Efficiency and Effectiveness in Supply Chain Networks - Assignment Example

CRM and Supply Chains How can CRM strategies improve efficiency and effectiveness in supply chain networks to enhance competitive advantage? Provide real life example to support your case With globalisation and the growth of a shared market across the world, it is very important for all brands to have individual recognition and be accepted as a part of the local scene as much a small business would be (Harker and Esan, 2006). While this is often the target of marketing executives, it is often found that customers may have different relationships with brands and the strongest customer relationships survive even when if product quality goes down or even if the competition offers a better deal (Tenser, 2006). In essence, the relationship which is established by a company may allow the company not only improve its image with the customer, it may also allow the company to anticipate the needs of the customers and react to them faster than others which would lead to competitive advantages. Similarly, with established relationships, companies could be more aware of the future needs of customers and alter their supply chains accordingly leading the supply chain network to be more efficient and effective. To create and keep such relationships, relationship marketing becomes very important. Relationship marketing signifies the idea that a company should use a marketing strategy in which stress is placed on establishing a long term relationship with customers that comes with the hope of repeat business rather than individual sales (Stone & Woodcock, 1995). For supply chain efficiency, the company must understand the needs of the customers and keep track of what has been bought by the customers in the past which can lead to a company being more aware of what could be purchased in the future. This process involves a deep understanding of the needs of the clients as they go through their relationship with the company. In the UK, Mazda has established a system for creating deeper relationships with their enterprise fleet buyers. This is a not a recent adventure for Mazda since their support and business service centres have been running for long. However, the level of personal service and the positive relationship which is to be established between the business, the car dealers and Mazda is something which is fairly new in the car industry (Cochran, 2006). Mazda has used the best elements of customer relationship management as described by Stone & Woodcock (1995) since instead of attracting businesses and clients to the company as new buyers; Mazda has established ways to continue a relationship. This is seen as a long term approach to relationship marketing with regard to business clients which includes service contracts and replacement parts plan for cars or other vehicles bought by their clients at discount rates (Mazda, 2005). Knowing what cars a business client has bought allows Mazda to make proper mileage estimates and keep an efficient supply chain for spare parts and replacements for consumables within the car. It is understood that a car will need servicing, replacement parts and regular maintenance but when those services are provided by the dealer, it allows the dealer to know and to expect when the cars would be brought in next for servicing (Mazda, 2005). Going a step further, Mazda would also know how long a car has been with a business client and thus fleet replacement plans would be easy to follow since customers who have been with Mazda for a decade or more could certainly be seeking newer models. The supply chain can then be optimised for newer models to arrive just as the fleet is being updated by a number of business clients in a given area. The company would also gain other advantages in terms of having an efficient supply chain since Mazda would find it easier to sell long standing customers other equipment which may be required by their businesses (Harker and Esan, 2006). This is because Mazda also makes industrial and specialised machines and they could be very useful for a company working in a field such as drilling or construction. If the right kind of relationship exists between Mazda and her business clients, the clients would need less convincing to buy things such as heavy trucks from Mazda. The clients may even come to Mazda with their own requirements to use them as suppliers based on the relationships they have with the company. Little and Marandi (2003) note that regular clients become much cheaper to handle as compared to those who have just started a relationship with a given seller. Due to the positive relationship established with long time customers, such clients become very familiar with the process of placing orders or with the servicing system and thus they would not need to be walked through the process. While this is a difficult concept to bring out in advertisements, it can certainly help Mazda make a better supply chain since the customers would be more familiar with what they need and mistakes in the ordering process are unlikely to be made by anyone. Essentially, both supply chain management and customer relationship management depend on information which the company has about the location of different items within the supply chain and the anticipated or currently known needs of their customers. While companies such as Mazda which are selling high ticket items to select business customers use individual data sets to optimise their supply chain, companies such as Wal-Mart which have millions of customers spread across the globe can work with aggregate data to have a good relationship with their patrons. For example, quite