hi everyone sorry about getting this out a little bit late um i just had some stuff come up at the last minute here uh so i do just want to go ahead and get started uh today we'll be talking about chapter 11. this is customer relationship management and supply chain management so this chapter is really all about managing these customer relationships using information systems we'll talk about the customer relationship management system in particular uh we'll also cover operational customer relationship management as well as other types of crm that we may run into in addition we'll talk about the supply chains supply chain management and it support so normally i play this quick little video clip but since this is going on youtube i'm not going to i encourage you to play i'll put a link in the description to this video but basically what it says is that you know you have all these different groups working together and all that collaboration could be good but it can also be bad and you know certainly dilbert makes a point where you know inside of this scenario it's very difficult to sort of get all the groups together and it's likely to end up in failure so with that out of the way let's just jump right into customer relationship management as the name would imply the real really the whole purpose of this system is to sort of help firms you know sort of manage their relationships they have with customers and you know this is going to have all the information about their customers stored inside of it so you know particularly things like who the customer is things like what sort of stuff they buy things like any sort of general information about the customer now of note it's important that we keep in mind two major things customer age excuse me how long the customer's been with us and then the customer value it's gonna be how much they buy from us now if we keep these two things in mind we have a very sort of a long-lasting customer relationship that's a very valuable customer that's certainly someone we want to keep happy and we do that however we can of course we have someone who's not yet a customer maybe we don't uh worry so much about them and you know we kind of think about how can we best sort of manage that relationship and that's really what this chapter is about so one approach to that is use personal marketing in personal marketing uh the whole goal is that you're going to form very close relationships with your customers this can be particularly applicable for sales jobs where you're only working with a couple of clients a day not so applicable to retail or anything like that so we definitely want to keep that in mind but what we're trying to achieve is something called customer intimacy and customer entity what we're trying to do is just have that very close relationship there it's not to be confused with any other type of intimacy certainly not in that way so that's what we're talking about let's take a quick look at this chart here so we see the crm process like i said these are your high value repeat customers these are going to be the customers you want to make sure as happy as possible but really what this is is we have on the outside this little blue little circle here whoops this blue circle all the way around these are people who would be willing to buy but have not yet bought once someone buys we acquire the customer and we have the customer now we can either keep or lose the customer so we do that by support and resell hopefully we will keep the customer if we have customer churn that means we lost the customer we definitely don't want to have that happen especially not often although some customer churn is going to be inevitable so we want to get to the point of having loyal repeat customers and you know we kind of have that right here and then finally we get to high value or low value repeat customers so that's what we're doing there inside of this so with that in mind it's important to kind of understand the whole concept of customer touch points and this is going to be any point in which the customer is going to interface with the system so we think about how do we contact our customers well there's a couple different ways we could do that we're always able to send out mailing information if we have addresses that can certainly be an effective way to reach people although it's gonna be a costly way we could also of course call people that's gonna be a costly way as well because we're having to pay not only for the phone service but we're also having to pay more importantly for the custom for the employees rather so we're paying at minimum minimum wage and you know you think an employee could probably make 20 calls in an hour that's at least 7.25 to make those calls contrast that with mailings you're paying at least 50 cents plus probably another 10 cents or so for printing just for a basic little postcard you're looking at you know for 20 customers a very similar number instant messaging can be a great way for customers to contact us uh certainly we can you know have lots of support and stuff done via instant messaging uh websites are a great way as well because we don't have to have anyone manning a website well i mean you know we don't have to have anyone actively managing a website but when it comes to you know certainly having lots of information available lots of consumers are going to use the website to kind of figure out what sort of services we have and all that sort of stuff up but beyond this there's a lot of other ways customers can contact you know certainly having that touch point it's very common to use things like chatbot technology once a chatbot technology would be built out for a particular firm the sort of marginal cost of using it is going to be quite low so rather than paying you know let's say 60 cents or rather than paying let's say a dollar for uh each contact that's gonna be almost zero for each contract that's gonna be a very beneficial thing and certainly as we kind of progress you know we have things like social media campaigns and all that can be very beneficial to kind of boost the customer engagement now if you don't do customer relationship management well uh there's a couple of things that you are likely to see so first i have up here customer churn so if customers are not satisfied with how you treat them or anything about your company they may choose to leave your company that's only going to be the case if they can leave your company if there's a case where you have lots of lock-in particularly that's true with a lot of technology companies where i'm not gonna mention any specifics here just to kind of keep myself in uh out of the doghouse but you know uh you can certainly see pretty high switching costs in a lot of technological systems so if you're a consumer or a customer you want to make sure to avoid systems like that but if you are the company doing