered. A pull-based model is better because it enables the business to be driven more by actual customer demand, which is more efficient and reduces costs.
- Plant Away is an Oregon-based retailer and distributor of trees and shrubs. It has hundreds of smaller nurseries based around the country that grow the plant stock. The majority of its business is conducted online. Consumers typically purchase small quantities of products online and Plant Away coordinates the shipping from the most appropriate nursery. What unique problems might you anticipate it has in its supply chain? What might remedy these problems?
Answer
Typical problems in supply chains arise from uncertainties and unforeseen events. In a plant nursery, variations in the weather, growing season, plant diseases, and crop output would be uncertainties and/or unforeseen events. Other problems might be interstate regulations governing plants allowed in different states, and making sure plants survive and are healthy during transportation. It would be very important to have up-to-date forecasting of the weather or growing seasons that could anticipate possible problems and analyze and determine the best transportation routes.
- Discuss the business value of supply chain management systems.
Answer
Supply chain management systems enable firms to streamline both their internal and external supply chain processes and provide management with more accurate information about what to produce, store, and move. By implementing a networked and integrated supply chain management system, companies match supply to demand, reduce inventory levels, improve delivery service, speed product time to market, and use assets more effectively.
Total supply chain costs represent the majority of operating expenses for many businesses and in some industries approach 75 percent of the total operating budget. Reducing supply chain costs has a major impact on firm profitability.
In addition to reducing costs, supply chain management systems help increase sales. If a product is not available when a customer wants it, customers often try to purchase it from someone else. More precise control of the supply chain enhances the firm's ability to have the right product available for customer purchases at the right time.
A is an interaction with a customer.
Which of the following would not be considered a contact point?
software modules deal with setting employee objectives, performance, and compensation.
software modules seek to enhance collaboration between a company and its selling partners.
CRM systems typically provide software and online tools for sales, customer service, and:
SFA modules in CRM systems provide tools for all of the following except:
CRM systems help businesses achieve which of the following business objectives?
Customer service modules in CRM systems provide tools for:
Marketing modules in CRM systems provide tools for all of the following except:
Selling a customer with a checking account a home improvement loan is an example of:
Major CRM products typically have all of the following service capabilities except:
Major CRM software products include which of the following capabilities to support the sales process?
Which of the following applications provides analysis of customer data?
Operational CRM applications include tools for all of the following except:
Which of the following tools is used to analyze customer buying patterns?
Which metric is based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and the company?
The measurement of the number of customers who stop using or purchasing products or services from a company is called:
modules in CRM systems help sales staff increase their productivity by focusing sales efforts on the most profitable customers, those who are good candidates for sales and services.
Which of the following is not a major CRM application software vendor?
All CRM packages contain modules for PRM and ERM.
CRM software incorporates hundreds of business processes.
Cross-selling is the marketing of products to different customers.
A PRM module in CRM software helps organizations identify high-value customers for preferential treatments.
Analytical CRM uses tools to analyze customer data collected from the firm's customer touch points and from other sources.
Churn rate is an important indicator of the growth or decline of a company's customer base.
Discuss the difference between operational CRM and analytical CRM.
Answer
Operational CRM and analytical CRM are two types of CRM. Operational CRM includes customer-facing applications, such as tools for sales force automation, call center and customer service support, and marketing automation. Analytical CRM includes applications that analyze customer data generated by operational CRM applications to provide information for improving business performance.
- Discuss the business value of having an effective CRM system.
Answer
Companies with an effective customer relationship management system realize many benefits, including increased customer satisfaction, reduced direct-marketing costs, more effective marketing, and lower costs for customer acquisition and retention. Information from a CRM system increases sales revenue by identifying the most profitable customers and segments for focused marketing and cross-selling.
- You have been hired by Croydon Visiting Nurse Services, whose business processes are all manual, paper-based processes. How might a CRM system benefit them?