recently Wal-Mart decided to use RFID technology to track the movement of goods within stores and from the point of origin to the point of sale. The total expense for this project runs into the billions but it allows Wal-Mart to have a better relationship with buyers and it allows the company to have a more optimized supply chain. Instead of human clerks telling Wal-Mart’s central offices that certain products have arrived at a point, they have been checked and now have been sold; the RFID tag could inform all parties regarding the status of the goods (Williams, 2004). In fact, as soon as a product arrives in the store, all customers who have shown interest in the product could be sent automated emails which let them know that the item they wanted or allied items are available for sale. This time compression eliminates any human data entry process and saves labour costs as well as creates more positive relationships. It may be considered a small optimisation but it becomes still a valuable contributor to the bigger picture of the retail environment where Wal-Mart competes. At any given time, Wal-Mart has nearly a trillion pounds worth of goods in inventory or in transit around the world which is owned by Wal-Mart. The supply chain management process used by Wal-Mart which allows it to keep better track of its inventory allows the company to use that as collateral and take loans against it while it is in transit. This in itself becomes a very a valuable benefit for the company as it also lets the company give clients exact dates and times when shipments of new supplies are expected to come in (McClenahen, 2005). The aggregate data which is collected about sales with RFID tags allows Wal-Mart to predict when restocking needs to take place much better than human feedback. With one product selling out at a point, the supply chain can be redirected on the fly to place more items of a similar nature at the same point. If a primary good is being sold at an accelerated rate, the supply chain can automatically route more of complementary goods to the same region. In essence, the supply chain is no longer limited by what the store manager thinks would be required by the people but it could predict and react on its own depending on what the people are actually buying in Wal-Mart. While some might say that such optimisation strategies which are based on both supply chain management and customer relationship management are useful only for giant companies, the facts show us that even smaller companies can benefit from these strategies. For example, a very small company known as Oriel wines was made the subject of a cast study by Chozich (2005) who showed that a small producer and supplier of wine could use the internet and other technological implements to give their clients an image of a company which seems to have a much stronger supply chain. The image of the supply chain and the variety of wines sold by the company make it appear that it runs from Los Angeles to Berlin and as far as Tokyo. Oriel Wines sells more than twenty varieties of wines around the world and the company has offices located in Europe and America which make it look like a very large business. In actual fact, they have a staff of just six people. What they really do is use the internet in efficient ways that give them a better footing overall (Chozich, 2005). Automation and understanding customer needs allows them to compete with larger companies in the world and allows them to have the repeat business which they depend on. Oriel Wines use email services that automatically make Amazon.co.uk like recommendations to their clients, this makes them appear more on top of things and also look larger in size. Deliveries to customers, supply level management, international shipping procedures and various other things which require control over the supply chain and an understanding of the needs of the customers are mainly automated. Similarly, distribution email lists and related information for the company is handled through outsourcing services providers who maintain these lists for monthly fees thus allowing the company to focus on its core competencies (Chozich, 2005). In conclusion, it becomes easy to say that with the use of IT and the processes which establish good relationships with clients, a supply chain can be enhanced to a great level in both manufacturing and retail. However, the good relationship can only be maintained with excellent service and acceptable product quality since without those, it would be nearly impossible to retain customers much less expect them to become supporters and ambassadors for the company. Word Count: 1,868 Works Cited Chozich, A. 2005, ‘Managing Technology; Appearances Are Deceiving’, Wall Street Journal. 19 Sep, p. R7. Cochran, C. 2006, ‘Seven ways to keep customers front and center’, Machine Design, vol. 78, no. 8, pp. 65-65. Harker, M. and Esan, J. 2006, ‘The Past Present & Future of Relations Marketing’, Journal of Marketing Management, vol. 22, no. 1, pp. 215-242. Little, E. and Marandi, E. 2003, Relationship Marketing Management, Thomson. Mazda. 2005, ‘Mazda dealers in gear for small business and fleet success’, Mazda.co.uk, [Online] Available at: http://www.mazda.co.uk/CorporateSales/FleetPress/Articles/fleet_06-May-2005 McClenahen, J. 2005, ‘Wal-Mart’s big gamble’, Industry Week, 254(4), p. 42-49. Stone, M. & Woodcock, N. 1995, Relationship Marketing, Kogan Page. Tenser, J. 2006, ‘The big payoff’, Advertising Age, vol. 77, no. 12, pp. 1-4. Williams, D. 2004, ‘The Strategic Implications of Wal-Marts RFID Mandate’, Directions Magazine, [Online] Available at: http://www.directionsmag.com/article.php?article_id=629&trv=1 Read More