it you still want to treat your customers well because while you may not see customer churn in an area that has maybe not able to be switched at all you will still have customer dissatisfaction people not satisfied with your company or its products or services and you also have reputational damage and as we talked about before reputational damage is really sort of a asset for the company but it's an intangible asset so you take what people want to pay for the company and you subtract off any sort of damage associated with that all right so you know along with this we kind of talked in the data management chapter a little bit about this we have the whole concept of data consolidation and you know like we said we want to do is we want to make sure that we're not storing the same information twice because if we do that it cost us money and it can cost us quite a substantial amount of money because storing information for an enterprise is a lot more expensive than storing enterprise for an individual there's a lot of different costs that go into it namely the cost of the storage the cost of the you know the fact that it's going to be on 24 7. so you have power cost and you know beyond power itself you have the electricity costs to heat and cool whatever you're actually storing that's very costly um you know if the marginal cost is going to be pretty low but certainly if you can reduce your data needs by let's say 50 that's gonna be huge for your firm because that's 50 less heating and cooling inside the server room it's going to be very beneficial in that way in addition like we said before you want to make sure you have accurate records um you know certainly that's going to be a very beneficial thing and we always want to make sure that we're removing organizational silos and making sure that anything that we're doing is across the organization as a whole so we kind of think about operational crm this is going to be a very front office focused system where it's going to be focused on the operations of the firm so this is going to really sort of affect the people who are interfacing with the customers and this is going to be the sales team marketing team and service team and there's two major components to these systems that we're going to talk about it's going to be customer facing and customer touching so we're going to get to those in a little bit but we will go ahead and go over operational crm benefits because what this really sort of does is this kind of takes the general approach of marketing and it kind of personalizes it to each and every customer so for example if we're a sales company we're selling software we have basic information about our customers stored inside of a database we're not having to flip through and sort of you know quickly look things up it's already there and that's going to really allow us to have a very complete and sort of a 360 degree view of each of the customers uh most importantly though this is going to give us access to easily see what they've purchased from us in the past and maybe even when we they purchased from us from competitors and you know these things combined with each other are going to really help us sort of increase our sales and if we can increase our sales we would anticipate being able to have a higher amount of profit and of course that's the goal of the business so let's go back now and kind of talk about the customer facing applications this is where we're going to have a part of a system that's going to not interact directly with customer it's going to be interacting indirectly with them instead and a lot of times this is going to be in the form of a customer interaction center and a customer interaction center is basically like a new term for a call center where customers are going to be contacting us they're going to be emailing us they're going to be chatting with us all those sorts of things and it's really our role to sort of facilitate that to make sure that the customers are getting the assistance that they need another component of this is gonna be salesforce automation and like we kind of talked about this is going to not only have the sales history and the customer information but also potential customers so we go back to the sort of chart we had earlier this is going to include potential sales leads where we can sort of increase our revenue and increase our customer base now we also have customer touching applications and this is where the customer just sort of interfaces with the system directly so they're going to sort of go in and they're going to put in whatever information they want to they can do you know sort of uh sales and purchases online that sort of stuff it's all going to be an example of customer touching and this kind of differs because there's no intermediary so here we had some sort of a sales personnel some sort of marketing personnel not sure which but you know depending on the system they're going to have some sort of intermediary whereas the customer touching there is no admiring area and this is commonly going to be referred to as ecrm so the e of course standing for electronic i guess and you know it's certainly going to be something where we're going to see a lot of this happen in terms like self-help uh we're just a web store in general so those are just two examples there where the customer can sort of directly go in and touch and get what they need to so some things to kind of think about for ecrm first it's going to be very important that we have good searching algorithms that we have our organize our information organized in a very effective and logical way because if we can do this properly it means we can have lower uh cost of wages if we can reduce the cost of wages for a company we can increase our profitability so that's really the goal here is to sort of get to this level to where we can have a very low sort of marginal cost of a sale we talk about transactional costs some and that's going to be something we're really trying to lower that number and make sure that we're going to be as efficient as possible as an organization but beyond that you know not every customer is going to be the same so it's very important that we sort of take this approach and we customize it to the customer and then we make sure that it's not just you know focusing on you know the products and services we're providing and offering the customers but also making sure the appearance is customizable you know it's pretty easy to do that now to make sure that systems can be changed some people prefer high contrast lots of different preferences for stuff like that um we also would probably want to have a frequently asked questions section because by the definition of frequently asked questions these are questions we're going to be answering over and over so if we just point people to an faq section that can be very beneficial for us so we've