Comparing between SRM and CRM - Essay Example

SRM vs. CRM Faculty Table of Contents I. Introduction i. What is Supplier Relationship Management (SRM) ii. What is Customer Relationship Management (CRM) II. Activities/Functions of SRM i. Strategic ii. Tactical iii. Operational III. Activities/Functions of CRM i. Strategic ii. Tactical iii. Operational IV. Problems/Issues relating to SRM V. Problems/Issues relating to CRM VI. The Future of SRM in the Workplace i. Technology VII. The Future of CRM in the Workplace i. Technology VIII. Conclusion References I. Introduction In today highly competitive environment, finding competitive edge is a critical factor for expansion and surviving of any business. Companies work on price, quality and services for increasing profit by acquiring, converting and retaining their most valuable asset (customer). Supplier Relationship Management (SRM) and Customer Relationship Management (CRM) are two solutions that talks about the same issues but from an opposite perspective, buyer and seller. SRM is an emerging concept with limited implementations and nearly no theoretical and practical experience. Whereas, CRM is mainly to increase customer satisfaction with a better support and more targeted products and to reduce costs by linking marketing, sales, research & developments and customer support services. Figure 1: Suppliers and Customers in any Company (Source: Lang etl. 2002) i. What is Supplier Relationship Management (SRM) SRM is a comprehensive approach to managing an enterprises interactions with the organizations that supply the goods and services it uses. SRM aims to streamline and make more effective the processes between an enterprise and its suppliers and includes both business practices and software. SRM is part of the information flow component of supply chain management (SCM). SRM increases the efficiency of processes associated with acquiring goods and services, managing inventory, and processing materials. The use of SRM software can lead to lower production costs and a higher quality with lower priced product. Some definitions of SRM are given below: “The practices needed to establish the business rules, and the understanding needed for interacting with suppliers of products and services of varied criticality to the profitability of the enterprise” Gartner Group “An integrated solution that bridges product development, sourcing, supply planning and procurement across the value chain” [Lang etl. 2002] Below figure shows the Company-Supplier Relationship during its entire lifecycle. Figure 2: Company-Supplier Relationship Lifecycle (Source: Lang etl. 2002) ii. What is Customer Relationship Management (CRM) Customer Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships. [Anderson & Kerr 2002] Customer relationship management is the broad category of concepts, tools, and processes that allows an organization to understand and serve everyone with whom it comes into contact. It is a broad term that covers concepts used by companies to manage their relationships with customers, including the capture, storage and analysis of customer information. CRM aims for: Achieving higher revenue per customer knowing and serving customer better. Increasing customer satisfaction and retention by integrating information from various channels. Lowering costs to acquire and service customers by using technology to automate, manage and analyze processes and data. [Lang etl. 2002] CRM entire lifecycle, starting with acquisition and selection, going through the sales process to end up with customer support and filtering is shown in below figure. Figure 3: Company-Customer Relationship Lifecycle (Source: Lang etl. 2002) II. Activities/Functions of SRM SRM is about to manage relationship with suppliers more effectively at the same time cutting down the costs and increasing the viability of product and services received. Below are some functions/ activities are discussed. i. Strategic SRM is a new emerging concept, which can be seen opposite to CRM. Recent developments in information technology have required and enabled manufacturing companies to rethink and restructure their supply chain strategies. A simple supply chain system includes suppliers, a company, and customers. Figure 4: Simple Supply Chain Structure and Relationship (Source: Bukey, 2007) SRM involves looking for clear direction on how organization plans to create, maintain, and expand or reject supplier relationships. The objectives of SRM strategy must consider a company’s specific situation and its needs and expectations from supplier. The first thing organization should do is to have brainstorming session for each SRM strategies. Some common strategic drivers for SRM are: Consolidation of suppliers where better supplier capabilities are favored Expansion into global markets Pressure on price and profit from customers and competition Pressure on value generation in supply chain Performance requirements of shareholders (Bukey 2007) It is important for the company to identify the level of relationship that needs to be established with each supplier. In any organization, some suppliers will be of greater importance than others and the development of strategic relationships with them will be in different