Unit4

Customer relationship management

Customer relationship management (CRM) is a widely-implemented strategy for managing a

company’s interactions with customers, clients and sales prospects. It involves using technology to
organize, automate, and synchronize business processes—principally sales activities, but also those
for marketing, customer service, and technical support. The overall goals are to find, attract, and win new
clients, nurture and retain those the company already has, entice former clients back into the fold, and
reduce the costs of marketing and client service. Customer relationship management describes a
company-wide business strategy including customer-interface departments as well as other departments.

PHASES:-

The three phases in which CRM support the relationship between a business and its customers are to:

 Acquire: CRM can help a business acquire new customers through contact management, selling,
and fulfillment.[3]
 Enhance: web-enabled CRM combined with customer service tools offers customers service from
a team of sales and service specialists, which offers customers the convenience of one-stop shopping.
 Retain: CRM software and databases enable a business to identify and reward its loyal customers
and further develop its targeted marketing and relationship marketing initiatives.
CHALLENGES:-

Tools and workflows can be complex, especially for large businesses. Previously these tools were
generally limited to contact management: monitoring and recording interactions and communications.
Software solutions then expanded to embrace deal tracking, territories, opportunities, and at the sales
pipeline itself. Next came the advent of tools for other client-interface business functions, as described
below. These tools have been, and still are, offered as on-premises software that companies purchase and
run on their own IT infrastructure.
Often, implementations are fragmented—isolated initiatives by individual departments to address their
own needs. Systems that start disunited usually stay that way: siloed thinking and decision processes
frequently lead to separate and incompatible systems, and dysfunctional processes.
Business reputation has become a growing challenge. The outcome of internal fragmentation that is
observed and commented upon by customers is now visible to the rest of the world in the era of the social
customer, where in the past, only employees or partners were aware of it. Addressing the fragmentation
requires a shift in philosophy and mindset within an organization so that everyone considers the impact to
the customer of policy, decisions and actions. Human response at all levels of the organization can affect
the customer experience for good or ill. Even one unhappy customer can deliver a body blow to a
business.
TRENDS:-

Many CRM vendors offer Web-based tools (cloud computing) and software as a service , which are
accessed via a secure Internet connection and displayed in a Web browser. These applications are sold as
subscriptions, with customers not needing to invest in purchasing and maintaining IT hardware, and
subscription fees are a fraction of the cost of purchasing software outright.
The era of the "social customer" refers to the use of social media (Twitter, Facebook, LinkedIn, Yelp,
customer reviews in Amazon etc) by customers in ways that allow other potential customers to glimpse
real world experience of current customers with the seller's products and services. This shift increases the
power of customers to make purchase decisions that are informed by other parties sometimes outside of
the control of the seller or seller's network. In response, CRM philosophy and strategy has shifted to
encompass social networks and user communities, podcasting, and personalization in addition to
internally generated marketing, advertising and webpage design. With the spread of self-initiated
customer reviews, the user experience of a product or service requires increased attention to design and
simplicity, as customer expectations have risen. CRM as a philosophy and strategy is growing to
encompass these broader components of the customer relationship, so that businesses may anticipate and
innovate to better serve customers, referred to as "Social CRM".
Another related development is Vendor Relationship Management, or VRM, which is the customer-side
counterpart of CRM: tools and services that equip customers to be both independent of vendors and better
able to engage with them. VRM development has grown out of efforts by Project VRM at
Harvard's Berkman Center for Internet & Society and Identity Commons' Internet Identity Workshops, as
well as by a growing number of startups and established companies. VRM was the subject of a cover
story in the May 2010 issue of CRM Magazine.
In a 2001 research note, META Group (now Gartner) analyst Doug Laney first proposed, defined and
coined the term Extended Relationship Management. He defined XRM as the principle and practice of
applying CRM disciplines and technologies to other core enterprise constituents, primarily partners,
employees and suppliers...as well as other secondary allies including government, press, and industry
consortia.

BENEFITS:

Let's take a look at the advantages that a CRM or Customer Relationship Management system can bring.

1. Shared or distributed data: As companies realize that customer relationships are happening on
many levels (not just through customer service or a web presence), they start to understand the
need for sharing all available data throughout the organization. A CRM system is an enabler for
making informed decisions and follow-up, on all the different levels.

2. Cost reduction: A strong point in Customer Relationship Management is that it is making the
customer a partner in your business, not just a subject. As customers are doing their own order
entry, and are empowered to find the info they need to come to a buy decision, less order entry
and customer support staff is needed.

