The Right Path to SCM-CRM Integration

The Right Path to SCM-CRM Integration

Charlotte H. Mason (University of Georgia, USA) and Aleda V. Roth (Clemson University, USA)
Copyright: © 2009 |Pages: 18
DOI: 10.4018/978-1-59904-859-8.ch011
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Growing competitive pressures and escalating customer demands have led businesses to sophisticated information technology to manage costs and enhance revenues. Two popular initiatives are supply chain management (SCM) and customer relationship management (CRM). SCM focuses on optimizing the materials, information, services, and financial flows through a supply network. CRM focuses on marketing, sales, and customer service, and aims to maximize the value of customer relationships. Furthermore, the real potential lies in the integration of SCM and CRM. Disconnected implementations can result in IT “silos” with redundancies in hardware, software and staff, breaks in the information chain, and disappointing performance. There are different paths to integration. The right path depends on the organization’s relative maturity on 6 key factors: 1) interconnectivity, 2) interoperability of systems’ functionality, 3) information integrity, 4) interorganizational competence, 5) intellectual capital, and 6) innovative capability.
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Since the early 1990s, the number and varieties of software categories available to firms have skyrocketed. Due to advances in other information, process, and communication technologies (IPCT), and especially those related to the Internet, managers have far greater choices and expanded functionality for running their businesses than ever before. Of these, software for coordinating enterprise-wide supply and demand is among the most prominent. On the supply side, Supply Chain Management (SCM) systems may employ enterprise resource planning (ERP) software to boost enterprise efficiency, improve decision-making by providing greater visibility into operations, and promote collaboration via information sharing. On the demand side, Customer Relationship Management (CRM) offers the opportunity to gain more information in real time about current and prospective customers, providing functionality for contact management, sales force automation, and customer service. A recent survey by the Yankee Group reveals that external applications – those aimed at enhancing customer and supplier relationships – are growing at a much faster rate than internally focused applications (Westervelt, 2004). Furthermore, companies are increasingly focused on integrating technologies.

For some firms, the SCM and CRM software solutions delivered at least partially on their promises, whereas for others the results were less than anticipated. Despite significant investments in resources, most companies were not prepared for the implementation hurdles. During the first wave of their infusion into businesses, in which individual SCM and/or CRM software modules were generally treated as separate installations, the integration with existing legacy systems proved most troublesome. The Standish Group (1995) reported that the average cost overrun was 178 percent of budget; and the implementation schedules exceed 230 percent of plan. Estimates of implementation failures of CRM ranged from 55 - 75 percent according to the Meta Group (Johnson, 2004). From a survey of 162 senior managers conducted by Bain and Co. (Cook and Hagey, 2003), researchers concluded that SCM– which was long touted as an avenue to control costs, reduce risks, and increase service performance– was mismanaged by most companies. While executives in charge of supply-chain management recognized the importance of the supply chain, many had yet to realize its potential. Interestingly, 86 percent said supply-chain performance was a priority, but two-thirds said their companies failed to track the performance of their internal supply chains outside their corporations.

Recent evidence is more encouraging. In a survey of primarily large, established, business-to-business U.S. firms, Ramaswami, Bhargava, and Srivastava (2004) found that both CRM and SCM processes have positive and significant associations with the financial performance of firms. Rosenzweig, Roth, and Dean (2003) reported that the intensity of supply chain integration led to improved capabilities. Roth, Cattani, and Froehle (2008) empirically showed that the fundamentals of supply chain management were prerequisites to global competence; and Stratman and Roth (2008) linked ERP competence to business performance. However, many companies found that the payoff from implementing only one side of the equation was not enough (Koudal and Lavieri, 2003). In response, some are calling for a “consumer driven supply chain” (IBM, 2004) that represents a shift from traditional supply chains that focus on maximizing internal systems to end-to-end systems. These systems are highly collaborative, integrated throughout the enterprise, and emphasize more focus on the ultimate impact on the consumer. Similarly, Deloitte Consulting refers to firms who have effectively linked SCM with CRM as having a ‘digital loyalty network.’

Key Terms in this Chapter

Sales Force Automation (SFA): Software that automates an organization’s sales activities such as lead distribution and tracking, contact management, sales process management pipeline management, sales forecasting tools, and automated generation of quotes and orders.

Enterprise Resource Planning (ERP): An integrated information system that serves all departments and functions within an enterprise

360° View of the Customer: Having all customer related data consolidated into one location, in order to provide the most complete and thorough view of the customer’s information and preferences.

Customer Relationship Management (CRM): The strategic process of selecting and managing interactions with customers to optimize the value of the customer to the organization as well as satisfaction for the customer.

Supply Chain Management (SCM): The planning, scheduling and control of the supply chain.

Materials Requirement Planning (MRP): Computerized ordering and scheduling system for manufacturing or production process

Supply Chain: The sequence of organizations and functions that mine, make, or assemble materials and products from suppliers to manufacturers to distributors to customers.

Marketing Automation: The use of software to automate marketing processes such as customer segmentation, customer data integration, and campaign management.

