Unit – 5

Subject Name : Supply Chain & Logistics Management Subject Code – KMBNOP01

SUPPLY CHAIN AND CRM- LINKAGE

Customer relationship management (CRM) is a model for managing a company’s

interactions with current and future customers. It involves using technology to organize,
automate, and synchronize sales, marketing, customer service, and technical support.
Organizations need business supply activities to maximize the customer base and gain
the competitive advantage in the market. It is important to understand that the logistics
contribute to the customer satisfaction by fulfilling the customer orders in minimum
time. Although the term supply chain has many different perspectives, from the
perspective of total supply chain management the end user is the ultimate owner of the
product. The delivery process involves the customer focused market that allows the
organization to achieve its goals. Organizations can perform transactional or relationship
marketing based on the market segmentation and relationship marketing.

Customer Relationship Management or CRM refers to several different aspects of the

relationship between a business and its customers. CRM refers to the information
technology or software that manages customer information, much like SCM software and
SCM systems. It also applies to the process of managing customers, suppliers, vendors,
and other stakeholders, through a buying lifecycle. CRM is also the integrated approach
of managing and coordinating customer interactions across multiple channels.

Purpose of CRM

• “The focus is on creating value for the customer and the company over the longer
term”.
• When customer value the customer service that they receive from suppliers, they
are less likely to look to alternative suppliers for their needs.
• CRM enables organisations to gain ‘competitive advantage’ over competitors that
supply similar products or services.
• “Customer relationship management focuses on strategically significant markets.
Not all customers are equally important”. Therefore, relationships should be built
with customers that are likely to provide value for services.
• Building relationships with customers that will provide little value could result in
a loss of time, staff and financial resources.

Phases of CRM

Acquire
• CRM software tools can help businesses acquire new customers by improving
efficiency in contact management, sales prospecting, selling and direct marketing.

Enhance
• CRM tools help keep customers happy by providing superior service from a
responsive team of sales and service specialists.

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Retain
• CRM also helps a company identify and reward its most loyal customers to retain
and expand their business via targeted marketing. Hence retaining customers
becomes easier.

Types/Variations of CRM

Sales force automation

• SFA uses software to streamline the sales process. The core of SFA is a contact
management system for tracking and recording every stage in the sales process
for each prospective client, from initial contact to final disposition. Many SFA
applications also include insights into opportunities, territories, sales forecasts
and workflow automation.

Appointments

• Appointment CRMs automatically provide suitable appointment times to

customers via e-mail or the web, which are then synchronized with the
representative or agent's calendar.

Marketing

• CRM systems for marketing track and measure campaigns over multiple channels,
such as email, search, social media, telephone and direct mail. These systems track
clicks, responses, leads, deals, and revenue.

Customer Service And Support

• CRMs can be used to create, assign and manage requests made by customers, such
as call center software which help direct customers to agents. CRM software can
also be used to identify and reward loyal customers.

Social Media

• Some CRMs coordinate with social media sites like Twitter, LinkedIn, Facebook
and Google Plus to track and communicate with customers who share opinions
and experiences about their company, products and services.

Small Business

• For small businesses a CRM may simply consist of a contact manager system which
integrates emails, documents, jobs, faxes, and scheduling for individual accounts.

Implementing CRM

• When introducing or developing CRM, a strategic review of the organisation’s

current position should be undertaken.
• Organisations need to address four issues:
o What is our core business and how will it evolve in the future?

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 o What form of CRM is appropriate for our business now and in the future?
o What IT infrastructure do we have and what do we need to support the
future organisation needs?
o What vendors and partners do we need to choose?

Benefits of CRM

• Reduced costs, because the right things are being done (i.e.., effective and efficient
operation)
• increased customer satisfaction, because they are getting exactly what they want
(i.e.. meeting and exceeding expectations)
• ensuring that the focus of the organisation is external
• growth in numbers of customers
• maximisation of opportunities (e.g.. increased services, referrals, etc.)
• increased access to a source of market and competitor information
• highlighting poor operational processes
• long term profitability and sustainability

Trends of CRM

1. Social CRM : Social media marketing remains on an uptrend and companies are
paying attention. Consumers are empowered by social networking sites to
influence product or brand image and perception. Negative feedback no longer
simply routes a call to customer service; businesses can expect feedback to reach
potential markets before they do.

