Collaborative Customer Relationship Management

Collaborative Customer Relationship Management

Alexander H. Kracklauer D. Quinn Mills Dirk Seifert Editors Collaborative Customer Relationship Management Taking CRM to the Next Level With 99 Figures and 7 Tables 123

Prof. Dr. Alexander H. Kracklauer Prof. D. Quinn Mills Prof. Dr. Dirk Seifert Harvard Business School Soldiers Field Boston, MA 02163 USA akracklauer@hbs.edu and alexander.kracklauer@fh-neu-ulm.de dmills@hbs.edu seifert-d@gmx.de ISBN 978-3-642-05529-4 ISBN 978-3-540-24710-4 (ebook) DOI 10.1007/978-3-540-24710-4 Cataloging-in-Publication Data applied for A catalog record for this book is available from the Library of Congress. Bibliographic information published by Die Deutsche Bibliothek Die Deutsche Bibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the Internet at <http://dnb.ddb.de>. This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. http://www.springer.de Springer-Verlag Berlin Heidelberg 2004 Originally published by Springer-Verlag Berlin Heidelberg New York in 2004 Softcover reprint of the hardcover 1st edition 2004 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Hardcover-Design: Erich Kirchner, Heidelberg

Preface of the Editors Driven by rapidly changing business environments and more demanding consumers, many organizations are searching for new ways to achieve and retain a competitive advantage via customer intimacy and customer relationship management. In this context, new strategic frameworks and cooperative efforts with all participants along the value chain are needed to allow managers to synchronize their efforts with changes in shopping patterns of consumers. This book presents a new strategic framework that has already been tested successfully at global companies through a large empirical study. New management concepts like CPFR (Collaborative Forecasting and Replenishment), CRM (Customer Relationship Management), CM (Category Management) and Mass Customization are integrated in one holistic approach to jointly develop customer bonding and loyalty. Experts from companies like McKinsey, Procter & Gamble, Accenture, A.C. Nielsen as well as authors from renowned academic institutions like Harvard Business School and Technical University Munich offer valuable insights on how to redesign organizations to meet future requirements of consumers. Structure of the Book After the introduction of the concept of customer management in part 1 of the book, Mercer Management consultants Eric Almquist and David Bovet together with Carla J. Heaton from Marsh & McLennan explain in chapter 2 what companies have learned so far while implementing CRM and show key take-aways. Based on that, part 2 of the book explains how Collaborative Customer Management helps manufacturers and retailers to achieve joint success in the marketplace. Chapter 3 illustrates that Collaborative Customer Management is a further development of ECR on the demand side. Additionally, strategies and tools for Collaborative Customer Management are presented. A case study on Procter & Gamble clarifies the approach of Collaborative Customer Management. Chapter 4 explains the integration of Supply Chain Management and Customer Relationship Management. It shows how logistics and information technology add value to the consumer while simultaneously reducing cost. In addition it shows what possibilities exist to increase co-operation along the supply chain in order to better meet consumer demand. A case study by JDA s CTO, Scott Hines shows the way in which the integration of Customer Management and Supply Chain Management can lead to outstanding results. A study by Deloitte Consulting in chapter 5 reveals how customer satisfaction and profitability can be increased through customer management and supply chain management. The study, conducted in 28 countries, shows that companies in digital loyalty networks, which integrate CRM and SCM

VI Preface of the Editors throughout the supply chain with modern IT are already realizing better earnings than comparable companies who have not. The next part deals with the demand side of Collaborative Customer Relationship Management and looks more closely at CRM and Category Management. Chapter 6 and 7 show why cooperation in CRM makes sense and which results are realizable by using collaboration nets. The authors of the Technical University Munich show potentials and challenges of an individualization based approach and four models of an individualization based CCRM. AC Nielsen authors Matthias Groß and Jens Ohlig show in chapter 8, how market research institutes can help leverage the CM process and show the CM process in detail. Moreover, they demonstrate how Category Management can help to retain customers. Peter Barrenstein and Stefan Tweraser of McKinsey establish in chapter 9 why CM is particularly important now and offer guidelines for successful Category Management. The next part of the book, part 4, looks into the relationship between CCRM and logistics. Collaborative Planning, Forecasting and Replenishment (CPFR), a new strategy for joint planning and supply management is introduced here via two contributions from industry experts. In chapter 10 Peter Hambuch of Procter & Gamble reveals how CPFR is employed by a large consumer goods manufacturer. In chapter 11, Georg Engler of Accenture discusses the progression from a pilot project to broad based use. The fifth section of the book looks at future developments in CCRM. Chapter 12, written by A. H. Kracklauer, D. Q. Mills and D. Seifert together with P & G authors M. Leyk and S. Rübke deals with newest developments in the Category Management field and consequently talks about New Ways of Category Management. M. Großweischede of the Competence Center for Multi-Channel-Management of the University of Essen introduces CCRM in the Internet and customer driven assortments for e-retailers in chapter 13. The sixth and final section of the book draws conclusions from the preceding chapters and offers the essential take-aways. The book is to be viewed as a platform for the expression of the opinions of different important players in the field: manufacturers, retailers, consulting companies and IT-solutions providers. The opinions expressed by contributing authors do not necessarily reflect those of the editors. The articles distinguish themselves through different styles and approaches, offering the reader varying perspectives on Collaborative Customer Relationship Management. Acknowledgements The book would not have been possible without the help and the inspiration of many people and companies. The editors would like to thank Accenture, JDA, and SAP AG, who sponsored our research.

