12 questions over chapter “” Customer Relationship Management and Supply Chain Management “”
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Question 1
1.
Tweets can be used as customer touch points.
Answer
True
False
0.84 points
Question 2
1.
Supply chain visibility is the time between the receipt of incoming goods and the dispatch of finished, outbound products.
Answer
True
False
0.84 points
Question 3
1.
In Supply Chain terms, a “pull” model of inventory management implies:
Answer
make to stock |
make to order |
make in batches |
make on a steady schedule |
0.84 points
Question 4
1.
Electronic Data Interchange is a cheap and simple technology for small business
Answer
True
False
0.84 points
Question 5
1.
Which of the following best describes CRM?
Answer
a process
a set of technologies
an information system
a way of thinking and acting
0.84 points
Question 6
1.
The complete data on a customer is called:
Answer
a profile
a record
a 360 degree view
a file
a consolidated customer map
0.84 points
Question 7
1.
___________ systems support the front-office business processes which directly interact with customers.
Answer
Collaborative CRM
Operational CRM
Analytical CRM
Transactional CRM
0.84 points
Question 8
1.
I operate a web-based bicycle parts store. Each time you log into the web portal for my store, my CRM system looks at your past purchases and recommends a purchase for your current visit. This is called:
Answer
cross-selling
up-selling
bundling
a loyalty program
0.84 points
Question 9
1.
Creating models of customer purchase behavior and identifying ‘valuable’ customers are within the domain of:
Answer
transactional CRM
colloborative CRM
analytical CRM
technical CRM
0.84 points
Question 10
1.
Frequent flyer miles are an example of:
Answer
cross-selling
up-selling
bundling
a loyalty program
0.84 points
Question 11
1.
‘Open Source’ CRM systems are CRM systems available for use at no cost.
Answer
True
False
0.84 points
Question 12
1.
The ____________ segment of a supply chain is where distribution takes place.
Answer
upstream
downstraem
internal
cross-current
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CHAPTER 11
Customer Relationship Management and Supply Chain Management
CHAPTER OUTLINE
11.1 Defining Customer Relationship Management
11.2 Operational Customer Relationship Management Systems
11.3 Analytical Customer Relationship Management Systems
11.4 Other Types of Customer Relationship Management Systems
11.5 Supply Chains
11.6 Supply Chain Management
11.7 Information Technology Support for Supply Chain Management
LEARNING OBJECTIVES
1. Define customer relationship management and collaborative CRM, and identify the primary functions of both processes.
2. Describe the two major components of operational CRM systems, list three applications used in each component, and provide at least one example of how businesses use each application.
3. Describe analytical CRM systems, and describe four purposes for which businesses use these systems.
LEARNING OBJECTIVES (continued)
4. Define mobile CRM systems, on-demand CRM systems, and open-source CRM systems, and identify one main advantage and one main drawback of each.
5. Define the term, supply chain, and describe the three components and the three flows of a supply chain.
LEARNING OBJECTIVES (continued)
6. Identify two major challenges in setting accurate inventory levels throughout the supply chain, and describe three popular strategies to solve supply chain problems.
7. Define the terms electronic data interchange (EDI), extranet, and portal, and explain how each of these applications helps support supply chain management.
Chapter Opening Case: The Next Step in Customer Relationship Management
Source: Maxx-Studio/Shutterstock
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VIP Auto Appearance Center
(IT’s About Business 11.1)
Source: Thank You/Shutterstock
11.1 Defining Customer Relationship Management
Source: Kzenon/Shutterstock
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Customer relationship management (CRM) is an organizational strategy that is customer-focused
and customer-driven.
From Neighborhood Stores…….
Personal
© MONKEY BUSINESS-LBR/Age Fotostock America, Inc.
To Today…..
Impersonal
Giant malls
The Web
Mobile population
The Need for CRM
It costs six times more to sell to a new customer than to sell to an existing one.
A typical dissatisfied customer will tell 8-10 people.
By increasing the customer retention rate by 5%, profits could increase by 85%.
Odds of selling to new customers = 15%, compared to the odds of selling to existing customers (50%)
70% of complaining customers will remain loyal if their problem is solved
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Tenets of CRM
One-to-one relationship between a customer
and a seller.
Treat different customers differently.
Keep profitable customers and maximize
lifetime revenue from them.
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Lifetime Customer Value
Source: Kzenon/Shutterstock
The value of a customer to a company depends on three dimensions: the duration of the
relationship, the number of relationships (e.g., the number of products from a
company that a customer purchases), and the profitability of the relationship.
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Figure 9.1
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Customer Touch Points
Data Consolidation
Accounting
Finance
Marketing
MIS
HR
Customer
Data Consolidation = 360-Degree View of Customers
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11.2 Operational Customer Relationship Management Systems
Two major components of operational CRM
Customer-facing applications
Customer-touching applications
Operational CRM is the component of CRM that supports the front-office business processes.
That is, those processes that directly interact with customers; i.e., sales, marketing, and service.
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Customer-Facing Applications
Customer service and support
Sales force automation
Marketing
Campaign management
© Mustafa Almir Mahmoud/Age Fotostock America, Inc.
Customer-facing applications are those applications where an organization’s sales, field service,
and customer interaction center representatives actually interact with customers.
Customer service and support refers to systems that automate requests, complaints, product returns,
and requests for information.
Sales force automation automatically records all the aspects in a sales transaction process.
Campaign management applications help organizations plan campaigns so that the right messages are
sent to the right people through the right channels.
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Refining the Call Center
(IT’s About Business 11.3)
© Dinodia/Age Fotostock America, Inc.