kind of talked about chatbot technology a little bit already but we could also have a loyalty program to where the more customers purchase from us the more sort of perks that they get and that can not only encourage people to be loyal to the firm but it can also encourage them to purchase more than they otherwise would so that could be very beneficial as well so there's a couple other types of crm systems um you know we certainly have mobile crm as the name would imply it's going to focus primarily on mobile devices uh open source crm is going to be focused on what's not focused on it just is a crm package it's going to be open source and it's licensed sure nature and then we also have social crm which is going to have a lot of social components where we're interfacing with customers and you know sort of having a online community in a way so i wouldn't necessarily um you know think any of these are particularly different from crm personally so just understand what crm is and you should be all set so i'm gonna leave this up for a couple seconds here this is a bonus point for exam three uh if you fill this out you will certainly get that on exam three and i'd encourage you to do it so just gonna leave this up for a second feel free to pause the video if you need to so let's kind of shift gears a little bit now and talk about supply chains so with supply chains there's a couple of key sort of components to talk about we're going to talk about supply chains in the next slide but for now i just want to make sure that we understand supply chain visibility deals with the flow of information so can one party see another party's uh information on the supply chain if they can then that could be beneficial if they cannot that can also be beneficial there's some pros and cons to that but really the visibility just kind of refers to can the information be seen and then lastly we have inventory velocity that is to say how fast or how slowly is the information is the inventory rather changing on the supply chain so here's a generic supply chain here and we're going to focus starting off with the manufacturer so i'm just going to use a car company's manufacturer a picture any car company won't uh it doesn't really matter which one and what we're seeing is we have information that's going upstream we have information going downstream so let's start off by going uh upstream you know toward the supply chain so we have the manufacturer they're putting together the car parts into a car they have tier one suppliers that's gonna be things like a windshield that's gonna be things like a steering wheel a seat an air bag those are going to be ready-made components that when we assemble them all together we get a completed automobile that's the manufacturing process tier 1 supplier it's going to be that and we have tier 2 so tier two suppliers are going to be the suppliers that supply the tier one suppliers so if we have a windshield we're going to have um you know components of a windshield we may have a sand that could be an example of a tier 2 supplier in this case we could have you know whatever sort of adhesive they use to kind of fuse the windshield together i'm not an automobile expert so i don't know what that's called but that would be an example of a tier 2 supplier and then uh kind of another example the tier 2 supplier could be a fabric provider you know they could be the people who are supplying the chemicals to the uh airbag companies you know all those sorts of things could be examples of tier 2 suppliers then tier three suppliers could be things like um you know going back to the example so we have the uh instead of getting the fabric we would get the material the fabric's made of so maybe it's made of cotton maybe it's made of synthetic fibers that's going to be done in tier three so it's really just kind of going from breaking down the components and seeing what level they are this could change if we were instead of being on a bill manufacturer if we were a glass manufacturer then our tier one is probably going to be some sort of a sand supplier so there's really a couple different ways to kind of look at that so it just kind of depends on what your manufacturer is that's going to determine this but then for an automobile manufacturer of course we're going to have probably not actually going to have a distributor instead we're probably just going to skip straight to the retailer which is going to be in case of an automobile manufacturer it's going to be you know sort of the dealership and then you have the dealerships to interface with the customer so if we were to use a different example let's say we were to use a company like samsung or apple that's making smart phones manufacturers gonna make the smart phones tier one suppliers would be things like system on a chip like nvidia or some of the other competitors in that space maybe companies making screens i think samsung makes their own screens but that's still an example of a tier one supplier um you know ram parts anything like that is gonna be tier one then we go to tier two and of course we have the components of the screen maybe they have glass um you know certainly the different uh components of the lcd or oled depending on what you're using all those are going to be examples of tier two suppliers then finally we get to tier three it's gonna be whatever sort of materials those are using so in the case of the glass it's probably gonna be some sort of uh silicon so you know that's what we're talking about here and then of course distributor wholesaler it's going to be the people who are selling to the retailers and then the retailer is going to sell to the customers so that's a basic supply chain so within the supply chain management process i want to make a quick note here a lot of people consider themselves to be a supply chain manager but in reality they're not because there's really only one way to have a supply chain centrally managed well two ways the first is going to be a command economy so in a command economy uh the government's going to make all the decisions and there's going to be some official who can basically determine everything on the supply chain generally speaking that hasn't worked well in history make it that what you will i don't want to get into the sort of anything about that but certainly you know it's not been something that's been shown to be effective uh from an empirical standpoint if we look throughout history uh the other way would be digital distribution so a great example this is gonna be apple apple has full digital distribution of a lot of their software to where they control almost the entire supply chain apart from those two examples you're mostly going to be in operations management because think back to the supply chain it's very difficult to control all the way from tier three all the way to the at least the retailer that's