Chapters 9-12

• Enterprise systems, also known as enterprise resource planning (ERP) systems – are based on a suite of integrated software modules and a common central database.
• Enterprise Software – built around thousands of predefined business processes that reflect best practices.
• Financial and accounting processes, including general ledger, accounts payable, accounts receivable, fixed assets, cash management and forecasting, product-cost accounting, cost-center accounting, asset accounting, tax accounting, credit management, and financial reporting
• Human resources processes, including personnel administration, time accounting, payroll, personnel planning and development, benefits accounting, applicant tracking, time management, compensation, workforce planning, performance management, and travel expense reporting
• Manufacturing and production processes, including procurement, inventory management, purchasing, shipping, production planning, production scheduling, material requirements planning, quality control, distribution, transportation execution, and plant and equipment maintenance
• Manufacturing and production processes, including procurement, inventory management, purchasing, shipping, production planning, production scheduling, material requirements planning, quality control, distribution, transportation execution, and plant and equipment maintenance
• Sales and marketing processes, including order processing, quotations, contracts, product configuration, pricing, billing, credit checking, incentive and commission management, and sales planning
• Enterprise systems provide value by both increasing operational efficiency and providing firmwide information to help managers make better decisions.
• • Coca-Cola, for instance, implemented a SAP enterprise system to standardize and coordinate important business processes in 200 countries.
  • Crocs used ERP for similar purposes
  • Alcoa, the world’s leading producer of aluminum and aluminum products with operations spanning 31 countries and more than 200 locations, had initially been organized around lines of business, each of which had its own set of information systems
• A firm’s supply chain – a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers.
• Goods start out as raw materials and, as they move through the supply chain, are transformed into intermediate products (also referred to as components or parts) and, finally, into finished products.
• • The upstream portion of the supply chain – includes the company’s suppliers, the suppliers’ suppliers, and the processes for managing relationships with them.
  • The downstream portion – consists of the organizations and processes for distributing and delivering products to the final customers.
• • Just-in-time strategy – Components would arrive exactly at the moment they were needed, and finished goods would be shipped as they left the assembly line.
  • Safety stock – acts as a buffer for the lack of flexibility in the supply chain.

  Bullwhip effect – information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain.
• Supply chain software – classified as either software to help businesses plan their supply chains (supply chain planning) or software to help them execute the supply chain steps (supply chain execution).
• Supply chain planning systems – enable the firm to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans.

  
  

  · Demand planning – determines how much product a business needs to make to satisfy all its customers’ demands
• Supply chain execution systems – manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.
• Push-based model (also known as build-to-stock) – production master schedules are based on forecasts or best guesses of demand for products, and products are pushed to customers.

  Pull-based model (also known as a demand-driven or build-to-order model) – actual customer orders or purchases trigger events in the supply chain.
• • Customer relationship management (CRM) systems – capture and integrate customer data from all over the organization, consolidate the data, analyze the data, and then distribute the results to various systems and customer touch points across the enterprise.

  Touch point (also known as a contact point) – a method of interaction with the customer, such as telephone, e-mail, customer service desk, conventional mail, Facebook, Twitter, website, wireless device, or retail store.
• • Partner Relationship Management (PRM) – uses many of the same data, tools, and systems as customer relationship management to enhance collaboration between a company and its selling partners.

  Employee Relationship Management (ERM) – deals with employee issues that are closely related to CRM, such as setting objectives, employee performance management, performance-based compensation, and employee training.

  Customer relationship management systems – typically provide software and online tools for sales, customer service, and marketing.
• ü  Sales force automation (SFA) – help sales staff increase productivity by focusing sales efforts on the most profitable customers, those who are good candidates for sales and services.

  ü  Customer service – provide information and tools to increase the efficiency of call centers, help desks, and customer support staff.
• ü  Marketing – support direct-marketing campaigns by providing capabilities for capturing prospect and customer data, for providing product and service information, for qualifying leads for targeted marketing, and for scheduling and tracking direct marketing mailings or e-mail.

  §  Cross-selling – the marketing of complementary products to customers.
• ·        Operational CRM – includes customer-facing applications, such as tools for sales force automation, call center and customer service support, and marketing automation.

