Supply Chain Management and Customer Relationship Management Systems - Essay Example

Supply Chain Management (SCM) and Relationship Management (CRM) Systems Executive Summary Supply Chain Management (SCM) and Relationship Management (CRM) have emerged to be two of the most significant aspects in the modern day business context. Traditionally, the management systems used to employ certain processes which require manual storing and retrieving of data and information. These processes result in increase of complexity in the overall process and also lowered the efficiency in the system. It also resulted in increased operational cost. The SCM and the CRM have enabled to increase profitability of the firms by increasing the speed and efficiency of the overall process, however have enabled to lower the operational costs. Therefore, in future as well the organizations are required to make use of these two modern management systems in order to stay out of competition in this increasing globalised business environment. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Approach of SCM and its Benefits in Comparison to Traditional Management Systems 5 Approach of CRM and its Benefits in Comparison to Traditional Management Systems 8 Recommendation and Conclusion 11 References 13 Bibliography 16 Introduction In this age of competition and altering environment of business, it is important to perform certain multifaceted processes in business. These business processes require to be performed in order to make profits and also for the successful existence of enterprises or organizations. The competition is increasing with every passing day and so it is important for enterprises to employ technologies which would facilitate in saving on time, reducing expenses as well as provide assurance regarding the quality of the products. The application of information technologies (IT) and information systems (IS) so as to systematize decide on and deal with huge volumes of information that has proved to be of immense help for the enterprises. The implementation of these technologies has facilitated effective operational deals, mechanization of processes as well as activities and even decision making. The recent additions in the field of technologies were in the form of Supply Chain Management (SCM) and the Customer Relationship Management (CRM). The execution of these technologies have assisted the enterprises or organizations to arrange their business operations in an efficient manner which further assists in saving time as well reduce the expenses of the organizations (Mukhopadhyay, 2011). Approach of SCM and its Benefits in Comparison to Traditional Management Systems SCM is said to be a collection of planned coordinated behaviors as well as judgments which are made use of in order to proficiently put together the producers, transporters, suppliers, warehouses, customers and the retailers. It is done so as to make certain that the correct and the appropriate service or the product is being circulated in the accurate quantities to the appropriate destinations and also at the accurate time. This technology and system of coordinated behaviors facilitates in bringing down the system-wide expenses along with fulfilling the extent of service necessities of the customers. The execution of this technology would also assist the organizations and enterprises in attaining competitive advantage (Mukhopadhyay, 2011; Seghal, 2011). The supply chain entails operations of the inner supply chain, a system of the upstream supplier along with system of downstream distribution. Supply chain also involves the logistic operations which smoothens the progress of the substantial material flow starting from the producer of the raw materials to its manufacturers and lastly to the end customers (World Scientific Books, 2011; Bibiano & Et. Al., 2007). The inner supply chain of an organization or a manufacturing enterprise engages sourcing of resources, manufacturing and then distributing the manufactured products. Sourcing of resources or procuring with regard to a manufacturing firm means the liability to choose the suitable suppliers, dealing and settling contracts, devising the process of procuring and also to process the placed orders. The production process of a manufacturing enterprise is in charge for converting the raw material, constituents or parts to a particular product. The distribution process is liable for managing and controlling the material flow and delivery of the manufactured goods to the end customers from the manufacturers. The distribution system is accountable for the definite and correct transfer of materials among the different destinations. The distribution management engages the management of accumulating, packaging and management of the complete materials at the receiving centers, retail outlets and warehouses. The management of transportation forms a chief division of the distribution management. This entails control, management and choosing of external delivery services or in-house private means of transportations (Mukhopadhyay, 2011; Bibiano & Et. Al., 2007). Therefore, it can be well understood that SCM intends to manage the information related to the business processes for the purpose of operational activities. The supply chain includes all the different stages that are directly as well as indirectly engaged in satisfying and meeting up to the necessities of the customers. A supply chain of a manufacturing enterprise or concern entails supplier, storehouses, providers, transporters, customer, retailer and the third-party provider of logistic. The aim and purpose of the supply chain management is to make the most of the value that is produced on the whole relatively than the production of profit in relation to a specific supply chain (Seghal, 2011; World Scientific Books, 