Supply Chain & CRM

Dr. Mohan Kulkarni 1

SCM & CRM Synergy

A Strategic Weapon For Competitive

Advantage


Maximizing inventory turns

Maximizing inventory turns

Business ChallengesBusiness

Challenges

Maintaining high

customer service

levels

Maintaining high

customer service

levels

Reducing operational costs

Reducing operational costs

Minimizing inventory levels

Minimizing inventory levels

Increasing operational efficiency

Increasing operational efficiency

Conflicting key objectives must be balanced

Business ChallengesBusiness Challenges


The Value Chain

Market Pressures

OperationsBusiness

Pressures

Globalization,

Cost Pressures, &

Local Responsiveness

Scope, Flexibility,Customization,

Supplier Responsibility

Core Competency, Market Strategy

New Competitors/ New Business Models,

and Outsourcing

“Globalization has created the need for truly comprehensive supply-chain solutions.”

WHAT’S PRESSURIZING THE VALUE CHAIN ?WHAT’S PRESSURIZING THE VALUE CHAIN ?


Supply Chain Management


Materials Management

Physical Distribution Management

Logistics Management

Integrated Logistics Management

Supply Chain Management

Integrated Supply Chain Management

The Evolution and Development of Supply Chain Management(SCM)


DEFINITION of SCMChristopher(1998)- Strategically managing the

procurement, movement and storage of materials, parts and finished product inventory and related information flows, through the organization and its marketing channels in such a way that the current and future profitability are maximized by cost effective fulfillment of orders.

Sahay B.S. (1998) – Supply chain management is an integrative philosophy to manage the total flow of a distribution channel from supplier to ultimate user.


A Physical Function

At Right Time

In Right Quantity

At Right Place

A Market Interface Function (Ensure the following conditions are met )

Production

Storage Transportation

Procurement

The Right Product

Exactly As Per Customers Need

THE FUNCTION OF SCMTHE FUNCTION OF SCM


FUNCTIONS OF SCM Material flow Information flow Network & Capacity Planning Supply Chain Development Distribution

Demand Responsesupply source make distribute sell

Demand Signal

Demand Fulfillment


Five Core Principles

•Connectivity

•Collaboration

•Synchronization

This principle deals with the connectivity network of supply chain partners. Connectivity can be strategic in dealing withplanned linkage information integration and network architecture.

Collaboration allows a closer integrationof the supply chain partners by integrating,planning, forecasting and over all decision making processes across organization boundaries. True collaboration in an ongoing investment in the extended supply

chain network.

Synchronization between vendors, manufacturing, sales and marketing, finance, customers, and third parties is an integral part of supply chain development. When finely developed interface within the firms are between the firm and its partners are seamless, frictionless and transparent.


Five Core Principles(Continued)

•Leverage

•Scalability Scalability as it is used here, refers to the ability of the firm to develop a set of supply chain processes that can be easily duplicated with additional suppliers, customers, and 3PL’s. The Principle of Scalability requires a balance between customization and scalability.

The Principle of Leverage simply suggests that the firm cluster and focus their assets on high payout opportunities with core suppliers, customers, and 3PL’s.


COLLABORATION IN SUPPLY CHAIN Internal Collaboration Inter-company Collaboration

Manual

Electronic • Transactional• Information • Planning


"Profit is the payment

you get when you take

advantage of change"

- Joseph A. Schumpeter


Why Customers Quit

1% Die 3% Move Away 5% Form Other Friendships 9% For Competitive Reasons 14% Because of Product

Dissatisfaction 68% Because of Attitude of

Indifference Towards Customer by some Employee of Dealer


BT has identified that future business growth will comefrom the delivery of superior value exchange with chosen customers…

ConformanceQuality

CustomerSatisfaction

CustomerLoyalty

Customer Value

Delivering what we promise

Meeting standards

Providing whatcustomers want

Being highly responsive

Retaining ourcustomers(reducing churn)

Getting them torecommend us

Exceeding theneeds of targetedcustomers

Exchanging value through unique benefits

Customer Value Analysis andVoice-of-the-Customer Initiatives

21st centurygrowth company

. . founded upon high satisfaction and the resulting loyalty

Customer-facingefficiency

Importance ofcustomer sat isfact ion


Satisfaction feelingsSatisfaction feelings

Dazzled

Pleased

Satisfied

Unhappy

Failed/Outraged

Delivery

Satisfaction, expressed through customer feelings, is afunction of what is actually delivered…

… and the expectation created by both a company and its competition

Hi

Lo

Importance ofcustomer sat isfact ion

Expec-tation


Trough of Trough of DisillusionmentDisillusionment

Slope ofSlope ofEnlightenmentEnlightenment

Plateau ofPlateau ofProductivityProductivity

Peak ofPeak ofInflatedInflated

ExpectationsExpectationsTechnologyTechnology

TriggerTrigger

VisibilityVisibility

MaturityMaturity

Web Call ThroughWeb Call Through

WebWebCollaborationCollaboration

SegmentationSegmentation

Contact CenterContact Center

CallCallCenterCenter

CRM Early CRM Early 1990’s1990’s

PersonalizedPersonalizedSelf-ServiceSelf-Service E Mail MktE Mail Mkt

Web MeasurementWeb MeasurementDB Mktg.DB Mktg.