Answer
A CRM system that includes patients' health records would allow any nurse to take over if another needed replacement. Assuming that the nurses had access via laptops or other mobile devices to the system, a new nurse would have instant access to the patients' needs. The CRM might also be able to record which types of treatments or products customers were most interested in or gave the greatest benefit to customers and help anticipate needs. Additionally, with PRM capabilities, products needed by the nursing service would be more easily anticipated, ordered, and delivered. Since the employees work in the field, or away from a central office, Internet-based communications might provide tools for reviewing employee performance.
- What are four questions that a good CRM system can help answer and how do firms use the answers to those questions?
Answer
Four questions that a good CRM system can help answer are: (1) What is the value of a particular customer to the firm over his or her lifetime? (2) Who are our most loyal customers? (3) Who are our most profitable customers? and (4) What do these profitable customers want to buy? Firms use the answers to these questions to acquire new customers, provide better service and support to existing customers, customize their offerings more precisely to customer preferences, and provide ongoing value to retain profitable customers.
- What is a PRM module? How does it differ from an ERM module?
Answer
The more comprehensive CRM packages contain modules for partner relationship management (PRM) and employee relationship management (ERM). PRM uses many of the same data, tools, and systems as customer relationship management to enhance collaboration between a company and its selling partners. If a company does not sell directly to customers but rather works through distributors or retailers, PRM helps these channels sell to customers directly. It provides a company and its selling partners with the ability to trade information and distribute leads and data about customers, integrating lead generation, pricing, promotions, order configurations, and availability. It also provides a firm with tools to assess its partners' performances so it can make sure its best partners receive the support they need to close more business. ERM software deals with employee issues that are closely related to CRM, such as setting objectives, employee performance management, performance-based compensation, and employee training. Major CRM application software vendors include Oracle, SAP, Salesforce.com, and Microsoft Dynamics CRM.
Which of the following statements about enterprise applications is not true?
Which of the following is not an example of a next-generation enterprise application?
According to a 2020 survey of 181 ERP users conducted by Panorama Consulting Group, 38 percent of ERP projects experienced cost overruns, and these overruns averaged percent over budget.
Which of the following is not a business intelligence feature of SAP's next generation business intelligence applications?
Which of the following enables a business to connect customer conversations and relationships from social networking sites to CRM processes?
Enterprise systems do not require fundamental changes in the way the business operates.
Enterprise applications reduce switching costs.
Enterprise applications are based on organization-wide definitions of data.
Stand-alone enterprise systems are becoming a thing of the past.
What is social CRM and how is it being used?
Answer
Social CRM tools enable a business to connect customer conversations and relationships from social networking sites to CRM processes. They enable businesses to better engage with their customers by, for example, analyzing their sentiments about their products and services. These social enhancements help firms identify new ideas more rapidly, improve team productivity, and deepen interactions with customers. SAP, Salesforce.com, and Oracle CRM products feature technology to monitor, track, and analyze social media activity in Facebook, LinkedIn, Twitter, YouTube, and other sites. For example, Salesforce.com connected its system for tracking leads in the sales process with social-listening and social-media marketing tools, enabling users to tailor their social-marketing dollars to core customers and observe the resulting comments. If an ad agency wants to run a targeted Facebook or Twitter ad, these capabilities make it possible to aim the ad specifically at people in the client's lead pipeline who are already being tracked in the CRM system. Users will be able to view tweets as they take place in real time and perhaps uncover new leads. They can also manage multiple campaigns and compare them all to figure out which ones generate the highest click-through rates and cost per click.
- Identify and briefly describe at least four challenges involved in implementing an enterprise system.
Answer
Many firms have implemented enterprise systems because they are such powerful instruments for achieving operational excellence and enhancing decision making. But precisely because they are so powerful in changing the way the organization works, they are challenging to implement. Challenges include the expense of the software and related costs; the time and expense required for implementation; the deep-seated technological changes and organizational changes required; overcoming organizational resistance; switching costs; and the need to understand exactly how the business uses its data and how the data would be organized in the system, potentially requiring additional data cleansing work.