Marketing
Cross selling
Up selling
Bundling
Source: © Amy Eira/PhotoEdit
Cross selling is the practice of marketing additional, related products to customers based on
their previous purchases.
Up selling is a sales strategy in which the sales person will provide customers the opportunity
to purchase higher-value related products or services as opposed to, or along with, the consumer’s
initial product or service selection.
Bundling is a form of cross selling in which a business sells a group of products or services together at a price that is lower than the combined individual prices of the products.
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Customer-Touching Applications
Search and comparison capabilities
Technical and other information and services
Customized products and services
Loyalty programs
Source: © Spencer Grant/PhotoEdit
In customer-touching applications, customers interact directly with online technologies and applications
rather than interact with a company representative.
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11.3 Analytical Customer Relationship Management Systems
Analytical CRM systems analyze customer behavior and perceptions in order to provide actionable business intelligence.
© VISION/Age Fotostock America, Inc.
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The Relationship Between Operational
CRM and Analytical CRM
Data Mining
Decision Support
Business Intelligence
OLAP
Customer
Data
Warehouse
Sales
Marketing
Customer Service and Support
Campaign Management
Customer-facing Applications
Search and Comparison
Customized Products
Technical Information
Personalized Web Pages
FAQ
E-mail / Auto Response
Loyalty Programs
Customer-touching Applications
See Figure 11.3.
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11.4 Other Types of Customer Relationship Management Systems
On-demand CRM Mobile CRM Open-source CRM
Source: Image Source Limited; J-C & D.
PRATT/PhotoNonStop/Glow Images)
On-demand CRM is a CRM system that is hosted by an external vendor in the vendor’s data center.
Mobile CRM is an interactive CRM system that enables an organization to conduct communications
related to sales, marketing, and customer service activities through a mobile medium for the purpose of building
and maintaining relationships with its customers.
Open-source CRM is CRM software whose source code is available to developers and users.
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Mobile CRM on a Smartphone
(IT’s About Business 11.4)
Source: Oleksiy Mark/Shutterstock
11.5 Supply Chains
Source: jon le-bon/Shutterstock
Generic Supply Chain
Supply chain: refers to the flow of materials, information, money, and services from raw material
suppliers, through factories and warehouses, to the end consumers.
Upstream component of a supply chain: sourcing or procurement takes place.
Internal component of a supply chain: packaging, assembly, or manufacturing takes place.
Downstream component of a supply chain: distribution takes place.
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Supply Chain (recall Figure 1.5)
Another look at a supply chain (from Figure 1.5).
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The Flows of the Supply Chain
Material flows Information flows Financial flows
© Toh Kheng Ho/Age Fotostock America, Inc.
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Material flows are the physical products, raw materials, supplies and so forth that flow along
the chain.
Information flows are all data related to demand, shipments, orders, returns and schedules
as well as changes in any of these data.
Financial flows are all transfers of money, payments and credit-related data.
A supply chain involves a product life cycle approach, from “dirt to dust”.
11.6 Supply Chain Management
Supply chain management (SCM)
Interorganizational information system (IOS)
© Toh Kheng Ho/Age Fotostock America, Inc.
Supply chain management (SCM) is the function of planning, organizing and optimizing
the supply chain’s activities.
Interorganizational information system (IOS) involves information flows among two
or more organizations.
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Push Model
Pull Model
Source: © Milan Zeremski/iStockphoto
Problems Along the Supply Chain
Poor customer service
Poor quality product
High inventory costs
Loss of revenues
The Bullwhip Effect
Order
Quantity
Time
Customer Sales
Order
Quantity
Time
Retail Orders
To Wholesaler
Order
Quantity
Time
Wholesaler
Orders to
Manufacturer
Order
Quantity
Time
Manufacturer
Orders to
Supplier
Figure 10.2
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Solutions to Supply Chain Problems
Using inventories
Just-in-time inventory
Information sharing
Vendor-managed inventory
Just-in-time inventory: a system in which a supplier delivers the precise number of parts to
be assembled into a finished product at precisely the right time.
Vendor-managed inventory: an inventory strategy where the supplier monitors a vendor’s
Inventory for a product or group of products and replenishes products when needed.
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11.7 Information Technology Support for Supply Chain Management
Electronic data interchange (EDI)
Extranets
Electronic data interchange (EDI) is a communication standard that enables
business partners to exchange routine documents, such as purchase orders,
electronically.
Extranets link business partners to one another over the Internet by providing
access to certain areas of each other’s corporate intranets.
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EDI Benefits
Minimize data entry errors
Length of messages are shorter
Messages are secured
Reduces cycle time
Increases productivity
Enhances customer service
Minimizes paper usage and storage
EDI Limitations
Significant initial investment to implement
Ongoing operating costs are high due to the use of expensive, private VANs
Traditional EDI system is inflexible
Long startup period
Multiple EDI standards exist
Comparing Purchase Order Fulfillment Without EDI
Source: Drawn by E. Turban
See Figure 10.3.
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Comparing Purchase Order Fulfillment With EDI
Source: Drawn by E. Turban
Extranets
The main goal of extranets is to foster collaboration between business partners.
An extranet is open to selected B2B suppliers, customers and other business partners.
The Structure of an Extranet
See Figure 10.4.
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Types of Extranets
A company and its dealers, customers or suppliers
An industry’s extranet
Joint ventures and other business partnerships
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A company and its dealers, customers or suppliers – centers around one company.
An industry’s extranet – major players in an industry team up to create an extranet.
Joint ventures and other business partnerships – partners in a joint venture use extranet as a vehicle for communications and collaboration.
Chapter Closing Case
The Problem
The Solution
The Results