2011). Supply chain is practiced and employed in manufacturing organizations in order to save time and make the best use of the saved time and cost for other productive purposes. Traditional approach of SCM is more dependent on cost management system. This entails to minimizing the cost of the overall process and providing the customer satisfaction. The cost efficiency of this system is comparatively lower than the modern approach of supply chain management system (Lockamy III & Smith, 2000). The capability of a particular supply chain approach to contend relying on the excellence, elasticity, cost, time and fresh products is formed and created with the assistance of the strategic emphasis of the participants of the supply chain. An organization’s place based on the significant competitive preferences is ascertained by the four structural consequences of the long run and they are vertical amalgamation, competence, facility and technology. It also entails the four decisions correlated to the infrastructure of the organization and they are quality, organization, workforce and setting up and managing the production (World Scientific Books, 2011; Wisner & Et. Al., 2008). The collective effect of the decisions related to the infrastructure taken regarding the competitiveness of the organization is equally significant to the enduring decisions taken with regard to the composition of the organization (Seghal, 2011; Mukhopadhyay, 2011;). Thus, the intention of an effectual supply chain lies in harmonizing the flow of the required materials and services with the purpose of reducing the inventories and makes the most of the effectiveness and competence of the chosen manufacturers as well as the service contributors present in the chain. The concept or approach of supply chain is best suited for an environment where the requirements are decidedly expected, the need to predict errors is minimum, the life cycle of the product is quite extended, the introduction of fresh products are occasional, the mixed bag of product is negligible and the lead-time related to the manufacturing is quite extended and the lead-time in relation to the order completion is quite minimum (World Scientific Books, 2011; Seghal, 2011). In comparison the traditional approach leads to longer cycle in the chain of process which in turn leads to increase in overall cost as well as time in the overall process. A proficient composition of supply chain coordinates with the competitive preferences by emphasizing on minimum costs allied with the operations and guarantees the release of products on appropriate time. Therefore, it is learnt that a competent supply chain in a manufacturing organization facilitates to save time and cut down on the expenses related to production. This helps the organization to lead in the competition as well as attain competitive advantage resulting in escalating the profits of the organization (Mukhopadhyay, 2011; Wisner & Et. Al., 2008). Approach of CRM and its Benefits in Comparison to Traditional Management Systems Customer Relationship Management (CRM) refers to the strategy of management which assists in bringing together the concept of information technology with the concept of marketing. The concept of CRM came into existence in the end of 1990 and originated firstly in the United States. This concept has been embraced and implemented by numerous organizations across the world because of its high and lucrative advantages (Bock, 2010). It has been stated that the two most noteworthy and significant activities related to the marketing functions of an organization are acquiring fresh customers and retaining those customers. In the initial years the main focus of marketing was given to acquiring fresh customers. However, with the passing years and the altering environment of the business it became evident that only acquiring fresh customers would not help the existence of the organizations (Brink & Berndt, 2009; Raab, 2008). Traditionally, CRM was thought of as a complex as well as an expensive method of establishing communication with the consumers. In the earlier times, the customer data and information were stored as a contact data. However, the desired access of such data at the right time and at the right place was quite difficult. Storing of data in central location was the process followed traditionally. This also resulted to accumulation of large number of customer data, which were hard to be accessed in a prompt manner (Inc Tech, 2009). The importance of holding on to the exiting customers was then recognized for the long term profitability of the organizations. The shift from acquisition to retention of customers happened owing to the expenses involved (Bock, 2010). It was learnt that getting hold of fresh customers engaged more costs or proved to be more expensive compared to holding on to the existing customers and achieving recurring businesses from them. The expenses related to acquiring a fresh customer was said to exceed five times and in some instances even 10 times than bringing in repeated business from the existing customers. The varying requirements of the consumers resulted in the failure of conservative promotions and as a consequence increased the expenses of the organizations. Once the problem of acquiring and altering demands of the customers was recognized, the need of CRM was identified and developed (Brink & Berndt, 2009; Raab, 2008). The concept of CRM is to comprehend the character of swapping over of goods as well as services among the provider and the customer and most importantly to deal with properly and correctly. In this context it needs to be noted that the swapping over does not only involve financial considerations but also the need of communication between the customer and the provider. The main objective of the organizations