Supply Chain and Customer Relationship Management

In CRM we must consider:
RFM; recency, frequency and monetary
Systems help a lot but…
it takes more than technology to run your business
What are three strategies for making a profit?
– top/bottom line optimisation
– Porter’s three generic strategies
– increasing/optimisation of flow of information
What is top line?
revenue; want to maximise
What is bottom line?
cost/expenses; want to minimise
How do we maximise top line? (4)
– reaching new customers
– offering new products
– cross-selling services
– offering complementary products
How do we minimise bottom line? (4)
– optimising manufacturing process
– decreasing transportation costs
– reducing cost of human capital
– minimising errors in a process
What are the three elements of Porter’s Business Strategy?
1. Focus strategy
2. Differentiation strategy
3. Overall cost leadership
Porter’s Business Strategy; Focus Strategy (3)
– focusing on offering products and services to a particular market segment or buyer group within a segment of a product line, and/or to a specific geographic market
– cannot be considered in isolation (must still consider cost leadership and/or differentiation
e.g. organic farming, “low carb” product
– relates to optimising the top line
What does focus strategy relate to?
optimising the top line
Porter’s Business Strategy; Differentiation Strategy (3)
– offering a product or service that is perceived as ‘unique’ in the market place
– cannot be considered in isolation (must still consider pricing relative to competition)
e.g. Hummer, Farrari, Volvo
Apple (think different)
– relates to optimising the top line
What does differentiation strategy relate to?
optimising the top line
Porter’s Business Strategy; Overall Cost Leadership (2)
– offering the same or better quality product or service at a price that is less than what any of the competition is able to do
e.g. The Warehouse, Mitre 10 Mega, Dell
– relates to optimising the bottom line
What does overall cost leadership relate to?
– optimising the bottom line
Inward flows of information (3)
– customer inquiries/feedback
– materials availability
– supplier reputation
Outward flows of information (4)
– cold calling
– advertising
– materials ordering
– press releases
In order to achieve business goals you need to…
streamline business operations
You streamline business operations by: (3)
– reducing costs
– increasing revenue
– improving flows of information
Techniques:
– Supply Chain Management (SCM)
– Customer Relationship Management (CRM)
– Enterprise Systems (ES or ERP)
Supply Chain Management (SCM) (2)
– a pathway
e.g. raw materials –> manufacturer (distribution chain)
– at each stage in SCM, new information is generated
Key SCM Concepts (5)
– raw material
– component
– manufacturer
– retailer
– consumer
Each interface in the Supply Chain (SC) represents: (4)
– movement of goods
– information flows
– transfer of title
– purchase and sale
Strategic SCM consists of developing smarter ways to:
– choose
– buy from
– sell to your business partners
Why optimise the SC? (5)
– streamline production (enable “just-in-time” manufacturing)
– reduce inventory levels (reduce costs through waste elimination)
– improve customer feedback (provide accurate ‘estimated delivery time’)
– improve reputation (e.g. ensuring sustainable sources in products)
– replace “buy, hold and sell” with “sell, source and ship”
What has “buy, hold and sell” been replaced with?
“sell, source and ship”
Buy-hold-sell:
Making lots of inventory, holding it in warehouse and selling it; traditional
Sell-source-ship:
Not much inventory held, just the parts, product is made up when required and shipped
e.g. Dell
SEE GRAPH
Risk of Buy-hold-sell:
Could be left with product
Risk of Sell-source-ship:
Not ready in time; long wait for customer
SCM integrates:
logistics systems with suppliers, distributors and retailers to support supply chain
What is the aim of SCM?
to promote overall cost leadership and reduce bottom line
– pass savings onto consumer, increase market share (indirect improvement in top-line performance)
A well designed SCM system will optimise: (6)
– order fulfillment times
– logistics and transportation costs
– production lines
– revenue and profit by ensuring product availability
– cost and price
– reputation with customers
SCM is:
the higher level construct/overall process
Logistics Management (LM) is:
the individual aspects of the supply chain which require logistic (planning and control)
Most supply chains are:
complex, supply networks
What else is often included in SC?
technologies e.g. enterprise systems, RFID tags instead of barcodes
Customer Relationship Management (CRM) (3)
– opposite end to SCM
– involves customer retention
– uses information about customers to gain insights into their needs, want and behaviours in order to serve them better
What is the aim of CRM?
to promote differentiation, focus and increase topline (revenue)
How does CRM increase topline? (3)
– sales form automation
– customer service and support
– marketing campaign management and analysis
What are the benefits of CRM? (3)
– streamline sales process (keep customer informed of delivery times)
– provide better after-sale service and support (improve customer retention)
– understand customers better (devise more effective marketing campaigns, make customers feel wanted)
RFM
Recently – customers who purchased recently are more likely to buy again versus customers who have not purchased in a while
Frequently – customers who purchased frequently are more likely to buy again versus customers who have made just one or two purchases
Money – customers who have spent the most money in total are more likely to buy again
Most valuable customers…
tend to continue to become more valuable
In SCM, information…
needs to be monitored and communicated at all points
CRM and information
CRM centralises information pertaining to customer interactions within all organisational facets
What do both CRM and SCM need to do?
both need to communicate; departments need to share information and reduce information duplication