Problem :

Michel Dell started his business as a student from his

university dorm by using a mail order approach for
selling PCs. This changed the manner by which PCs
were sold.
 The customer did not have to come to a store to buy a
computer and dell was able to customize the computer
to the customers specifications.
 The direct mail approach enabled Dell to underpriced
his rivals who were using distributors and retailer by
about 10 % .

kavita.khadse@crkimr.in
 For several years the business grew and Dell constantly
captured market share.
 In 1993 Compaq the pc market leader at that time
decided to drastically cut prices in order to drive Dell out
of the market . As a result of the price war Dell Computer
Corporation had a $65 million loss from reduced sales
and inventory writedowns in the first six months of 1993
alone.
 The company was on the verge of bankruptcy

kavita.khadse@crkimr.in
 The IT solution

Dell realize that the only way to win the marketing war was
to introduce fundamental changes along the supply
chain from its suppliers all the way to its customers.

Among the innovations used to restructure the business

were the following

 Most orders from customers and to suppliers were moved

to the Web. Customers configure what they want and find
the cost and the deliverability in seconds all online

kavita.khadse@crkimr.in
 Dell builds most computers only after they are
ordered. This is done by using just in time
manufacturing which also enables quick deliveries, low
inventories, little or no obsolescence and lower
marketing and administrative costs.
 Some component warehouses which are maintained
by Dells major suppliers are located within 15 minutes
of Dell factories. Not only does Dell get components
quickly but those components are up to 60 days newer
than the ones acquired by major competitors
kavita.khadse@crkimr.in
 Shipments which are done by UPS and other carriers
are all arranged electronically

 Dell collaborates electronically with its buyers to pick

their brains for new product ideas

 Dell new PC models are tested at the same time as the

networks that they are on are tested this collaboration
reduces the testing period from 60 or 90 days to 15

kavita.khadse@crkimr.in
 The Result

 By 1999 Dell had become the worlds number two PC

seller and 2001 it become number one It is considered
one of the words best managed and most profitable
companies

kavita.khadse@crkimr.in
 Learning
 The Dell case demonstrates that the new build to order
business model changed the manner in which business
is done in the PC industry.
 To implement such a model on a large scale Dell built
superb supply chain management that includes both
suppliers and customers.
 A major success factor in Dell’s operation was the
improvements made by using IT along the entire
supply chain.

kavita.khadse@crkimr.in
 Definition

 A supply chain refers to the flow of materials information,

payments and services from raw material suppliers
through factories and warehouses to end customers.
 A supply chain also includes the organizations and
processes that create and deliver products, information
and services to the end customers.
 It includes many tasks such as purchasing, payment
flow, materials handling , production planning and
control, logistics and warehousing inventory control and
distribution and delivery .
 The function of supply chain management is to plan
organize, coordinate, and control all the supply chain’s
activities
kavita.khadse@crkimr.in
 Benefits

The goal of modern SCM are :

 To reduce uncertainty and risk in the supply chain
thereby positively affecting inventory levels cycle time
business processes and customer service.
 All these benefits contribute to increased profitability and
competitiveness

kavita.khadse@crkimr.in
 Supply chain business
processes
1. Customer service management
2. Procurement
3. Product development and
commercialization
4. Manufacturing flow management/support
5. Physical distribution
6. Outsourcing/partnerships
7. Performance measurement

kavita.khadse@crkimr.in
1. Customer service management process :
 Customer Relationship Management concerns the
relationship between the organization and its customers.
Customer service is the source of customer information.
It also provides the customer with real-time information
on scheduling and product availability through interfaces
with the company's production and distribution
operations.
 Successful organizations use the following steps to build
customer relationships:
 determine mutually satisfying goals for organization

and customers
 establish and maintain customer rapport

 produce positive feelings in the organization and the

customers
kavita.khadse@crkimr.in
2. Procurement process :
Strategic plans are drawn up with suppliers to support
the manufacturing flow management process and the
development of new products.
In firms where operations extend globally, sourcing
should be managed on a global basis. The desired
outcome is a win-win relationship where both parties
benefit, and a reduction in time required for the design
cycle and product development.
Also, the purchasing function develops rapid
communication systems, such as electronic data
interchange (EDI) and Internet linkage to convey
possible requirements more rapidly.
Activities related to obtaining products and materials
from outside suppliers involve resource planning, supply
sourcing, negotiation, order placement, inbound
transportation, storage, handling and quality assurance,
many of which include the responsibility to coordinate
with suppliers on matters of scheduling, supply
continuity.
kavita.khadse@crkimr.in
3. Product development and commercialization :Here,
customers and suppliers must be integrated into the
product development process in order to reduce time to
market. As product life cycles shorten, the appropriate
products must be developed and successfully launched
with ever shorter time-schedules to remain competitive.
 According to Lambert and Cooper (2000), managers of
the product development and commercialization
process must:
 coordinate with customer relationship management to

identify customer-articulated needs;

 select materials and suppliers in conjunction with

procurement, and
 develop production technology in manufacturing flow

to manufacture and integrate into the best supply

chain flow for the product/market combination.

