A Proposed Model in Integrating SCM, CRM & ERP

Transcription

1 A Proposed Model in Integrating SCM, CRM & ERP Nasrollah Moghaddam Charkari 1, Neda Abdolvand 2 1- Department of Computer Science & Electrical Engineering, Faculty of Technical & Engineering, Tarbiat Modares University. 2- IT Committee, Road and Transportation Ministry. Charkari@modares.ac.ir Abstract Today s everybody is conscious that e-business could potentially transform the business landscape. Enterprises are struggling with ERP, SCM and CRM application to compete and attend in the market. These applications neither are easy to implement, nor expensive but time and cost consuming. In addition, customers, suppliers and even employees expectations have been rising that is forcing organizations to think about walking toward e-world as well as integration front-office and back-office processes through Internet-based technologies. In this paper we present a model to integrating tertiary. It will guaranty to get result of ROI of these systems. The model is based on knowing reference blocks and integrating them before completing implementation thoroughly. Keywords: Supplier Chain Management (SCM), Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), e-business, e-procurement. Introduction Ushering the Internet in "the information age" made transformation in the business world that few people could have imagined. Business stepped intensively toward internet phenomenon and e-commerce to make "365x24x7" a reality. So, electronic storefronts do companies setup expeditely to keep up with their Internet-only counterparts. In addition, it's moving toward business-to-business transactions [1]. In the past several years, e-business seems to have overwhelmed every aspect of daily life. Enhance productivity, maximize convenience and improve communications globally are the most features made Internet technologies as a critical part of both individuals and organizations. The rapid growth and promotion of Internet technologies has led some to wonder how to follow e-business phenomenon. Today's, it's involved managing direct relationship with customers, employers, suppliers whether they are individuals or other business. E-business is neither distinct from nor equivalent to Customer Relationship Management (CRM), Supplier Chain Management (SCM), Employee Relationship Management (ERM), ERP, E-payment and e-.; Though most of them play a vital role in well-executed e- business strategy [1]. However, as it's heard implementing CRM completely is as devouring an elephant thoroughly. Then, what should they implement and walk toward? Today, the challenge of e-business is integration [1-14]. Perhaps, many companies start to implement sections 1 Assoc. Professor of Trabiat Modares University 2 IT Expert of IT Committee

2 Figure 1- Relation between SCM, ERP, CRM of CRM, SCM, and ERP and so on. But there is just one way to get maximize revenue and profits: synchronize supply and demand in real time while ERP applications help a business to manage the important parts of supply chain operation, interaction with customers, order tracking and parts purchasing although it s neither SCM nor CRM [2, 3]. That is many companies led to a growing number of integration challenges for e-businesses of all sizes and types. Unfortunately, most of companies believe to making a web site and scrambling to get an e-commerce at first phase of building an e-business. That's not fortunate since usually there was little or no consideration how scalable or reliable the site needed to be or even how captivating the content [4]. It was just a matter of beating the competition. And unfortunately, these first-to-market consumer sites were rarely integrated with the manufacturing side of the business, which was establishing its own Internet-based relationships with suppliers or consumer. This lack of integration has proved to be a significant challenge for many organizations as the customer base has grown, real-time orders status requested and products returned [5,6]. In other words, considering SCM and CRM separately can result in missed opportunities and poor performance. Some bridges [7] are necessary between them that are enterprises should consider. And it's not possible without an integrated strategy. As a result an e-business model can help to step forward and guaranty success. Some computing and IT companies offer some software solution which couldn't warranty to reach goals. We try to offer a model so that each enterprise should adapt it with their needs and their sections. The model will show the implementation steps as well as integrating the processes are necessary in an e-business. ERP ERP system is the basis that determines how the business processes function. Because the implementation of a CRM strategy requires a system in which a company s back office and financial functions are integrated seamlessly with its front office customer facing processes. This crucial factor is often misunderstood and causes the failure of many CRM installations. To succeed, front and back office functions must be integrated on many levels so that product and service data, order management, customer service, etc. become part of a greater information flow [7]. Back office usually refers to a company s internal processes and traditional ERP functionality such as: Order management and billing Distribution and logistics Manufacturing Procurement Finance and accounting Human resources Legacy applications While enhancing e-application made back-office processes more important and extended, so e-supply chain found a separated entity which support more back-office processes successfully. But, it doesn't mean SCM and CRM made us unneeded to ERP. ERP can act as a bridge between different phases. In other words, the first phase and core of any business is creating its product (product, services, and information). Managing