way. Some supplier may be too large or they dominate market therefore sometimes it will be difficult to maintain desirable relationship with them. Therefore, negotiating a win-win proposition with each supplier should be accomplished at strategic level. In addition, information visibility and level of sharing is also an important aspect. It should be given importance and after technology selection, the level, security, timing, frequency, and amount of information sharing must be decided on and implemented. ii. Tactical Some things are common in tactical level for SRM and CRM. The strategy should be shared with each member of the team. In addition, some tools for SRM should be used which are supplier database and supplier interaction tools. There should be some contractual obligation such as rules, penalties and rewards for suppliers. Each supplier is different and rules and contract terms may differ from supplier to supplier. Penalties and rewards are useful in bringing suppliers in line during the process of SRM development. In addition, certification should be checked for each supplier, which is a set of rules, business conditions, and performance requirements that is established as a general policy and defined specifically for each supplier. iii. Operational This activity involves support to front-office business process, which includes sales, marketing and services. Every interaction with supplier should be added in database (customer contact history). Staff from the database whenever necessary should retrieve this history/information of the suppliers. As SRM implementation begins, business processes and supplier performance must be constantly monitored, with improvements or adjustments made as required. Once business processes have been correctly established and are working properly, they become standard, as they will facilitate improvements to the SRM process. (Bukey 2007) Figure 5: Relationships Develop Over Time (Source: Bukey 2007) III. Activities/Functions of CRM Customers want to do business with organizations that understand what they want and need and CRM is about to manage relationship with customers more effectively at the same time cutting down the costs and increasing the viability of product and services offered. Below are some functions/ activities are discussed. i. Strategic CRM strategy involves various things such as, finance, growth, logistics, shareholder management, policies and processes, front-of-house customer service, employee training, systems and information management and marketing. It involves looking for clear direction on how organization plans to create, maintain, and expand customer relationships. The objectives of CRM strategy must consider a company’s specific situation and its customers needs and expectations. The first thing organization should do is to have brainstorming session for each CRM strategies. There should be a selection criterion on different points for selection of each strategy not just by tossing, which is better, and this criterion should be applied. Organization CRM strategy should have a vision of three basic things; create, maintain and expand customers. Create relationships by understanding the unique expectations of each customer and equip staff to meet those expectations. Maintain relationships by constantly identifying opportunities to enhance customer experience Expand relationships by rewarding customers who helps to grow business [Anderson & Kerr 2002] ii. Tactical The first thing is important here is to share the strategy. Every team members should know about the CRM strategy. They should be also familiar with the tools chosen to support the strategy. This can be done by inviting a representative from another area of the organization in staff meetings and explaining how his or her area uses the customer data that CRM team members collect. Some tactics specific procedures and tool should be used for implementation of CRM strategy. Some tools for CRM include customer database, e-commerce customer interaction tools, procedures for handling unhappy customers, and customer satisfaction surveys. In addition, one important thing is that to keep the brainstorming notes, sorted by their clusters, whether they are implemented or not. iii. Operational This activity involves support to front-office business process, which includes sales, marketing and services. Every interaction with customer should be added in database (customer contact history). Staff from the database whenever necessary should retrieve this history/information of the customers. IV. Problems/Issues relating to SRM SRM is an emerging concept. It will take some time before all the problems/issues for it explored. All the concepts of the CRM can be used for proper implementation of SRM as it talks about supplier as opposed to buyer in case of CRM. It is important especially when there is a limited supply base for a product or organization need supplier more as compared to supplier. Some issues for SRM implementations are development of supplier-centric strategy ignored, avoiding the organizational changes, current developments and ignorance of statistical tracking and measurement of outcomes. In addition, it is important issue that everyone involved in SRM