Dr. Mohan Kulkarni 1
SCM & CRM Synergy
A Strategic Weapon For Competitive
Advantage
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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
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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 ?
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Supply Chain Management
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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)
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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.
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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
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FUNCTIONS OF SCM Material flow Information flow Network & Capacity Planning Supply Chain Development Distribution
Demand Responsesupply source make distribute sell
Demand Signal
Demand Fulfillment
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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.
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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.
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COLLABORATION IN SUPPLY CHAIN Internal Collaboration Inter-company Collaboration
Manual
Electronic • Transactional• Information • Planning
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"Profit is the payment
you get when you take
advantage of change"
- Joseph A. Schumpeter
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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
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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
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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
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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)
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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.
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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
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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
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Turning CRM strategy into action
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
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Turning CRM strategy into action
DeliveredValue
Value State 2
Customer relationship orientationCRM sales processesPropensity arrays
1
2
3
The value state of the customer base provides the CRM management focus over time. Overall, segments and individual customers
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Turning CRM strategy into action
DeliveredValue
Value state 3
Sophisticated CRM programmesDialogue managementManage the CRM value driversMining and process optimisation1
2
3
The value state of the customer base provides the CRM management focus over time. Overall, segments and individual customers
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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
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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.
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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….
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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
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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
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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)
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Thank you
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