Reshma S Menon

S3 MBA(IB)
 Supply chain management may be thought of as
the management of all activities aimed at
satisfying the end consumer; as such it covers
almost all activity within the organisation.
 Customer relationship management (CRM) is a
strategy to learn more about customers' needs
and behaviours in order to develop stronger
relationships with them.
 Integration between CRM and SCM improves
communication between the store and the
manufacturing.
 CRM first appeared in 1980s. In the budding stage
it was in the form of Customer Information System
(CIS).
 The term CRM was first coined in early 1990s.
 CRM methodology enables the organization to
understand the customers' needs and behaviour
better.
 It is a major strategic approach to customers and
businesses are investing millions of dollars to
acquire CRM services and solutions.
 To simplify marketing and sales process
 To make call centres more efficient
 To provide better customer service
 To discover new customers and increase
customer revenue
 To cross sell products more effectively
 The CRM processes should fully support the basic
steps of customer life cycle.
The basic steps are:
 Attracting present and new customers
 Acquiring new customers
 Serving the customers
 Finally, retaining the customers
 The point here is one size doesn't fit all.
 There is no single CRM software or formula which
will give instant success to all companies.
 Today the global market for CRM services and
solutions is currently worth $148 billion. This
proves to show the numerous choices available in
this field.
 Increased sales through better timing by
anticipating needs based on historic trends
 Identifying needs more effectively by
understanding specific customer requirements
 Cross-selling of other products by highlighting and
suggesting alternatives or enhancements
 Identifying which of your customers are profitable
and which are not
 This can lead to better marketing of your products
or services by focusing on:
 effective targeted marketing communications
aimed specifically at customer needs
 a more personal approach and the development of
new or improved products and services in order to
win more business in the future
 Ultimately this could lead to:
 Enhanced customer satisfaction and retention,
ensuring that a good reputation in the marketplace
continues to grow.
 Increased value from existing customers and
reduced costs associated with supporting and
servicing them, increasing the overall efficiency
and reducing total cost of sales.
 Improved profitability by focusing on the most
profitable customers and dealing with the
unprofitable in more cost effective ways.
There are three fundamental components in CRM:

 Operational CRM
 Analytical CRM
 Collaborative CRM
 Operational CRM provides automated support to
front office business processes (sales, marketing
and service).
 Operational CRM typically involves three general
areas:
1. Sales Force Automation (SFA)