2. Centralized Data : By centralizing customer data through CRM, businesses will

be able to target and engage customers more effectively. CRM data won’t end with
generating leads for the sales team but will be a continuing process that also
includes maintaining relationships with a growing customer base. (For related
reading, see Using Product Management Features in a CRM Solution.)

3. Mobility : Customers are no longer bound to PCs and are constantly accessing data
on the go. Frontline employees and customer service resources will increasingly
be empowered by mobile devices for support. On the other side of the coin,
customer perception will also be shaped not only by real-world involvement, but
also by online and mobile experiences.

4. Flexibility : Flexibility for CRM users is key because it allows them to customize
the software to meet their needs. Ease of integration and multichannel publishing
are key corporate considerations. As a result, a flexible and accessible CRM
platform is becoming increasingly important for users.

5. Crowdsourcing : With customers gaining voice through social media, enterprises

are increasingly able take advantage of crowdsourcing for business
improvements. Tapping current customers for fresh ideas, solutions and
expectations can help employees across an organization provide the innovation
and interactive relationship that a growing number of customers now expect. This

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 means that CRM will no longer be just for lead generation and marketing, it will
also provide a source for new innovation.

CRM and SCM

The complete supply chain network must include different management systems such as
ERP and CRM system.
• The CRM system provides the ability to the organization for managing the
customer orders, delivery of products, revenue, marketing, order management,
products information along with strategies for reaching the target market in
timely and efficient manner.
• The supply chain integrates the CRM for making the database of customer
information and collecting valuable data to show the current needs and wants of
the customers.
• The CRM ensures good customer relationships as the right product for the right
customer at the right time in right quantity, condition, and cost.
• The CRM segments the each of the customer needs and supports the relationship
marketing/cross selling.
• The CRM integration in supply chain leads to forecast the customer behavior and
retains customers by analyzing the likelihood of customer purchases.
• Furthermore, the CRM can be used to run the sales promotions under any specific
customer groups using the business analytics tools.

However, there can be certain challenges for integration the CRM with the SCM at the
practical level. The two environments cannot be exactly same for the same phase or
process. The integrated system can give end to end visibility of the supply chain for the
SCM with precision ability for the product creation, modification, or replaced. The CRM
also reduces the SKU complexity, increases the prediction accuracy, revenue growth, and
overall supply chain cost reduction.

Aspects of CRM

CRM is often broken down into three aspects: Strategic, Operational, and Analytical.

• The “Strategic” aspect considers various methodologies to determine customer

value and how to develop customer experiences. This includes defining
strategically significant customers and how to create their ideal customer
experiences. This is valuable information for supply chain managers as they
consider inventory and logistics. For example, many strategically significant
customers value 2-day shipping; a crucial role for a supply chain.

• Operational Customer Relationship Management is the automation and

integration of sales force, marketing, and customer service. When companies are
considering integrating a CRM software program, they benefit from
including supply chain managers in their decisions. CRMs can track an
overwhelming number of metrics and supply chain managers can use this
information to create a valuable supply chain that is customer-focused and
prepared to respond to demands.

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 • Analytical CRM refers to how an organization uses relevant data and transforms
that data into action. Supply chains can use these valuable insights about
customers to meet their business objectives.

IT INFRASTRUCTURE USED FOR SUPPLY CHAIN AND CRM

The supply chain infrastructure consists of the assets and systems that drive the network
of suppliers, manufacturers, and logistics functions. It includes the information and
organizational structures that support the supply chain.
Recent studies show that complete savings can be realized in improvements in the design
of the supply chain infrastructure, such as in materials sourcing, manufacturing
capabilities, and distribution systems.

Supply chain infrastructure consists of both the physical and informational assets
required to run a supply chain. This includes the buildings in which a company
manufactures and distributes its products; the fixed and mobile equipment inside those
buildings; the transportation fleet that moves product within the manufacturing and
distribution network; and the information technology needed to plan, execute, and track
supply chain activities.

Companies that opt to participate in supply chain management initiatives accept a

specific role to enact. They have a mutual feeling that they, along with all other supply
chain participants, will be better off because of this collaborative effort. The fundamental
issue here is power. The last two decades have seen the shifting of power from
manufacturers to retailers.