3 all processes, are needed in the creation product, is the core activity of any business. ERP helps to implement this phase successfully, but it's not over. As it's mentioned above and illustrated in the figure1, supplier and customer are two main parts of this phase. Suppliers provide requirements and instruments are needed in creating product while customer is whom product is built for [8]. SCM It's required to extend the structure of the new business process network operationally to automate and stream-line communications, transactions, and collaboration with supply partners. It's obvious that no business will operate as a single company albeit it's a node of complicated network of individuals and businesses that exploit internet as a leverage in storing, processing, exchanging information at the lowest possible cost [1, 9]. Plan Design Source Build Delivery Procurement Figure 2- A Functional Block Diagram of SCM Businesses employ procurement and supply chain to monitor, manage and extend the enterprise. Consequently, SCM should manage all process in the distributor, supplier and trading partner sides. So, it should include demand management, supply management, inbound/outbound logistics, indirect procurement direct procurement/supply chain planning, and event management, Sourcing and Business process networks [10]. A functional blocks look to SCM processes have shown in figure 2. CRM One of the most important reason that organization used of Enterprise Applications, is acquire and retain long-term and valued customers, that is, called Customer Relationship Management. CRM applications could be used to support all of the customer-centric processes within organization in any size and level including marketing, sales, and customer support [5]. Today s, while power of competence guaranties survivance, every enterprise is mining new ways to develop, maintain, and leveraged a consistent, accurate, and timely set of customer, product, and service information across the customer-facing marketing, sales, service, support, and product development units that is tenet of CRM [11]. A functional blocks look to CRM processes have shown in figure 3. Order - Marketing Review Design Sale Delivery Service Figure 3- A Functional Block Diagram of CRM Processes

4 Model Before offering the model, we show how these parts are related. As it's illustrated in figure 4 [8], there is no integration view in this relation. CRM isn't an independent entity and SCM is an external entity. This view Figure 4- Conventional E-business Model hardens the implementation, increase cost and linger ROI. Specially, enterprises follow this model, start to implement by accounting block separately. Consequently, we have heard that e-business projects fail at the rates higher than 66% [10]. Instead, we have tried to investigate front-office and back-office and know their relation in an integration view. Although enterprise believes to a store front support all activities especially customers-related ones, it's a fact some processes have a back-office entity and others front-office entity for others. CRM covers the most of front-office application while SCM and ERP used by marketing, sales, procurement and executive management to support and control critical customer relationships [11, 4, 12]. As a result in an integrated system, it should be covered all back-office and front-office processes so that they are applicable for customers, partners, suppliers and employees [13]. Albeit, some processes are the same for both back-and front-office applications. In other words, this system should gather product and service information, so this information could apply in delivering information and services to customers or making management decision in supply chain [12]. In the enhanced e-business model we offer, all common processes as well as the chain of creating product constitute the core of system. Here are the required processes that we need in the integration view [14] : MANAG EMENT Customers Customers Sourcing PRODUCT Payment Requirements Satisfy Suppliers Procurement Services Figure 5- Enhanced E-business Model

