MIS 111: computers and the inter-networked society

MIS 111: computers and the inter-networked society

MIS 111: COMPUTERS AND THE INTERNETWORKED SOCIETY Class 13: IT-Enabled Business Value Chains July 29th, 2011 LEARNING OBJECTIVE

List a few current events in information systems news Describe problems that face Supply Chain Management Indentify how IT can help address these problems Compare and contrast the purposes of Enterprise Resource Management (ERP), Supply Chain Management, and Customer Relationship Management systems? THREE PARTS TO TODAY

ERP Enterprise Resource Management Inside the walls Management SCM - Supply Chain Management Vendor-facing Management

CRM - Customer Relationship Management Customer-facing Management ROOT BEER GAME Has anyone played this before? YOU CANNOT TALK ABOUT THE GAME! WHAT WAS THE DEMAND

Factory? Distributor? Wholesaler? Retailer? DEMAND 9 8 7 Demand

6 5 4 3 2 1 0 0 10 20 30

Week Number 40 50 60 LESSONS LEARNED LESSONS LEARNED

The impact of time delays on the supply chain Team behavior and decision-making Inventory cost money, but may help increase service levels Lags cause problems and longer supply chains cause problems

Need information systems to monitor each stage in the chain Need cooperation in the channel LESSONS LEARNED The bullwhip effect One or more players cut orders in an attempt to reduce inventory Suppliers see a reduction in order size as a signal of declining demand and reduce their orders even more

Meanwhile, retailers see a jump in consumer demand Retailers order extra in an attempt to fill the pipeline HOW CAN IT HELP? SUPPLY CHAIN MANAGEMENT SUPPLY CHAIN MANAGEMENT First of all, what is a supply chain?

PARTS OF THE SUPPLY CHAIN Upstream where sourcing from external suppliers occurs Internal where packaging, assembly, or manufacturing takes place Downstream where distribution takes place, frequently by external distributors

Making stuff that's easy. Supply chain, now that is really hard. -Yossi Sheffi, MIT SUPPLY CHAIN MANAGEMENT -NvBE11s-0M&feature=related SCM SCM Real-World Implications of failure Wasted

products (bananas) Overtime for employees Loss of profits due to lack of optimization (trucks at half capacity) Ways to prevent SCM failure Global communication Better forecasting THE CHALLENGES OF INVENTORY

Inventory turns: the number of times the business sells its inventory When SCM of companies are not linked, supplier requirements unknown so companies must overstock inventory Classic Problem: Bullwhip Effect erratic shifts in orders up and down the

supply chain CAUSES OF THE BULLWHIP EFFECT Price promotions Analysis of the cost of money (demand management)

Batch Purchasing Discounting efficiency) Forecasting/Trend Analysis Anticipated for consolidated orders (logistical

increased demand (modeling) Shortage gaming Known shortages encourage customers to inflate order quantities (allocation of inventory) WHAT KINDS OF SYSTEMS ARE NEEDED FOR SCM? Inter-organizational Information Systems Involve

information flows from two or more organizations Are often more suited to digital, rather than physical goods SUPPLY CHAIN MANAGEMENT Cultural Differences Companies

must be sure that practices and products are not offensive to targeted cultures Localization Packaging may need to be different in different countries different languages, styles Economic/Political Differences

IT infrastructures differ among countries some governments may control use of IT Legal Issues Copyright laws, patents, file sharing, privacy laws differ by country THE IMPORTANCE OF TRUST

Supply chain systems work best when all businesses are sharing information However, there is a risk of disclosing proprietary information and intellectual property figures Possibility of a trading partner taking advantage of anticipated demand

ENTERPRISE RESOURCE MANAGEMENT FUNCTIONAL AREAS ON THE VALUE CHAIN ENTERPRISE RESOURCE PLANNING SYSTEMS Enterprise Resource Planning Systems Integrate

the planning, management, and use of all of an organizations resources Tightly integrate the functional areas in the organization so changes in one functional area are immediately reflected in other areas ERP BREAKS THE INFORMATION SILOS ERP: FUNCTIONAL INTEGRATION

WHAT CAN ERP SYSTEMS DO? Financial and Accounting Processes General ledger, accounts payable, asset accounting Sales and Marketing Processes Pricing,

billing, order processing Manufacturing and Production Processes Inventory, shipping, production planning Human Resources Processes Personnel

administration, payroll WHAT DOES AN ERP SYSTEM CONTAIN? ERP: AN MIS PERSPECTIVE So you need ERP software. How are you going to get it? Will you buy an off-the-shelf suite? Advantages:

Simple solution, may be inexpensive, covers all functional areas in one package Disadvantages: May have compatibility issues with new systems, may have to change business processes to suit the needs of the system Will you hire a consultant to create a customized solution? Advantages: Can get quick and easy maintenance, can get a totally suitable system for business process needs Disadvantages: Very expensive, need lots of coding from

scratch CUSTOMER RELATIONSHIP MANAGEMENT CUSTOMER RELATIONSHIP MANAGEMENT (CRM) Goal: Integrated View of Customer Sales,

Marketing, and Customer Service Operational CRM Sales Force Automation eCommerce / Web Portals Customer Service Call Centers Campaign Management CRM, CONTINUED Analytical CRM

Personalization Segmentation and Profiling Customer Valuation (Profitability Analysis) Customer Behavior Analysis / Call Patterns Need Analysis and Forecasting CUSTOMER TOUCH POINTS E-mail Web site Telephone

Conventional mail Store Help MARKET RESEARCH Market research: discovers the populations (customers) and regions that are most likely to purchase product Traditional marketing conducts interviews with

consumers and retailers Additional research methods use data mining techniques and statistical models to predict sales volumes of different products CUSTOMER SERVICE SUPPORT Automated Web-based customer service provides automated customer

service 24/7 Saves labor costs Saves paper costs Consists of FAQs, tracking systems, maintaining customer profiles Artificial intelligence used to emulate a real-life customer service representative Auto-categorization performance

used to improve CRM 2.0? CRM 2.0 Characteristics Allows consumers to collaborate and participate with companies

Via Blogs, Wikis, and other Web 2.0 technologies Challenges Copyright if consumers create new product value, who gets the credit and the cash? WHAT DO YOU THINK? 1. How closely do you interact with the

companies from which you buy your products? Your phones, computers, clothes, food? 2. Would you participate in a companys wiki or comment on a companys blog? If yes, what would you contribute? If no, why not? 3. At what point should CRM 2.0 stop? Should customers have the ability to

provide input on product manufacturing? REMAINING LECTURES Project Management Business Processing Management Information Security / Data Communications IT Ethics and Green IT E-Government Challenge

Anything else you would like to learn?

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