Chapter 9: Achieving Operation Excellence and Customer Intimacy: Enterprise Applications

Question 1

Analytical CRM

Answer 1

Customer relationship management applications dealing with the analysis of customer data to provide information for improving business performance.

Question 2

Bullwhip Effect

Answer 2

Distortion of information about the demand for a product as it passes from one entity to the next across the supply chain.

Question 3

Churn Rate

Answer 3

Measurement of the number of customers who stop using or purchasing products or services from a company. Used as an indicator of the growth or decline of a firm’s customer base.

Question 4

Cross-Selling

Answer 4

Marketing complementary products to customers.

Question 5

Customer Lifetime Value (CLTV)

Answer 5

Difference between revenues produced by a specific customer and the expenses for acquiring and servicing that customer minus the cost of promotional marketing over the lifetime of the customer relationship, expressed in today’s dollars.

Question 6

Demand Planning

Answer 6

Determining how much product a business needs to make to satisfy all its customers’ demands.

Question 7

Employee Relationship Management (ERM)

Answer 7

Software dealing with employee issues that are closely related to CRM, such as setting objectives, employee performance management, performance-based compensation, and employee training.

Question 8

Enterprise Software

Answer 8

Set of integrated modules for applications such as sales and distribution, financial accounting, investment management, materials management, production planning, plant maintenance, and human resources that allow data to be used by multiple functions and businesses processes.

Question 9

Just-In-Time Strategy

Answer 9

Scheduling system for minimizing inventory by having components arrive exactly at the moment they are needed and finished goods shipped as soon as they leave the assembly line.

Question 10

Operational CRM

Answer 10

Customer-facing applications, such as sales force automation, call center and customer service support, and marketing automation.

Question 11

Partner Relationship Management (PRM)

Answer 11

Automation of the firm’s relationships with its selling partners using customer data and analytical tools to improve coordination and customer sales.

Question 12

Pull-Based Model

Answer 12

Supply chain driven by actual customer orders or purchases so that members of the supply chain produce and deliver only what customers have ordered.

Question 13

Push-Based Model

Answer 13

Supply chain driven by production master schedules based on forecasts or best guesses of demand for products, and products are “pushed” to customers.

Question 14

Social CRM

Answer 14

Tools enabling a business to link customer conversations, data, and relationships from social networking sites to CRM processes.

Question 15

Supply Chain

Answer 15

Network of organizations and business processes for procuring materials, transforming raw materials into intermediate and finished products, and distributing the finished products to customers.

Question 16

Supply Chain Execution Systems

Answer 16

Systems to manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.

Question 17

Supply Chain Planning Systems

Answer 17

Systems that enable a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product.

Question 18

Touch Point

Answer 18

Method of firm interaction with a customer, such as telephone, e-mail, customer service desk, conventional mail, or point-of-purchase.

Question 19

How do enterprise systems help businesses achieve operational excellence?

Answer 19

Enterprise software is based on a suite of integrated software modules and a common central database. The database collects data from and feeds the data into numerous applications that can support nearly all of an organization’s internal business activities. When new information is entered by one process, the information is made available immediately to other business processes.
Enterprise systems support organizational centralization by enforcing uniform data standards and business processes throughout the company and a single unified technology platform. The firmwide data generated by enterprise systems helps managers evaluate organizational performance.

Question 20

How do supply chain management systems coordinate planning, production, and logistics with suppliers?

Answer 20

Supply chain management (SCM) systems automate the flow of information among members of the supply chain so they can use it to make better decisions about when and how much to purchase, produce, or ship. More accurate information from supply chain management system reduces uncertainty and the impact of the bullwhip effect.
Supply chain management software includes software for supply chain planning and for supply chain execution. Internet technology facilitates the management of global supply chain information. Improved communication among supply chain members also facilitates efficient customer response and movement toward a demand-driven model.

Question 21

How do customer relationship management systems help firms achieve customer intimacy?

Answer 21

Customer relationship management (CRM) systems integrate and automate customer-facing processes in sales, marketing, and customer service, providing an enterprise-wide view of customers. Companies can use this customer knowledge when they interact with customers to provide them with better service or to sell new products and service. These systems also identify profitable or nonprofitable customers or opportunities to reduce the churn rate.

Question 22

What are the challenges posed by enterprise applications?

Answer 22

Enterprise applications are difficult to implement. They require extensive organizational change, large new software investments, and careful assessment of how these systems will enhance organizational performance. Enterprise applications cannot provide value if they are implemented atop flawed processes or if firms do not know how to use these systems to measure performance improvements. Employees require training to prepare for new procedures and roles. Attention to data management is essential.

Question 23

How are enterprise applications taking advantage of new technologies?

Answer 23

Enterprise applications are now more flexible, Web-enabled, and capable of integration with other systems, using Web services and service-oriented architecture (SOA). They also have open source and on-demand versions and are able to run in cloud infrastructure or on mobile platforms. CRM software has added social networking capabilities to enhance internal collaboration, deepen interactions with customers, and utilize data from social networking sites. Open source, mobile, and cloud versions of some of these products are becoming available.