  ·        Analytical CRM – includes applications that analyze customer data generated by operational CRM applications to provide information for improving business performance.
• ü  Customer lifetime value (CLTV) – based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and the company
• ·        Churn rate – measures the number of customers who stop using or purchasing products or services from a company.
• ·        Social CRM tools – enable a business to connect customer conversations and relationships from social networking sites to CRM processes.

  ·        Salesforce.com – connected its system for tracking leads in the sales process with social-listening and social-media marketing tools, enabling users to tailor their social marketing dollars to core customers and observe the resulting comments.
• ·        Uber, the so-called “ride hailing service” (otherwise known as a taxi service) – headquartered in San Francisco and was founded in 2009 by Travis Kalanick and Garrett Camp.
• ·        E-commerce – refers to the use of the Internet and the web to transact business.

  ü  Commercial transactions – involve the exchange of value (e.g., money) across organizational or individual boundaries in return for products and services.

  E-commerce – began in 1995 when one of the first Internet portals, Netscape. com, accepted the first ads from major corporations and popularized the idea that the web could be used as a new medium for advertising and sales.
• Ubiquity

  ·        Marketplace – a physical place, such as a retail store, that you visit to transact business.

  ·        Ubiquitous – meaning that it is available just about everywhere all the time.

  ü  Marketspace – a marketplace extended beyond traditional boundaries and removed from a temporal and geographic location.

  ü  Transaction costs – the costs of participating in a market.
• Global Reach

  ·        E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost effectively than is true in traditional commerce.

  Universal Standards

  ·        The universal technical standards of the Internet and e-commerce greatly lower market entry costs—the cost merchants must pay simply to bring their goods to market.

  At the same time, for consumers, universal standards reduce search costs—the effort required to find suitable products.
• Richness

  ·        Information richness – refers to the complexity and content of a message.

  Interactivity

  ·        Interactivity – allows an online merchant to engage a consumer in ways similar to a face-to-face experience but on a massive, global scale.
• ·        Information density – the total amount and quality of information available to all market participants, consumers, and merchants alike.

  ü  Price transparency – refers to the ease with which consumers can find out the variety of prices in a market

  ü  Cost transparency – refers to the ability of consumers to discover the actual costs merchants pay for products.

  Price discrimination – selling the same goods, or nearly the same goods, to different targeted groups at different prices.
• ·        Personalization – Merchants can target their marketing messages to specific individuals by adjusting the message to a person’s clickstream behavior, name, interests, and past purchases.

  ·        Customization – changing the delivered product or service based on a user’s preferences or prior behavior.

  ü  Wall Street Journal Online – allows you to select the type of news stories you want to see first and gives you the opportunity to be alerted when certain events happen.
• ·        Information asymmetry – exists when one party in a transaction has more information that is important for the transaction than the other party.

  ·        Menu costs – merchants’ costs of changing prices

  ·        Dynamic pricing – the price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller

  Disintermediation – removal of organizations or business process layers responsible for intermediary steps in a value chain
• ·        Digital Goods – goods that can be delivered over a digital network

  Intellectual property – defined as “works of the mind” and is protected from misappropriation by copyright, patent, trademark, and trade secret laws
• ·        Business-to-consumer (B2C) electronic commerce – involves retailing products and services to individual shoppers.

  ü  Amazon, Walmart, and iTunes – examples of B2C commerce.

  ü  BarnesandNoble.com – sells books, software, and music to individual consumers, is an example of B2C e-commerce.
• ·        Business-to-business (B2B) electronic commerce – involves sales of goods and services among businesses.

  ü  Elemica’s website – an example of B2B e-commerce for buying and selling chemicals and energy
• ·        Consumer-to-consumer (C2C) electronic commerce – involves consumers selling directly to consumers.

  ü  eBay, the giant web auction site, enables people to sell their goods to other consumers by auctioning their merchandise off to the highest bidder or for a fixed price. eBay acts as a middleman by creating a digital platform for peer-to-peer commerce.

  ü  Craigslist – the most widely used platform consumers use to buy from and sell directly to others.
• Ø  Mobile commerce or m-commerce – the use of handheld wireless devices for purchasing goods and services from any location
• ·        Portals – gateways to the web and are often defined as those sites that users set as their home page.
• ·        E-tailers – Online retail stores, come in all sizes, from giant Amazon with 2015 revenues of more than $107 billion, to tiny local stores that have websites. An e-tailer is similar to the typical bricks-and-mortar storefront, except that customers only need to connect to the Internet to check their inventory and place an order.