kavita.khadse@crkimr.in
4. Manufacturing flow management process :The
manufacturing process produces and supplies products
to the distribution channels based on past forecasts.
Manufacturing processes must be flexible to respond to
market changes and must accommodate mass
customization. Orders are processes operating on a just-
in-time (JIT) basis in minimum lot sizes. Also, changes in
the manufacturing flow process lead to shorter cycle
times, meaning improved responsiveness and efficiency
in meeting customer demand. Activities related to
planning, scheduling and supporting manufacturing
operations, such as work-in-process storage, handling,
transportation, and time phasing of components,
inventory at manufacturing sites and maximum flexibility
in the coordination of geographic and final assemblies
postponement of physical distribution operations.

kavita.khadse@crkimr.in
5. Physical distribution :This concerns movement of a
finished product/service to customers. In physical
distribution, the customer is the final destination of a
marketing channel, and the availability of the
product/service is a vital part of each channel
participant's marketing effort. It is also through the
physical distribution process that the time and space
of customer service become an integral part of
marketing, thus it links a marketing channel with its
customers (e.g., links manufacturers, wholesalers,
retailers).

kavita.khadse@crkimr.in
6. Outsourcing/partnerships :This is not just outsourcing
the procurement of materials and components, but also
outsourcing of services that traditionally have been
provided in-house. The logic of this trend is that the
company will increasingly focus on those activities in the
value chain where it has a distinctive advantage, and
outsource everything else. This movement has been
particularly evident in logistics where the provision of
transport, warehousing and inventory control is
increasingly subcontracted to specialists or logistics
partners. Also, managing and controlling this network of
partners and suppliers requires a blend of both central
and local involvement. Hence, strategic decisions need
to be taken centrally, with the monitoring and control of
supplier performance and day-to-day liaison with
logistics partners being best managed at a local level.

kavita.khadse@crkimr.in
7. Performance measurement : Experts found a strong
relationship from the largest arcs of supplier and
customer integration to market share and profitability.
Taking advantage of supplier capabilities and
emphasizing a long-term supply chain perspective in
customer relationships can both be correlated with firm
performance. As logistics competency becomes a more
critical factor in creating and maintaining competitive
advantage, logistics measurement becomes increasingly
important because the difference between profitable and
unprofitable operations becomes more narrow. A.T.
Kearney Consultants (1985) noted that firms engaging in
comprehensive performance measurement realized
improvements in overall productivity. According to
experts, internal measures are generally collected and
analyzed by the firm including
 Cost
 Customer Service
 Productivity measures
 Asset measurement, and
 Quality. kavita.khadse@crkimr.in
 Enterprise resource
planning (ERP)
 ERP is a backbone of E-business. In other words ERP
is business operating system, for back-office
operations.
 Enterprise resource planning (ERP) is a cross-
functional enterprise system that serves as a
framework to integrate and automate many of the
business processes that must be accomplished within
the manufacturing, logistics, distribution, accounting,
finance, and human resources functions of a business.

kavita.khadse@crkimr.in
 ERP software is a family of software modules that supports
the business activities involved in these vital back office
processes.

 For example, ERP software for a manufacturing company will

typically track the status of sales, inventory, shipping, and
invoicing, as well as forecast raw material and human
resource requirements.

 ERP creates a framework for integrating and improving their

back-office system that results in major improvements in
customer service, production, and distribution efficiency.
kavita.khadse@crkimr.in
 Colgate Palmolive

 Colgate Palmolive is a global consumer

products company

 Colgate Palmolive implement SAP R/3 to

allow company to access more timely and
accurate data get the most out of working
capital and reduce manufacturing cost .

kavita.khadse@crkimr.in
 Result
 Before ERP it took Colgate anywhere from one to five
days to acquire an order and another one to two days
to process the order. Now order acquisition and
processing combined takes four hours. Distribution and
planning used to take up to four days, today it takes 14
hours . Delivery time has been cut in half

 Before ERP on time deliveries used to occur 91.5 %,

after R/3 the figures are 99.0%

 Total delivery cost is reduced by nearly 10 %

kavita.khadse@crkimr.in
 Benefits of ERP

 Quality & efficiency: ERP creates a framework for

integrating and improving a company’s internal business
processes that results in significant improvements in
the quality and efficiency of customer service
production and distribution

 Decreased cost: significant reduction in transaction

processing cost & hardware .

kavita.khadse@crkimr.in
 Decision support: ERP provides vital cross-functional
information quickly on business performance to
managers to significantly improve their ability to make
better business decisions across the enterprise.