5 Figure 6- Levels of Implementation

6 Marketing Order Management Distribution& Logistics Manufacturing Procurement Sale Payment Human Resources Legacy Applications Customer Service In a CRM view, we know customer needs, so we should be ready to make the product and give it back to the customer. In other words, operation may start with customer-related process (ordering) and terminates with customer-related process (delivering & services), too. He starts the phase of production by need to a product and finishes it by receiving delivered product. Providing and purchasing production requirements, relationships with suppliers, sourcing, logistics, procurement, payments and managing all process is needed all over. In the figure 5, we have shown the processes. Implementing In principle, customer is the heart of the CRM view, front processes, where as product is the heart of back processes. On the other hand, no enhancement could be applied without improved infrastructure; consequently the enterprise should start automation by its product chain while it should handle its reference parts as human resources and asset category. So, the implementing blocks are as figure 6. The order of implementing doesn't mean to complete all blocks first and follow it with other blocks. The first blocks are reference and fundamental blocks. It's needed to implement them in order to meet the requirements. For instance, enterprise should know its human resources to assign them to production phases and customer contact center but there is no need to complete employee and personnel management processes, at first. In a factory to manufacture a product, they should design product phases and determine phases of product and parts of the product; then they should product the parts. So they should know how to assign the raw material for different parts. That's they can find in asset. Furthermore, they should assign proper human resource to plan, build and control the parts and the product as well as making relation with customers and suppliers; consequently, they should know their human resources. After starting the product chain implementation, they can start managing their order management. They know their product and may map the orders to products; moreover they should know their customers to predict their future orders and meet their needs. In order to assign customer to orders that's enough to know customer name and it's ID in reference table. In this way, they can enhance their implementation, step by step while integration is guaranteed. In the same phase, they can start to control suppliers and their offers. After building reference blocks and their dependency, they can start to complete different blocks. However, implementing thoroughly depends on enterprise situation. If it has enough budget and human resources, many blocks could implement in parallel after knowing their dependency. The most important point is starting the integration with a core as the model shows that is implementing reference blocks such as human resources and assets; then relating them to production, suppliers and customers. In the figure 7, small parts of relations have shown. Manufacturing Product A Part 1 Part 2 Human Resource Asset Order Management Supplier Figure7- Sample of Relation between Blocks

7 Conclusion An e-business model is a model for efficiency and performance based on concept of fully integrated organization. Management is part of the ERP decision process while commercial depend on CRM process and procurement rely on SCM. We have simulated the model through software as power designer and Rational Rose for a supplier of automotive parts company. We have started to implement in several enterprises. We could recognize reference blocks, as well as blocks in next levels. Then we start to design reference tables while we know the relations between tables in different levels that is integration will satisfied. We start to know the functions should process in product line, albeit some automotive standards as ISO/TS help us to know top-down processes in the automotive manufacturers. The implementation has been started by.net framework(c#) and MS SQL Server The results on ROI and productivity will be published in another article. References [1] Charels C.Prior & Michael J. Bauer, E-Supply Chain: using the Internet to revolutionize your business, Berret-Koehler Publisher, 2001 [2] "E-Business Continuity Planning: The Essential Step to Building and Maintaining Customer Trust", Technical paper: Sungard Planning Solutions, 2003 [3] "ESSbase XTD Integration Services", Technical paper: Hyperion Solutions Corporation, 2003 [4] Bipin Agarwal, "Defining The E-Business Model", Tanning Technology, 2003 [5] J. Woods, A. White, K. Peterson & M. Jimenez, "Demand Chain Management Synchronizes CRM and SCM", GARTNER, 28 October 2002 [6] Don Peppers, Martha Rogers, Steve Skinner, Bob Hogg, Dan Stimson, Ed Sander & Mark Pyatt, "Supply Chain and Demand Chain Integration: The Pathway to Profit and Competitive Advantage", SAP, 2003 [7] "ICRM and ERP in One", Technical paper: Navision, 2001 [8] "ERP and Business Continuity", Technical paper: Sungard Planning Solutions, 2003 [9] Sivakumar Krishnamurthy, "Supplier Chain Intelligence White Paper", Wipro Technologies, 2003 [10] Dale Neef, e-procurement: from Strategy to implementation, Financial Times Prentice Hall, 2001 [11] Ken Kenjale & Arnie Phatak, "B2B Exchanges: Now That We Know Better How to Move Forward From Here", Technical paper: SYNTEL, 2002 [12] "Integrating CRM with SCM", Technical paper: PeopleSoft White Paper, July 2003 [13] Chris Brousseau & Scott Sparks, "A Holistic Approach to Realizing Sustained Results", PeopleSoft, 2003 [14] "Better Performance Through Insight", Technical paper: Hyperion Solutions Corporation, 2003