EAIEAISFASFA

CRM AnalyticsCRM Analytics

B2C CommunityB2C CommunityLoyalty SchemesLoyalty Schemes

CRM - late 2001CRM - late 2001

CRM Hype CycleCRM 1999CRM 1999

CRM - early 2001CRM - early 2001

PersonalizationPersonalization

Customer Customer FeedbackFeedback

PRMPRMWeb Web ServicesServices

Peer to PeerPeer to Peer

Source: Gartner G2

Estimated technology investment in CRM in 2005 = $148billion(Source: IDC)

42% of installed CRM software is unused (Source: Gartner, 03/03)


Definition of CRM

Seth (2001) – relationship marketing as the ongoing collaborative business activities between a supplier and a customer on a one-to-one basis for the purpose of growing the total market by creating better end user value at reduced cost.


The “6 I S” of CRM

INFORMATION

About customers

INVESTMENTS

In customers

INDIVIDUALITY

For customers

INTERACTION

With customers

INTEGRATION

Of customers

INTENTION

Of a unique relationship


Turning CRM strategy into action

Time

DeliveredValue The value state of the

customer base provides the CRM management focus over time. Overall, segments and individual customers

1

2

3



DeliveredValue

Value State 1

Product Sales OrientationCustomer value improvementBegin segment based programmes1

2

3

The value state of the customer base provides the CRM management focus over time. Overall, segments and individual customers



DeliveredValue

Value State 2

Customer relationship orientationCRM sales processesPropensity arrays

1

2

3




DeliveredValue

Value state 3

Sophisticated CRM programmesDialogue managementManage the CRM value driversMining and process optimisation1

2

3



Need for SCM & CRM Synergy

Profit to Performance

Products toCustomers

Functions to Processes

Inventory toInformation

Transactions toRelationships

Customization thruPostponement

Extended Enterprise

Virtual Organisation

Future Transformations Enablers

IT Tools and Techniques

Result

SCM-CRM Synergistic EffortsOf Organization

•Increase in Profits/ROI/ Market Share& Overall ImprovedImage in the minds

Of Customers,Employees & Other

Stakeholders


SCM-CRM Synergistic Efforts to Make Customers Smile Adopt a supply chain strategy that matches the

criticality of the product to the customer. For all stages of the supply chain, set explicit cost

& service performance goals consistent with or exceeding the end-customer value delivery goal.

Communicate the goals to intermediate customers & suppliers.

Set specific targets for the value consistency with the business strategy & reflective of product’s criticality to customers.


Identify how intermediate customers & suppliers contribute to the delivery of end customer value.

Develop mechanism for sharing information, monitoring performance & coordinating decisions within the supply chain.

Develop explicit targets for continuous improvements. Implement appropriate incentives to ensure equitable division of

the costs, risks & benefits among supply chain partners. Finally, understand the requirements for the success & pitfalls

of implementation.

SCM-CRM Synergistic Efforts to Make Customers Smile Continue….


Advantages Gained by SCM-CRM Synergy

• Doing things right- the Quality Advantage• Doing it fast- the Speed Advantage• Doing things on time- the Dependability Advantage• Ability to change what is done- the Flexibility

Advantage• Cost- the Productivity Advantage• Ability to satisfy customers – the Marketing Advantage


Website

Call center

Customer

Hourly Order Aggregation •Order Header•Order Detail•Customer Master

Picklist

IT B

ackbone

Invoicer

Tote kept in delivery bay

Promo Added

Loader

Route Choice

Loading BillEnd-of-Day Updation

Delivery Boy

Customer Service & Cash Handling

Credit Note

Stock & Cash Updation

SANGAM – SCM-CRM Synergy


Example of Mumbai’s Dabbawallas

This business provides employment to over 8,000 men & women. (Personnel Management)

Relationship with the customer is maintained by making their business more sustainable & dependable. (Customer Relationship Management)

A much cheaper alternative to these office workers than having their lunch outside eateries. (Cost Controlled Logistics System)

Delivery & collection done no matter how far they may reside or work. (Network Alliances)

There is never mix-up of having the wrong Tiffin going to the wrong office. (High Degree of Reliability)

Delivery is prompt every day irrespective of the conditions like strikes, floods etc. (Commitment to the System & Work)

Instead of addresses, colors, dots, stripes and marks are used to distinguish over 5,00,00 dabbas for exact destinations. (Excellent Tracking System)

Delivery quality close to 6-Sigma because they can not afford mistakes. (Supply Chain at its BEST)


Thank you

Supply Chain & CRM

Documents

Transcript of Supply Chain & CRM