 Enterprise agility: ERP provides more flexible

organizational structures, managerial
responsibilities and work role therefore more agile
and adaptive organization that can more easily
capitalize on new business opportunities.

kavita.khadse@crkimr.in
 CRM

Customer Relationship Management:

Managing customer relationship involves two objectives:
 To provide the organization and all of its customer facing
employees with a single complete view of every
customer at every stage and across all channels
 To provide the customer with a single complete view of
the company, its extended channels.
That’s why businesses are turning to customer
relationship management (CRM) as a major customer
centric business strategy.

kavita.khadse@crkimr.in
 CRM uses information technology to create a cross-
functional enterprise system that integrates and
automates many of the customer serving processes
in sales, marketing, and product services that interact with
a company customers.

 CRM systems also create an IT framework that

integrates all of these processes with the rest of a
companies business operations.

kavita.khadse@crkimr.in
 CRM software provides the tools that enable a
business and its employees to provide fast,
convenient, dependable, and consistent
service to its customers
 E.g. Siebel systems, Oracle , People Soft , SAP

kavita.khadse@crkimr.in
 MAJOR APPLICATION OF
CRM
 Sales: CRM software tracks customer contacts and
other business and life cycle events of customers for
cross-selling and up-selling. For example, CRM would
alert a bank sales representative to call customers
who make large deposits to sell them premier credit
programs or investment services.
 Marketing and Fulfillment: CRM software can
automate tasks such as qualifying leads, managing
responses, scheduling sales contacts, and providing
information to prospects and customers.

kavita.khadse@crkimr.in
 Customer Service and Support. CRM helps customer
service managers quickly create, assign, and manage
service requests. Help desk software assists customer
service reps in helping customers who are having
problems with a product or service, by providing relevant
service data and suggestions for resolving problems.

kavita.khadse@crkimr.in
 BUSINESS BENEFITS OF
CRM
 CRM allows a business to identify and target their best
customers, those who are the most profitable to the
business

 CRM enables a company to provide a consistent

customer experience and superior service and
support across all the contact points a customer
chooses. All of these benefits provide strategic
business value to a company and major customer value
to its customers.

kavita.khadse@crkimr.in
 Types of CRM
1. Operational CRM
 Operational CRM provides support to "front office"
business processes, e.g. to sales, marketing and service
staff. Interactions with customers are generally stored in
customers' contact histories, and staff can retrieve customer
information as necessary.
 The contact history provides staff members with immediate
access to important information on the customer (products
owned, prior support calls etc.), eliminating the need to
individually obtain this information directly from the customer.
Reaching to the customer at right time at right place is
preferable.
 Operational CRM processes customer data for a variety of
purposes:
 Managing campaigns
 Enterprise Marketing Automation
 Sales Management System

kavita.khadse@crkimr.in
 2. Analytical CRM
Analytical CRM analyzes customer data for a variety
of purposes:
 Designing and executing campaigns, e.g. customer
acquisition, cross-selling, up-selling
 Analyzing customer behavior in order to make decisions
relating to products and services
 Analytical CRM generally makes heavy use of data
mining and other techniques to produce useful results for
decision-making. It is at the analytical stage that the
importance of fully integrated CRM software becomes
most apparent - the more information available to
analytical software, the better its predictions and
recommendations will be.
kavita.khadse@crkimr.in
 3. Sales Intelligence CRM
 Sales Intelligence CRM is similar to Analytical CRM, but
is intended as a more direct sales tool.
 Features include alerts sent to sales staff regarding:
 Sales performance
 Customer trends
 Customer margins
 Customer alignment

kavita.khadse@crkimr.in
 4. Campaign Management
Campaign management combines elements of
Operational and Analytical CRM. Campaign
management functions include:
 Target groups formed from the client base according to
selected criteria
 Sending campaign-related material (e.g. on special
offers) to selected recipients using various channels (e.g.
e-mail, telephone, SMS, post)
 Tracking, storing, and analyzing campaign statistics,
including tracking responses and analyzing trends

kavita.khadse@crkimr.in
 5. Collaborative CRM
 Collaborative CRM covers aspects of a company's
dealings with customers that are handled by various
departments within a company, such as sales, technical
support and marketing.
 Staff members from different departments can share
information collected when interacting with customers.
 For example, feedback received by customer support
agents can provide other staff members with information on
the services and features requested by customers.

kavita.khadse@crkimr.in
 Collaborative CRM's ultimate goal is to use
information collected by all departments to improve
the quality of services provided by the company.
 Producers can use CRM information to develop
products or find new market. CRM facilitates
communication between customers, suppliers and
partner.

kavita.khadse@crkimr.in
 6. Consumer Relationship CRM
 Consumer Relationship System (CRS) covers aspects
of a company's dealing with customers handled by
the Consumer Affairs and Customer Relations
contact centers within a company.
 Representatives handle in-bound contact from
anonymous consumers and customers.
 Early warnings can be issued regarding product issues
(e.g. item recalls) and current consumer sentiment can
be tracked

kavita.khadse@crkimr.in