3. Better Customer Service: All data concerning interactions with customers is centralized. The
customer service department can greatly benefit from this, because they have all the information
they need at their fingertips. No need to guess, no need to ask the customer for the n-th time. And
through the use of push-technology, customer service reps can lead the customer towards the
information they need. And, most of the time, the customer can do this on their own, as the CRM
system (remember, the 3 P's) is more and more able to anticipate the need of the customer. The
customer experience is greatly enhanced.
4. Increased Customer Satisfaction: The customer feels that he is more "part of the team" instead
of just a subject for sales and marketing (the proverbial number), customer service is better, his
needs are anticipated. There is no doubt that customer satisfaction will go up. If the products sold
exceed the customer’s expectation, of course, no CRM system can help you with shoddy
products. In my opinion, the term satisfaction is a contaminated. Many companies think that if
customers are satisfied that this is a good predictor for repeat business. However, this is not the
case. Only delighted customers have a great level of loyalty.
5. Better Customer Retention: If a CRM system can help to enchant customers, this will increase
customer loyalty, and they will keep coming back to buy again and again, hence customer
retention.
 6. Loyal customers: Need I say more? Q.E.D.
7. More repeat business: The repeat business is coming from the delighted customers, who are
turned from doubting clients into loyal advocates.
8. More new business: If you are delivering the ultimate customer experience, this will seed the
word-of-mouth buzz, which will spawn more new business.
9. More Profit!: More business at lower cost equals more profit.

Summing it up CRM Gains for SME's include:

 Better Customer Knowledge

 Better Marketing Efforts
 Customer Acquisition Programs
 Customer Retention
 Database Development
 Revenue Increase
 Database Analysis
 Market Segmentation
 Market Targeting
 Increased Loyalty
 Permission Marketing
 Loyalty Programs
 List Management
 Customer Analysis

SUPPLY CHAIN MANAGEMENT

More common and accepted definitions of Supply Chain Management are:

 Global Supply Chain Forum - Supply Chain Management is the integration of key business
processes across the supply chain for the purpose of creating value for customers and stakeholders
(Lambert, 2008).

 According to the Council of Supply Chain Management Professionals (CSCMP), Supply chain

management encompasses the planning and management of all activities involved in sourcing,
procurement, conversion, and logistics management. It also includes the crucial components of
coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-
party service providers, and customers. In essence, supply chain management integrates supply and
demand management within and across companies. More recently, the loosely coupled, self-
organizing network of businesses that cooperate to provide product and service offerings has been
called the Extended Enterprise.
A supply chain, as opposed to supply chain management, is a set of organizations directly linked by one
or more of the upstream and downstream flows of products, services, finances, and information from a
source to a customer. Managing a supply chain is 'supply chain management'.
Supply chain management software includes tools or modules used to execute supply chain transactions,
manage supplier relationships and control associated business processes.
Role of SCM:-

This paper focuses the role of Information technology (IT) in supply chain management. It also highlights
the contribution of IT in helping to restructure the entire distribution set up to achieve higher service
levels and lower inventory and lower supply chain costs. The broad strategic directions which need to be
supported by the IT strategy are increasing of frequency of receipts/dispatch, holding materials further up
the supply chain and crashing the various lead times. Critical IT contributions and implementations are
discussed. Fundamental changes have occurred in today's economy. These changes alter the relationship
we have with our customers, our suppliers, our business partners and our colleagues. It also describes how
IT developments have presented companies with unprecedented opportunities to gain competitive
advantage. So IT investment is the pre-requisite thing for each firm in order to sustain in the market.