who act as the contributor of goods as well as services is to enhance communication among them and their customers so as to make certain of the lucrative long-term associations. The shift from acquisition to holding on to the existing customers has compelled the organizations to reshuffle their marketing strategies where the chief emphasis is given to customer retention (Brink & Berndt, 2009; Raab, 2008). The main objective of CRM is to promote communication between the organization and their customers so as to develop a comfort level with the organization which would facilitate in comprehending the requirements of the customers so that they are catered to with the appropriate products by the organizations (Bock, 2010). Improving the communication with the customers would also trigger a feeling among the customers that they are special and wanted by the organizations which would also promote loyalty in them for the respective organizations. Enhancing interaction with the customers would even facilitate the organization to attain repeated business from their loyal customers. It would be rather easy for the marketing personnel of an organization to strike deals in the form of repeated business with its existing customers rather than the fresh customers (Brink & Berndt, 2009; Raab, 2008). The comfort level and the close interaction would assist the personnel to convince the existing customers in order to purchase a new product or avail a fresh service. The approach of CRM definitely assists in achieving efficiency in the form of gaining repeated business from the existing customers. It also helps in saving costs of the organization as it reduces the expenses related to acquiring a fresh customer and as a result boosts the profitability factor for an organization. Reducing the expenses and gaining fresh business from the existing customers would obviously increase the profits of the particular organization. It would also help in promoting loyalty for the organization among the existing customers (Brink & Berndt, 2009; Raab, 2008). Recommendation and Conclusion It can be learnt from the above discussion that for an organization to remain profitable and attain competitive advantage, it is required to employ technologies like SCM and CRM. SCM is considered to be quite necessary and important for manufacturing organizations. It brings into line the process linked with the production operations which ensure that the process of production is carried out without any faults and even make certain of the quality and timely deliverance of the products. SCM helps to save time in relation to the production process thus achieving efficiency in the process. Saving time and proper planning of the complete process related to production from the procurement of materials till the delivery facilitates in reducing the expenses as well as a result of which the profits gets boosted. The organizations require making use of positive aspects of SCM as per their requirements in order to gain competitive advantage. The benefit of reducing the cost and time of the overall operational process can enable the organizations to make use of saved revenue in other developmental aspects in the organizations. CRM is also found to be quite imperative for organizations as it focuses on retaining the existing customers which provides the organizations with a steady basis of revenue even at bad times. In the present day’s context, organizations in any sector needs to establish sound relationship with their consumers to whom they are catering their services to. In such a scenario, CRM should be used by the organizations in order to establish and solidify this relationship which in turn can provide long term profitability and growth. This not only boosts the profit of the organizations but also ensures sustained existence. References Bock, M. (2010). The Advantages and Disadvantages of Relationship Management: How Can a Company Integrate Recent Research Findings in Order to Make its CRM System More Efficient? GRIN Verlag Brink, A. & Berndt, A. (2009). Relationship Marketing and Customer Relationship Management. Juta and Company Ltd. Bibiano, L. H. & Et. Al. (2007). Comparative Analysis of CRM and SCM Systems Implementation Approaches. Information Systems Evaluation and Integration Group. Retrieved Online on November 12, 2011 from http://www.iseing.org/emcis/EMCIS2007/emcis07cd/EMCIS07-PDFs/704.pdf Inc Tech. (2009). Traditional CRM vs. Social CRM. Business Software. Retrieved Online on November 12, 2011 from http://technology.inc.com/2009/06/01/traditional-crm-vs-social-crm/ Lockamy III, A. & Smith, W. I. (2000). Target Costing for Supply Chain Management: Criteria and Selection. Samford University. Retrieved Online on November 12, 2011 from http://www.drkresearch.org/Publications/Download/IMDS-b.pdf Mukhopadhyay, J. (2011). Supply Chain Management: A Comparative Study Between Large Organized Food And Grocery Retailers In India. National Seminar on Logistics & Supply Chain Management. Raab, G. (2008). Customer Relationship Management: A Global Perspective. Gower Publishing Ltd. Seghal, V. (2011). Supply Chain as Strategic Asset: The Key to Reaching Business Goals. John Wiley & Sons. Wisner, J. D. (2008). Principles of Supply Chain Management: A Balanced Approach. Cengage Learning. World Scientific Books. (2011). Supply Chain Management: An Evolutionary View. Supply Chain Management: Concepts, Techniques and Practices-Enhancing Value Through Collaboration. Bibliography Agnihotri, R. (2010). Effective Sales Force Automation and Customer Relationship Management: A Focus on Selection and Implementation. Business Expert Press. Monczka, R. M. & Et. Al. (2010). Purchasing and Supply Chain Management. Cengage Learning Ray, R. (2010). Supply Chain Management for Retailing. Tata McGraw-Hill Education. Read More