Lecture 1: Introduction to Management Information Systems Topic 2: Gaining Competitive Advantage with IT STUDENT LEARNING OUTCOMES 1. Define supply chain management (SCM) systems and describe their strategic and competitive opportunities. 2. Define customer relationship management (CRM) systems and describe their strategic and competitive opportunities. 3. Define e-collaboration systems and describe their strategic and competitive opportunities. 4. Explain the significance of enterprise resource planning (ERP) software as the integration of functional software systems. 1. Supply Chain Management (SCM) 1.1. Definition SCM tracks inventory and information among business processes and across companies SCM system is IT system that supports supply chain management 1.2. Key features SCM enables Just In Time (JIT) production -- method for producing or delivering a product or service just at the time the customer wants it Example: Dell computer o Dell uses JIT to deliver custom computers and keep to inventory in its distribution chain o Dell also uses i2 system (that is a very well-known SCM software) to send orders for parts to suppliers every two hours, enabling it to manufacture and deliver exactly what its customers want with little or no inventory in its supply chain. 1.3. Strategic and competitive advantages with SCM Goal is to squeeze out every penny of cost possible in the supply chain 1
Porter s Above/Below the line Run-Grow-Transform overall cost leadership below the line (cost reduction) Run This will optimize fulfillment, logistics, production, revenue and profit, and cost and price Information partnership is a key success factor, that is, two or more companies (e.g., parts suppliers and manufacturers) cooperate by integrating their IT systems thereby providing customers with the best of what each can offer. Note: Lower costs in the supply chain lead to lower prices to customers, which in turn can increase market share and above-the-line revenue. 2
2. Customer Relationship Management (CRM) 2.1. Definition Customer relationship management (CRM) system uses information about customers to gain insight into their needs, wants, and behaviors in order to serve them better 2.2. Key features Three major functions CRM includes multi-channel service delivery that describes a company s offering multiple ways in which customers can interact with it. They include e-mail, fax, phone, and web. A fundamental goal of a CRM system is the management and tracking of all these interactions. Sales force automation (SFA) function: automatically track all the steps in the sales process that include contact management, sales lead tracking, sales forecasting and order management, and product knowledge. Example: o GM s creating repeating customers it is far more expensive to acquire a new customer than it is to retain an existing customer. o Amazon s personalized recommendation system 2.3. Strategic and competitive advantages with CRM 3
Goal is to increase revenue by providing delightful experiences for the customer in a variety of ways-tailored product and service offerings, seamless interaction, product knowledge, and so on. Porter s Above/Below the line Run-Grow-Transform Differentiation and focus Above-the-line initiative Grow CRM enables more effective marketing campaigns based on more precise knowledge of customer needs and wants, efficient management of sales process, and superior after-sale service and support such as well-run call centers. 4
3. E-collaboration 3.1. Workflow Management Automation and management of business processes Integrated with Document management system manages a document through all stages of processing. Documents are updated and passed from employee to employee as electronic documents (complete with electronic signatures) Example: processing a loan in a bank, processing a sales order, etc) 3.2. Knowledge Management System (KMS) IT system that supports the capturing, organizing, and dissemination of knowledge throughout the organization They include o Knowledge of facts o Sources of information o Solutions, patents, and trademarks o Best-practice processes Example: o Consulting firms make very effective use of KMS by ensuring that consultants, working on a new project, can see and read what other consultants have done on similar types of projects similar to Naver s Knowledge Search. 3.3. Social Networking in Business -- Enterprise 2.0 5
The use of emergent social software platforms (web 2.0) within companies, or between companies and their partners or customers similar to Facebook.com Corporate wikis, blogging, internal virtual community, etc. (e.g., Who is the best person who can introduce me to an influential executive at X company? ) Example: Booz Allen s hello.bah.com: http://www.boozallen.com/media-center/pressreleases/48399320/42033790 Note: In general, E-collaboration is good for just about every type of business strategy Focus, differentiation, and overall cost leadership Above-the-line and below-the-line Run, grow, and transform 6
4. Enterprise Resource Planning (ERP) Bring IT All Together How do you bring together SCM, CRM, and e-collaboration systems? ERP system is a collection of integrated software for business management, accounting, finance, supply chain management, inventory management, customer relationship management, e-collaboration, etc. Attempts to integrate everything o CRM drives what SCM will produce o Everyone works together in e-collaboration o The entire organization knows the entire organization 7