Benefits of SCM:
A supply chain software can offer tremendous value to any company that relies on the smooth planning
and execution of related operations to achieve long-term profitability and maintain a solid competitive
edge. That’s why more and more organizations are purchasing and implementing supply chain
applications.
What are the key benefits of today’s leading supply chain software?
1) Improve Your Supply Chain Network 
Supply chain softwares provide complete, 360 degree visibility across the entire supply chain network –
something that cannot be easily achieved with disjointed manual processes.
With supply chain, users can monitor the status of all activities across all suppliers, production plants,
storage facilities, and distribution centers. This enables more effective tracking and management of all
related processes, from the ordering and acquisition of raw materials, through manufacturing and shipping
of finished goods to customers or retail outlets. So the status of mission-critical activities can be tracked
at all times, and potential inefficiencies or problems can be identified and corrected immediately, before
they become unmanageable.
2) Minimized Delays 
Many supply chains – particularly those that haven’t been enhanced with a supply chain application – are
plagued by delays that can result in poor relationships and lost business. Late shipments from vendors,
slow downs on production lines, and logistical errors in distribution channels are all common issues that
can negatively impact a company’s ability to satisfy customer demand for its products.
With supply chain software, all activities can be seamlessly coordinated and executed from start to finish,
ensuring much higher levels of on-time delivery across the board.
3) Enhanced Collaboration 
Imagine having the ability to know exactly what your suppliers and distributors are doing at all times –
and vice versa.
Supply chain softwares make that possible, bridging the gap between disparate business softwares at
remote locations to dramatically improve collaboration among supply chain partners. With supply chain
softwares, all participants can dynamically share vital information – such as demand trend reports,
forecasts, inventory levels, order statuses, and transportation plans – in real-time. This type of
instantaneous, unhindered communication and data-sharing will help keep all key stakeholders informed,
so supply chain processes can run as flawlessly as possible.
 4) Reduced Costs 
A supply chain software can help reduce overhead expenses in a variety of ways. For example, it can:
 Improve inventory management, facilitating the successful implementation of just-in-time stock
models, and eliminating the strain on real estate and financial resources caused by the need to store
excess components and finished goods
 Enable more effective demand planning, so production output levels can be set to most
effectively address customer requirements – without the shortages that result in lost sales, or the waste
that drains budgets
 Improve relationships with vendors and distributors, so purchasing and logistics professionals
can identify cost-cutting opportunities such as volume discounts.

Challenges of SCM:
While the challenges are many, leaders in the space are distinguishing between “what’s out and what’s
in” - what used to work versus what manufacturers need to do moving forward to remain at the forefront
of supply chain innovation and enablement.

Demand Driven Supply Chains

OUT: Forecasting Demand                                             

IN: Responding to Demand
Aligning supply and demand in today’s complex and dynamic manufacturing environment can be
challenging at best. Many companies spend an inordinate amount of time and resources in an attempt to
better predict demand. Yet, in spite of the significant investment, static forecasts are often out of date
within hours of creation, making some question the real value of traditional planning tools as it relates to
near-term demand volatility. Today, a key capability for manufacturers is to be able to rapidly respond to
what is happening at that moment.

As such, manufacturers need to transition from a supply chain driven strictly by forecasts to a demand-
driven one. Companies are looking to establish a Response Management competency, whereby action
teams throughout the supply chain are empowered with the right visibility and tools to quickly and
effectively respond to demand changes as they happen - leading to such benefits as more accurate order
promising, lead time reductions, and lower inventory levels and risk.

Visibility

OUT: Static Visibility                                                      

IN: Actionable Visibility
According to a survey by the Aberdeen Group, the most important challenge facing supply chain
professionals is supply chain visibility—as reported by nearly 80 percent of respondents.   However,
achieving visibility only solves a portion of the fundamental problem.

Visibility must be holistic and supported by appropriate decision-making tools that can help turn
information into action. Providing information does little good without the capability to do something
with it. Information, in this context is only powerful when it can be:

• consolidated for a multi-enterprise view across the complete supply network; 

• analyzed by front-line staff using real-time manufacturing and supply chain analytics and data modeling
for “what-if” scenario simulations; and 
• shared and collaborated on with parties internal or external to the organization.
Collaboration and Coordination

OUT: Single-Silo Decision Making                                       

IN: Collaborative Decision Making
As manufacturing becomes more complex in light of distributed operations, outsourced manufacturing
and a multitude of partners around the globe, effective collaboration becomes a strategic imperative.
Collaboration is routinely thought of at the transaction level – but collaboration amongst people is key to
a responsive supply network.  In such an environment, one person’s actions will impact countless others
both within and outside the organization. Given this reality, decisions cannot be made in isolation.

Without collaboration, there will be a poor balance of opinion and limited insight into the impact of
proposed actions, resulting in biased or uninformed decisions.  In an outsourcing relationship in
particular, this can be of particular concern as brand owners can make a decision with little or no
awareness of the impact on its contract manufacturing (CM) partner, and no idea if and how it can be
executed, and most importantly, at what cost. 
When effective and efficient collaboration can be established, all parties can explore the options, wrestle
with the trade-offs and develop a shared understanding and mutual commitment to the resolution. 
Collaborative decision making can empower the brand owner and CM partner relationship and drive the
ideal behavior quickly.