strategy should have a full time job. Employee should be committed for the job when they begin, which is possible through full time job. V. Problems/Issues relating to CRM CRM solution vendor are more interested in providing CRM solutions. However, it is important that any CRM implementation consider not only technology, but furthermore the broader organizational requirements. Some factors because of which any CRM implementations can fail have a high propensity to: Development of customer-centric strategies ignored. Avoiding the people side. Avoid organizational change or not seeing current developments. Ignoring of statistical tracking and measurement of outcomes. [Dick 2003] In addition, it is important issue that everyone involved in CRM strategy should have a full time job and employee should be committed for the job, which is possible through full time job. Another most and critical issue that CRM should consider is customer privacy and data security. Because these days many incidents have taken place of this security breach and customers want the assurance that their data is not shared with third parties without their consent and accessed illegally. VI. The Future of SRM in the Workplace There are literally thousands of technology solution providers out in the market. Organizations in consideration with their suppliers decide, which tools, platforms, software, they need to use. Several types of solutions today exists for SRM and they are web-based, open systems and can connect with almost any other system. In addition, the solutions should be selected according to need of the organization and not based on cost and superiority. The selected SRM solution tools can provide many added benefits to companies, some of them are: A cross view of a supplier’s inventory and a bar code on the go. Real time supplier performance view or dashboard. Corrective action form and continuous improvement. Connect anyone anywhere with any format. Multiple languages for each user and transportation tracking. [Bukey 2007] i. Technology SRM tools are marketed as standalone or add-on options for ERP systems and are available from a number of vendors, including 12 Technologies, Manugistics, PeopleSoft, SAP, mySAP’s SRM, Oracle’s iSupply, and Infor’s Supplyweb. These systems are typically referred to as supplier web portals. VII. The Future of CRM in the Workplace The same thing is applicable with CRM products too as in case of SRM and these solutions are available from many vendors from low cost to high cost. CRM solutions that exists today’s are web-based, open systems and can connect with almost any other system i. Technology CRM specific database or enterprise data warehouses are available from vendors such as IBM, ORACLE and Teradata. Customer agent support software required for operational CRM is available from Siebel Systems. LiveView is CRM solutions for collaborative CRM that requires customer interaction systems. Analytical CRM requires statistical analysis software such as Excel, SAS along with software that manages any specific marketing campaigns such as Teradata Relationship Optimizer, Unica and Maximizer. Support CRM systems require interactive chat software to provide live help and support to web site visitors and are available from TouchMind.com, Live Person or Right Now. VIII. Conclusion Supplier Relationship Management (SRM) and Customer Relationship Management (CRM) are two solutions that talks about the same issues but from an opposite perspective, buyer and seller. The use of SRM software can lead to lower production costs and a higher quality with lower priced product and the implementation of CRM solution can provide better service and support with customers. In conclusion, it can be said that whatever solution organizations implement, the ultimate goal is to increase profit by reducing cost. References: Anderson, K. & Kerr, C. (2002). ‘Customer relationship Management’. New York: McGraw-Hill Lang, A., Paravicini, D., Pigneur, Y. & Revaz, E. (2002). ‘From Customer Relationship Management (CRM) to Supplier Relationship Management (SRM)’, Retrieved on 13 February 2007 http://www.hec.unil.ch/yp/Pub/02-SRM.pdf Bukey, A. (2007). ‘Supplier Relationship Management: Benefits and Challenges’, Retrieved on 15 February 2007 from http://www.technology-evaluation.com/Research/ResearchHighlights/SCM/2007/01/research_notes/MI_SC_XAB_01_19_07_1.asp Dick, L. (2003). ‘CRM: The Truth, The Whole Truth And Nothing But The Truth (For A Change)’, Retrieved on 15 February 2007 from http://www.technologyevaluation.com/Research/ResearchHighlights/Crm/2003/02/research_notes/MI_CR_XDL_02_15_03_1.asp Supplier relationship management the key to future success, May 01, 2006, retrieved on 16 February 2007 from http://www.europeanleaders.net:80/learninggroups/supplier-relationship-management/supplier-relationship-articles/18845/ Customer Relationship Management, The BusinessLink (Business Service Centre), retrieved on 17 February 2007 from http://www.e-future.ca/pdf/efc_customer_relationship_management.pdf http://searchsap.techtarget.com/sDefinition/0,,sid21_gci871756,00.html accessed on 16 February 2007 http://searchcrm.techtarget.com/sDefinition/0,290660,sid11_gci213567,00.html accessed on 16 February 2007 Read More