almost impossible so what we want to do with supply chain management though is we first want to plan what do we need what do we anticipate demand to be and you know we sort of see this is how we're going to accomplish that whatever we're sort of needing to do we're going to plan it all out get a sort of general plan of attack there we're going to actually then source the materials that we need once we source the materials that we need we then assemble the materials in the make phase once we sort of made the product we finished that then we deliver it so we give it to retailers retailer's going to give it to customers and then lastly if there's any sort of problems with it we're going to do service or in this case it has return so these are sort of the five major phases of the supply chain management cycle and you know one of the main goals of this is to sort of reduce transactional costs and we can do that using the inner organizational information system so looking at this supply chain here like i said it's very unlikely to be a single company controlling all aspects of this could happen but it's rare so we actually have different organizations that are sort of a part of this so what we want to have happen is we want to make sure that they're all able to sort of share information we can do that with a single organizational system that's not only going to remove information silos within one company but it's going to remove information or yeah information silos within an entire industry so that's really the whole purpose of this is going to make it much cheaper to sort of conduct transactions which is in sense going to reduce the cost of goods sold that's a very important thing for us because we reduce the cost of goods sold we can do pretty much anything we want to with that money we could lower the prices of the goods we could lower we could increase our profitability we could do both but that's made possible by the deduction of the cost of goods sold here beyond this it's going to make the information quality much better so if we didn't have access to see you know what is you know being sold at the retail level and we are a manufacturer we don't know how much of our good to manufacture well we can easily and quickly see if we use it in an organizational system what sort of uh sales our customers are you know experiencing at the retail level beyond that is going to certainly make it more efficient you know we think back to this you know it may take two weeks to get a manufactured good to a distributor it may take three weeks get a you know something from the distributor to a retailer we can sort of reduce that cycle time by using things like just in time by having that information made available throughout the entire supply chain beyond this it's certainly going to help us sort of get rid of a lot of paper records and you know by getting rid of paper records it's a lot easier to process because you know with paper records it can be almost impossible to process and see you know what sort of things we're seeing whereas with you know having no paper records at all it's very easy to do that processing so a couple quick little solutions that we can have you know i talked about vertical integration so vertical integrations give a quick definition would be the combination of one or more of these different um you know sort of elements of supply chain into a single firm so for example um if you're a manufacturer like tesla you don't have a distributor wholesale you don't have a retailer you are the retailer so that's an example of vertical integration where they're sort of controlling more aspects of the supply chain we'd more commonly see this whenever he would have a company for whatever reason they would choose to sort of control more aspects of the suppliers so you had a surf shop for example maybe they want to not only have the surf but they want to have sort of you know the components that make the surfboard so that's kind of the example there just in time inventory we've talked about that in this class basically you know just kind of uh using the information we have to instead of having a large sort of amount of you know pre-existing inventory we have inventory right when we need it and that can be very beneficial for us and basically what that's going to do is that's going to make instead of the manufacturer have excess materials to make the earlier tier suppliers have excess material which uh is a good thing because you know generally speaking once it gets the manufacturing phase it's almost always going to be non-reversible so if we did manufacturing it's typically not going to be easily reversible whereas if it's in the supply phase we can still do a lot of other stuff with it so if we had sand and we made it into a specific size glass it's very difficult to get that specific size glass back to sand i believe it's technically possible but it would not be feasible given the energy required to do so then we also have the whole concept of sharing the information across the supply chain it's going to be very beneficial for us and we also could see a case of vendor managed inventory this would be particularly true in a lot of food like bread for example is often you know purchase on consignment to where you know the vendor sort of uh you know is very well versed in the demand and supply for their particular product so they actually own the bread that's on the store shelves in most of the grocery stores in america and that's able to sort of reduce a lot of waste that would otherwise potentially happen and it's worked well for bread it's worked well for some of the other produce that does that practice as well but not all the practices uh occur in that way so a couple different things to talk about for supply chain management in terms of i.t we have the whole concept of using electronic data interchanges and basically like what we just said is an organizational system that's going to allow us to you know sort of exchange any sort of data that we have this is commonly going to be seen on an extranet so an extranet is going to be sort of a network that's going to be involving multiple organizations and it's going to allow them to share files to share you know any sort of information they want to and it's going to be an actual network basically this kind of contrasts with a portal in exchange a portal on exchange is just going to be a website that holds you know this sort of information so instead of being a network it's going to be a specific website okay so just kind of wrap things up today we talked about customer relationship management we also talked about supply chains next class we're going to pick up we're actually going to do some examples of things with supply chains i think it's gonna be pretty neat so anyway thanks for attending i hope everyone has a great day i do apologize for having to cancel class today