Responsiveness as a Competitive Differentiator

OUT: Competing on Product and Price                                  

IN: Competing on Responsiveness

There is a leveling of sorts happening in the industry given the transparency across the growing global
competition that offers little leeway for companies to differentiate themselves solely on the traditional
aspects of product and price.  In an industry characterized by cutthroat competition and impatient, fickle
customers, a company’s success is dependent on its ability to meet the aggressive wants of their
customers before the competition.  Today’s customer expects the products they want when they want it,
and will choose a competitive offering if it meets this need. This commands a responsive supply chain. 

By establishing a strong Response Management competency, organizations are armed with a key
competitive differentiator. Having the process and technology in place that can demonstrate a company’s
ability to offer superior responsiveness (and therefore superior operations performance and customer
service) to changes in demand, supply and product is an extremely compelling value proposition given
today’s marketplace.

Higher Consideration For Software ROI And TCO

OUT: Perpetual Software Licenses                             

IN: Subscription of On-demand Software
                               
 Long gone are the IT spending heydays. Today’s mantra? "Make do with less.”  With much of the focus
on keeping ERP running, IT departments have little interest exploring uncharted IT projects that require
large dollars and precious resources they simply do not have. 
A paradigm shift is underway that is changing the way companies acquire, deploy and use software, so
companies can continue to benefit from solutions that can serve a unique purpose and offer capabilities
beyond what’s available in-house. The future is all about Software-as-a-Service (SaaS).
Unlike traditional enterprise applications, SaaS or on-demand services require no user-owned or managed
infrastructure (software or hardware), reducing risks and costs by eliminating the need for up-front capital
investments and ongoing IT resources for maintenance and management.  In addition, with a simpler
deployment process that requires less time and resources, customers are able to realize a compelling time
to value.

Other challenges of SCM:

1. Strategic imperative of supply chain
2. Deliberate redesign of supply chain networks
3. Offshore outsourcing (lead-times/customer service impact)
4. Supply chain design to customer requirements
5. Cash-to-cash cycle
6. Supply chain visibility technology
7. Strategies for inventory positioning near customers
8. Warehouse Management challenges
9. Collaboration with supply chain partners

Electronic Commerce:

It is the term used to describe the wide range of tools and techniques utilized to conduct business in a
paperless environment. Electronic commerce therefore includes electronic data interchange, e-mail,
electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared
databases and magnetic/optical data capture. Companies are able to automate the process of moving
documents electronically between suppliers and customers.

Electronic Data Interchange:

Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business documents in a

standard format. EDI describe both the capability and practice of communicating information between
two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI
are:
1. Quick process to information
2. Better customer service.
3. Reduced paper work.
4. Increased productivity.
5. Improved tracing and expediting.
6. Cost efficiency.
7. Competitive advantage.
8. Improved billing.

Electronic commerce:-
Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and
selling of products or services over electronic systems such as the Internet and other computer networks.
The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage.
The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds
transfer, supply chain management, Internet marketing, online transaction processing, electronic data
interchange (EDI), inventory management systems, and automated data collection systems. Modern
electronic commerce typically uses the World Wide Web at least at some point in the transaction's
lifecycle, although it can encompass a wider range of technologies such as e-mail as well.
A large percentage of electronic commerce is conducted entirely electronically for virtual items such as
access to premium content on a website, but most electronic commerce involves the transportation of
physical items in some way. Online retailers are sometimes known as e-tailers and online retail is
sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World
Wide Web.
Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B.
B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified
participants (private electronic market). Electronic commerce that is conducted between businesses and
consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic
commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic
commerce where the buyer is directly online to the seller's computer usually via the internet. There is no
intermediary service. The sale and purchase transaction is completed electronically and interactively in
real-time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase
transaction is called electronic commerce such as eBay.com.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the
exchange of data to facilitate the financing and payment aspects of the business transactions.
Scope of e-commerces:-
The scope of e-commerce is as wide as an ocean & there by the implementation hurdles.
When one thinks of the electronic commerce even through final goal remains the same as that of the
traditional commerce, but the way in which they function in order to improve the performance is
different. As information sharing is the major part of the commerce industries, networking has given
boost to e-commerce. This change in view-point has opened door for new opportunities.