c10EnterpriseSystemsSupplyChains,ERP,CRM,and

366EnterpriseSystems:SupplyChains,ERP,CRM,andKM10ChapterLearningObjectivesAfterstudyingthischapter,youwillbeableto:
Understandtheessentialsofenterprisesystemsandcom-puterizedsupplychainmanagement.Describesomemajorproblemsofimplementingsupplychainsandsomeinnovativesolutions.DescribetheneedforintegratedsoftwareandhowERPdoesit.DescribeCRManditssupportbyIT.DescribeKManditsrelationshiptoIT.ChevronTexacoModernizedItsSupplyChainwithIT10.1EssentialsofEnterpriseSystemsandSupplyChains10.2SupplyChainManagementandItsBusinessValue10.3EnterpriseResourcePlanning(ERP)Systems10.4CustomerRelationshipManagement(CRM)10.5KnowledgeManagementandIT10.6ManagerialIssuesMinicase:ERPHelpsProductivityatNorthernDigitalInc.Problem-SolvingActivity:Assessinge-CRMOnlineMinicases:10.1WestMarineCorp.10.2CybexInternational10.3QVC10.4NorthropGrumman10.5Siemens10.6FritoLay10.7XeroxACCFINMKTOMHRMISIntegratingITturban_c10_366-406-hr21-01-200911:21Page366Copyright©2010JohnWiley&SonsThebusinessperformancemanagementcycleandITmodel.IT-PERFORMANCEMODELThefocusofthischapterisonthesupportITprovidestobusinessprocessesthatarebeingconductedbytwoormorefunctionaldepartments,mostlyalongthesupplychain,viathreetypesofIT:ERP,CRM,andKM.Thesesystemsena-bleorganizationstoimproveperformanceandincreasecompetitiveness.367HowShallWeGetThere?Strategy,PlansHowCanWeImprovePerformance?Solutions,CriticalResponsesHowWellAreWeDoing?Monitoring,Performance,ComparingWhereDoWeWanttoGo?Mission,Goals,ObjectivesWisdomofthecrowdSmoothsupplychainsIntegratedsystemsImprovedcustomerrelationsUtilizeRFIDeverywhereWirelesssystemsWeb-basedsystemsKnowledgeportalse-CRMstrategyStrategyforenterpriseSocialnetworkingHowtoconductCPFRPerformancemanagementIndustrycomparisonsIntelligentperformancemonitoringExpandedERP,VMI,RFIDSocialnetworkingDigitalsupplychainExpertlocatingsystemsVirtualFactoriesOn-demandCRMInformationTechnology(IT)CHEVRONTEXACOMODERNIZEDITSSUPPLYCHAINWITHITTheProblemChevronTexaco,thelargestU.S.oilcompany,ismultinationalinnature.Itsmainbusinessisdrilling,refining,transporting,andsellinggasoline(oil).Inthiscompetitivebusiness,asav-ingofevenaquarterofapennypergallontotalsuptomil-lionsofdollars.Twoproblemshaveplaguedtheoilindustry:runningoutofgasolineatindividualpumps,andadeliverythatisabortedbecauseatankatthegasstationistoofull(called“retain”).Run-outsandretains,knownastheindustry’s“twinevils,”havebeenatargetforimprovementsforyears,withlittlesuccess.Thecausesofthetwinevilshavetodowiththesupplychain:Gasolineflowsinthesupplychainstartwithoilhunt-ing,drilling,andextraction.Aftertheoilistakenfromtheground,itisdeliveredtoandthenprocessedinrefineries,andfinallyitgoestostorageandeventuallytotheretailpumpandtothecustomer.Thetimeframefortheentiresupplychainsmaytakeseveralmonthstoyearsdependingonlocations,meansoftransportation,andmore.Duetotheabovereasons,itisdifficultmatchingthethreepartsofthesupplychain:oilacquisition,processing,anddistribution.ChevronTexacoownsoilfieldsandrefineries,butitalsobuysbothcrudeandrefinedoiltomeetpeakdemand.Purchasesareoftwotypes:thosethataremadethroughlong-termcontractsandthosethatarepurchased“asneeded,”inwhatiscalledthespotmarket,atprevailingprices(usuallyhigherthancontractpurchases).Inthepast,ChevronTexacoactedlikeamassproductionmanufacturingcompany,justtryingtomakelotsofoilOMturban_c10_366-406-hr14-02-20099:43Page367Copyright©2010JohnWiley&Sonsproductsandthensellthem(asupply-drivenstrategy).Theproblemwiththisstrategyisthateachtimeyoumaketoomuch,youareintroducingextrainventoryorstoragecosts.Ifyoumaketoolittle,youlosesales.TheSolutionThecompanydecidedtochangeitsbusinessmodelfromsup-plydriventodemanddriven.Namely,insteadoffocusingonhowmuchoilitwouldprocessand“push”tocustomers,thecompanystartedthinkingabouthowmuchoilitscustomerswantedandthenabouthowtogetit.Thischangenecessi-tatedamajortransformationinthebusinessandextensivesupportbyinformationtechnologies.ToimplementtheITsupport,thecompanyinstalledineachtankineachgasstationanelectronicmonitor.Themon-itortransmitsreal-timeinformationabouttheoillevel,throughacable,tothestation’sIT-basedmanagementsys-tem.Thatsystemthentransmitstheinformationviaasatel-litetothemaininventorysystematthecompany’smainoffice.There,anadvancedDSS-basedplanningsystemprocessesthedatatohelprefining,marketing,andlogisticsdecisions.ThisDSSalsoincludesinformationcollectedattruckingandairlinecompanies,whicharemajorcustomers.Usinganenter-priseresourceplanning(ERP)andbusinessplanningsystem(BPS),ChevronTexacodetermineshowmuchtorefine,howmuchtobuyinspotmarkets,andwhenandhowmuchtoshiptoeachretailstation.Tocombineallofthesedata,itisnecessarytointegratethesupplyanddemandinformationsystems,andthisiswheretheERPsoftwareisuseful.Thesedataareusedbyplannersatvariouspointsacrossthesupplychain(e.g.,refinery,ter-minalmanagement,stationmanagement,transportation,andproduction)whoprocessandsharedataconstantly.Thisdataprocessinganddatasharingareprovidedbythevariousinfor-mationsystems.RecentITprojectssupportthesupplychainandextendittoaglobalreach.Theseprojects