2. Customer Service and Support (CSS)

3. Enterprise Marketing Automation (EMA)

 Analytical customer relationship management may
be defined as a decision support system that is
targeted to helping senior executives, marketing,
sales and customer support personnel to better
understand and capitalize upon their customer
needs, the company's interactions with the
customer, and the customer buying cycle.
 The data collected in operational management is
analyzed to segment customers.
 The valuable information thus obtained is used to
satisfy customers.
 Analytical CRM is composed of:
 Pattern discovery component
 Product and customer analysis component
 Multitude component
 Sorting and customer fractionation component
 Customer value evaluation component
 The analytical solutions help answer questions
like:
 Who are their best customers?
 Whom they are likely to lose?
 How to retain them?
 How to attract new customers?
 How to improve profitability of customers?
 The value of customer is judged based on RFM
analysis i.e. focusing on Recency, Frequency, and
Monetary value from customer purchasing data in
retail business.
 Accordingly the customers are divided into
various levels.
 The four main segments of customers are:
 At the top is the VIP customer whose expenditure is
most and form 1% of all customers in a certain period.
 Then the main customer forming 5%.
 Next the ordinary customer forming 20%.
 And at the bottom is the scattered customer an
overwhelming 80%.
The first three categories create more than 80% of all
profits for the company and as a result they are
differentiated as the best customers. They are the real
targets of customer centralization.
 Collaborative CRM is an approach to customer relationship
management in which the various departments of a company, such as
sales, technical support, and marketing, share any information they
collect from interactions with customers.
 For example, customer feedback gathered from a technical support
session could inform marketing staff about products and services that
might be of interest to the customer.
 The purpose of collaboration is to improve the quality of customer
service, and, as a result, increase customer satisfaction and loyalty.
 It allows the company to synchronize and manage efficient, productive
interaction with customers, prospects, partners, and internal associates
across all communication channels.
 The customers' viewpoint is taken care of at every transaction level
thus enabling better service to the customer.
 Collaborative CRM also reduces web service costs by enabling web
collaboration.
 To implement CRM, following factors need to be
given due consideration
 Easy interaction between customers and company,
enhancing quick response to customers' request and
suggestions
 Easy access to information about company like
content of customization, advantages of the company,
benefits doled out to the customers. This establishes
profitable relationships with the customers based on
mutual trust and respect
 Abundant supply of customer information which have
been accumulated and integrated from different
channels
 Grow with customers i.e. customers' information
should be updated along with the passage of time
 Have cordial relationship with other companies
targeting the same customer segment. Thus
giving relevant solution to customers' need and
increasing acknowledgement to customers
 Customers' information must be segmented to
provide support for customization based on
personalized information i.e. tailoring the
company's product and services accordingly
 Companies that do not have repeat business from
customers will not gain much from CRM and also
that have walk-in customers not providing multiple
sales and service channels will not benefit much
from CRM.
 Again if maintaining long term relationship with
customer is not a priority for the company, it will be
wise not to invest in CRM.
 Companies in the following sectors benefit from
installing CRM software.
 banking
 finance
 insurance
 airlines and hotels
 telecommunications and health care
1. Multiple communication channels
 Web channel
 Fax channel
 Interactive TV channel
 IVR (Integrated Voice Response)
 E-mail
 Direct mail
 Direct field sales force channel
2. Database
3. Workflow and assignment
4. Scalability
5. Privacy concerns
 The failure rate for CRM implementations is as high as 70%. The reasons are:
 Absence of a clear transitional process i.e. a step by step awareness, a clear
funding strategy, and attainable goals is a must rather than introducing
sweeping changes all at once.
 The main focus of business is on products' sale and geographical
segmentation of market but not on customer segments.
 Key performance measurements are not tracked. Data integration,
interdepartmental communication, and good supervision of these processes
are critical to success.
 Weak functional organization of a company can cause customer and
employees' confusion.
 Short term interests are often given importance. Ethics must be given priority
over financial gains. A customer focussed company must be prepared to
make recommendations in favour of customers even at the cost of short term
interests of the company.
 The financial measures of success are often inadequate. In a customer
centric model the branding, research, and development must align with
development, compensation, budgeting, and incentive policies.
 Other new technology and solutions are introduced without implementing the
necessary framework.
 For any business to extract maximum benefit from
its CRM deployment, it is important that it be
linked to the back processes.
 Supply chain management, when connected via
business intelligence tools with CRM, can throw
light on many hitherto unknown aspects of a
company’s business processes.
 The insight offered by CRM into customer behaviour
and demand patterns can be made use of to
streamline manufacturing and distribution of products
as managed by the supply chain function.
 An important feature to understand when deploying
CRM is that it can only provide information that has to
be used both at the front end and back end to improve
processes.
 Customer segmentation information can be used to
structure the purchase of raw materials, scheduling
manufacturing, managing inventory, and overall
running the supply chain.
 A business can obtain major cost savings by acting
upon information from CRM systems.
 A streamlined supply chain is key to reaching out to the right consumer
at the right time and CRM offers inputs on providing the customers with
the right product mix and targeting them with appropriate marketing.
 A backward integration of processes taking into account the information
obtained from CRM can help a business better allocate its resources be
they in manufacturing, processing, marketing, or sales.
 Apportioning of raw materials to machines and machines to a given
product can be done more accurately if market demands are known; it
also leads to a reduction of inventory stocks, JIT production, and a lean
supply chain that responds to demands quickly.
 All this not only helps cut costs but also acquire a competitive
advantage for a business that can take the lead in offering a better
buying experience and service level that competitors may not be able
to offer.
 An efficient and responsive supply chain can have a huge positive
impact on store product segmentation and effective customer targeting.
 Integration between CRM and SCM improves communication between
the store and the manufacturing.
 Dell computer is a company that has effectively
tailored service levels according to customer value.
 It continuously re-segments its customer base, using
buying patterns and other information to estimate the
life time value of each customer or customer segment.
 Dell then designs the most profitable marketing, sales
and customer service relationships.
 As a result of the positive customer experience offered
by Dell, the company enjoys one of the highest levels
of consumer loyalty in the industry.
 At the same time, Dell collaborates with suppliers, making
90% of purchases from its 33 most important suppliers
through a portal called valuechain dell.com.
 The site helps suppliers to track orders and shipments and
understand how they measure up to Dell’s exacting
standards in product quality and just in time delivery.
 Dell also shares key data including demand forecasts over
the site.
 By working closely with suppliers, Dell has reduced its
inventory to just six days-one of the lowest in the industry.
 Dell has been so successful because it has a strong
understanding of who it’s most important customers are
and their value to Dell.
1. It delivers tremendous operational efficiencies.
2. Integration allows companies to set priorities more
easily and effectively.
3. Companies can respond more effectively to the
customers who matter most, strengthening the
relationships with key accounts.
4. Suppliers will be able to stay aligned with their
customers and end-customers.
5. Integration leads to greater job satisfaction-and lower
turnover- for customer service teams, allowing them
to spend more time delivering value to customers
and less time resolving service failures.
 In today’s every changing economy, integrating
SCM and CRM has become integral to increase
customer retention, return on assets and market
share.
 It is the most powerful and effective way to
achieve true balance between supply and demand
and will become one of the critical drivers of
success.
 UtaJuttner, Susan Baker, and Martin Christopher, 2004, Demand Chain
Management-Integrating Marketing and Supply Chain Management,
http://docs.google.com/viewer?a=v&q=cache:p_xP4Jsn-nEJ:martin-
christopher.info, downloaded on 12.08.2011
 Tina Reiners and Harrison Gray Partner, 2001, Integrating Supply
Chain and Customer Relationship Management to Leverage
Economies of
information,http://www.harrisongray.com/whitepapers/IntegratingCRMa
ndSupplyChain.pdfdownloaded on 12.08.2011
 Anonymous, 2011, Role of CRM in Improving your Business
http://www.crminfoline.com downloaded on 13.08.2011
 Anonymous, 2006, Basics of
CRM,http://www.advancedvoip.com/whitepapers/Basics%20of%20CR
M.pdf downloaded on 14.08.2011
 Anonymous, 2007, Types of CRM, http://www.tutorial-
reports.com/software/crm/types.php downloaded on 14.08.2011