Preface of the Editors VII Special thanks in particular to the contributing authors for sharing the knowledge and experience of their companies. We would also like to thank the members of our research team. First of all we want to thank Anurag Mehndiratta, who gave us a lot of valuable insights based on his work at Siemens. Moreover, Alexander Adler, Mark Cicirelli, Kirstin Hornby, Julian Kurz, Carla Saraiva, Steffen Schneider and Michael Lark contributed in an outstanding way to this volume. Heartfelt thanks also to those whose personal involvement facilitated intensive debate on many ideas contained in this volume: Fred Baumann, Claudia Beckers, Steffen Bundesmann, Richard Downs, Dr. Stephan Friedrich, Prof. Dr. Hans Hinterhuber, Dr. Heiner Olbrich, Dr. Olaf Passenheim, Prof. Dr. U. Jens Pätzmann, Silke Slootz, Jim Uchneat, Jürgen Weltermann, Prof. Sean Willems and Prof. Dr. Michael Zerres. And finally, our thanks to Prof. Michael Y. Yoshino and the Research Division of the Harvard Business School, who helped pave the way for the work presented here. If you have questions, comments and criticisms regarding this book you may contact the editors via e-mail: akracklauer@hbs.edu, dmills@hbs.edu, seifert-d@gmx.de Boston, April 2003 Prof. Dr. Alexander Kracklauer Prof. D. Quinn Mills Prof. Dr. Dirk Seifert

Table of Contents Preface of the Editors...V Part 1: Customer Relationship Management: The Basics... 1 Chapter 1: Customer Management as the Origin of Collaborative Customer Relationship Management... 3 Alexander H. Kracklauer, D. Quinn Mills, and Dirk Seifert Chapter 2: What Have We Learned so Far? Making CRM Make Money Technology Alone Won t Create Value... 7 Eric Almquist, David Bovet, and Carla J. Heaton Part 2: Collaborative Customer Relationship Management How to Win in the Market with Joint Forces... 23 Chapter 3: Collaborative Customer Relationship Management (CCRM)... 25 Alexander H. Kracklauer, D. Quinn Mills, and Dirk Seifert Case Study: Implementation of Collaborative Customer Relationship Management at Procter & Gamble... 46 Alexander H. Kracklauer and Niko Warmbrunn Chapter 4: The Integration of Supply Chain Management and Customer Relationship Management... 57 Alexander H. Kracklauer, D. Quinn Mills, Dirk Seifert, and Michael Barz

X Table of Contents Case Study: ISCRM A Study of the Business Benefits Achieved through Integrated Supply and Customer Relationship Management... 70 Scott Hines Chapter 5: The Future of Collaborative Customer Relationship Management: Integrating Demand and Supply Chains... 77 Jim Duffy, Peter Koudal, and Stephen Pratt Part 3: The Demand Side: Collaborative Customer Relationship and Category Management... 107 Chapter 6: Collaboration in CRM: Potentials and Challenges of an Individualization Based Approach... 109 Christian Schaller, Frank T. Piller, and Ralf Reichwald Chapter 7: Building Customer Loyalty with Collaboration Nets: Four Models of Individualization Based CCRM... 133 Frank T. Piller, Ralf Reichwald, and Christian Schaller Chapter 8: Collaborative Customer Relationship Management from a Market Research Viewpoint... 155 Matthias Groß and Jens Ohlig Chapter 9: Category Management: Why Now?... 173 Peter Barrenstein and Stefan Tweraser

Table of Contents XI Part 4: The Supply Side: Collaborative Planning, Forecasting and Replenishment (CPFR) as a Tool to Support CCRM... 181 Chapter 10: CPFR Views and Experiences at Procter & Gamble... 183 Peter Hambuch Chapter 11: How to Scale Your CPFR-Pilot... 199 Georg Engler Part 5: What s Next? The Future of Collaborative Customer Relationship Management... 215 Chapter 12: New Ways of Category Management... 217 Alexander H. Kracklauer, D. Quinn Mills, Dirk Seifert, Michael Leyk, and Steffen Rübke Chapter 13: Collaborative Category Management on the Internet Basics to Create and Manage Consumer-Focused Assortments in Online- Shops... 229 Markus Großweischede Part 6: Conclusions and Key Takeaways... 255 Alexander H. Kracklauer, D. Quinn Mills, and Dirk Seifert Editors... 261 Contributing Authors... 263 Index... 269