When we talk about information access for the supply chain, retailers have an essential
designation. They emerge to the position of prominence with the help of technologies.
The advancement of inter organizational information system for the supply chain has
three distinct benefits. These are −
• Cost reduction − The advancement of technology has further led to ready
availability of all the products with different offers and discounts. This leads to
reduction of costs of products.
• Productivity − The growth of information technology has improved productivity
because of inventions of new tools and software. That makes productivity much
easier and less time consuming.
• Improvement and product/market strategies − Recent years have seen a huge
growth in not only the technologies but the market itself. New strategies are made
to allure customers and new ideas are being experimented for improving the
product.

It would be appropriate to say that information technology is a vital organ of supply chain
management. With the advancement of technologies, new products are being introduced
within fraction of seconds increasing their demand in the market. Let us study the role of
information technology in supply chain management briefly.

The software as well as the hardware part needs to be considered in the advancement
and maintenance of supply chain information systems. The hardware part comprises

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computer's input/output devices like the screen, printer, mouse and storage media. The
software part comprises the entire system and application program used for processing
transactions management control, decision-making and strategic planning.

Here we will be discussing the role of some critical hardware and software devices in
SCM. These are briefed below −

Electronic Commerce

Electronic commerce involves the broad range of tools and techniques used to conduct
business in a paperless environment. Hence it comprises electronic data interchange, e-
mail, electronic fund transfers, electronic publishing, image processing, electronic
bulletin boards, shared databases and magnetic/optical data capture.

Electronic commerce helps enterprises to automate the process of transferring records,

documents, data and information electronically between suppliers and customers, thus
making the communication process a lot easier, cheaper and less time consuming.

Electronic Data Interchange

Electronic Data Interchange (EDI) involves the swapping of business documents in a

standard format from computer-to-computer. It presents the capability as well as the
practice of exchanging information between two companies electronically rather than the
traditional form of mail, courier, & fax.

The major advantages of EDI are as follows −

• Instant processing of information
• Improvised customer service
• Limited paper work
• High productivity
• Advanced tracing and expediting
• Cost efficiency
• Competitive benefit
• Advanced billing

The application of EDI supply chain partners can overcome the deformity and falsehood
in supply and demand information by remodeling technologies to support real time
sharing of actual demand and supply information.

Barcode Scanning

We can see the application of barcode scanners in the checkout counters of super market.
This code states the name of product along with its manufacturer. Some other practical
applications of barcode scanners are tracking the moving items like elements in PC
assembly operations and automobiles in assembly plants.

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Data Warehouse

Data warehouse can be defined as a store comprising all the databases. It is a centralized
database that is prolonged independently from the production system database of a
company.

Many companies maintain multiple databases. Instead of some particular business

processes, it is established around informational subjects. The data present in data
warehouses is time dependent and easily accessible. Historical data may also be
accumulated in data warehouse.

Enterprise Resource Planning(ERP) Tools

The ERP system has now become the base of many IT infrastructures. Some of the ERP
tools are Baan, SAP, PeopleSoft. ERP system has now become the processing tool of many
companies. They grab the data and minimize the manual activities and tasks related to
processing financial, inventory and customer order information.
ERP system holds a high level of integration that is achieved through the proper
application of a single data model, improving mutual understanding of what the shared
data represents and constructing a set of rules for accessing data.

With the advancement of technology, we can say that world is shrinking day by day.
Similarly, customers' expectations are increasing. Also companies are being more prone
to uncertain environment. In this running market, a company can only sustain if it accepts
the fact that their conventional supply chain integration needs to be expanded beyond
their peripheries.

The strategic and technological interventions in supply chain have a huge effect in
predicting the buy and sell features of a company. A company should try to use the
potential of the internet to the maximum level through clear vision, strong planning and
technical insight. This is essential for better supply chain management and also for
improved competitiveness.

We can see how Internet technology, World Wide Web, electronic commerce etc. has
changed the way in which a company does business. These companies must acknowledge
the power of technology to work together with their business partners.

We can in fact say that IT has launched a new breed of SCM application. The Internet and
other networking links learn from the performance in the past and observe the historical
trends in order to identify how much product should be made along with the best and
cost effective methods for warehousing it or shipping it to retailer.

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