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Editorial Advisory Board
Table of Contents
Jatinder N. D. Gupta, Sushil Sharma, Mohammad A. Rashid
Jatinder N. D. Gupta, Sushil Sharma, Mohammad A. Rashid
Chapter 1
Nancy Alexopoulou, Panagiotis Kanellis, Mara Nikolaidou, Drakoulis Martakos
Efficient response to change, both upon expected and unpredicted contingencies, is a critical characteristic for modern enterprises. This chapter... Sample PDF
A Holistic Approach for Enterprise Agility
Chapter 2
Hossana H. Aberra
SAP Business Blueprint is a vital part of SAP implementation exercise. A well-defined business blueprint may set the foundation for successful... Sample PDF
What is SAP Business Blueprint?
Chapter 3
Rogerio Atem de Carvalho
This chapter introduces the key aspects of Free/Open Source Enterprise Resources Planning systems (FOS-ERP). Starting by related work carried out by... Sample PDF
Free and Open Source Enterprise Resources Planning
Chapter 4
Brian H. Cameron
Business process modeling (BPM) is a topic that is generating much interest in the information technology (IT) industry today. Business analysts... Sample PDF
The Changing Nature of Business Process Modeling: Implications for Enterprise Systems Integration
Chapter 5
Alok Mishra
In the age of globalization, organizations all over the world are giving more significance to strategy and planning to get an edge in the... Sample PDF
Enterprise Resource Planning Systems: Effects and Strategic Perspectives in Organizations
Chapter 6
Gary P. Moynihan
An executive information system (EIS) is a software system designed to support the informational needs of senior management. The EIS is... Sample PDF
An Overview of Executive Information Systems
Chapter 7
Joseph Bradley
Enterprise Resource Planning systems have proven difficult and costly to implement. Organizations must consider the risks and rewards of embarking... Sample PDF
Enterprise Resource Planning System Risks and Rewards
Chapter 8
Andrea Masini
After observing that the pervasiveness of IT may soon render it strategically irrelevant, management scholars have recently questioned the value of... Sample PDF
ERP-Driven Performance Changes and Process Isomorphism
Chapter 9
Ronda R. Henning
The application software life cycle considers the functionality of a given collection of components within the context of a consumer’s requirements... Sample PDF
Application Integration within the Enterprise Context
Chapter 10
Sanjay Mathrani, Mohammad A. Rashid, Dennis Viehland
A significant investment in resources is required for implementation of integrated enterprise systems as technology solutions while the... Sample PDF
The Impact of Enterprise Systems on Business Value
Chapter 11
Charlotte H. Mason, Aleda V. Roth
Growing competitive pressures and escalating customer demands have led businesses to sophisticated information technology to manage costs and... Sample PDF
The Right Path to SCM-CRM Integration
Chapter 12
Euripidis Loukis, Ioakim Sapounas, Konstantinos Aivalis
This chapter is dealing with the alignment of enterprise systems with business strategy and its impact on the business value that enterprise systems... Sample PDF
Enterprise Systems Strategic Alignment and Business Value
Chapter 13
Sanjay Mathrani, Mohammad A. Rashid, Dennis Viehland
The market for enterprise systems (ES), continues to grow in the post millennium era as businesses become increasingly global, highly competitive... Sample PDF
Enterprise Systems in Small and Medium-Sized Enterprises
Chapter 14
Kerstin Fink, Christian Ploder
Small and medium-sized enterprises (SMEs) are a vital and growing part of any national economy. Like most large businesses, SMEs have recognized the... Sample PDF
Integration Concept for Knowledge Processes, Methods, and Software for SMEs
Chapter 15
Tobias Schoenherr, Ditmar Hilpert, Ashok K. Soni, M.A. Venkataramanan, Vincent A. Mabert
Although the research on integrated enterprise systems (ES) is proliferating, the knowledge base about ES implementations, usage and experiences... Sample PDF
Enterprise System in the German Manufacturing Mittelstand
Chapter 16
Darshana Sedera
Organizations invest substantial resources in acquiring Enterprise Systems, presumably expecting positive impacts to the organization and its... Sample PDF
Size Matters! Enterprise System Success in Medium and Large Organizations
Chapter 17
Joseph Bradley
ERP implementation projects normally involve a single vendor providing the packaged software for the entire system. Although most companies follow... Sample PDF
Implementing Best of Breed ERP Systems
Chapter 18
Ganesh Vaidyanathan
Enterprise resource planning systems are complex yet single, integrated software programs that runs off a single database so that the various... Sample PDF
Enterprise Resource Systems Software Implementation
Chapter 19
Calin Gurau
This chapter considers the importance of business modelling for implementing e-CRM systems. The introduction of e-business models requires the... Sample PDF
Restructuring the Marketing Information System for eCRM: An Application of the Eriksson-Penker Method
Chapter 20
Albert Boonstra
At the present moment, many hospitals are going through a process of change directed at the integrated delivery of health care. Enterprise Systems... Sample PDF
Analyzing an ES Implementation in a Health Care Environment
Chapter 21
S. Padmanaban
ERP systems have become key enablers of businesses today. While many organizations wish to adopt ERP for competitive advantage, they find choosing... Sample PDF
Designing to Deploying Customisable ERP Cost Effectively
Chapter 22
Mateja Podlogar, Katalin Ternai
This chapter introduces the ERP systems, their complexity, and especially their integration in higher education as a significant challenge for many... Sample PDF
ERP Systems in Higher Education from Regional Perspective
Chapter 23
Valentin Nicolescu, Holger Wittges, Helmut Krcmar
This chapter provides an overview of past and present development in technical platforms of ERP systems and its use in enterprises. Taking into... Sample PDF
From ERP to Enterprise Service-Oriented Architecture
Chapter 24
ERP and Beyond  (pages 329-345)
Suresh Subramoniam, Mohamed Tounsi, Shehzad Khalid Ghani, K. V. Krishnankutty
Enterprise-wide automation has already transformed the relations among suppliers, purchasers, producers, and customers. Conventional ERP helps only... Sample PDF
ERP and Beyond
Chapter 25
Gita A. Kumta
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E-Government and ERP: Challenges and Strategies
Chapter 26
Manish Gupta, Raj Sharman
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Emerging Frameworks in User-Focused Identity Management
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From the Knowledge Management perspective, Knowledge distribution is a critical process in organizations. As many of the other Knowledge-related... Sample PDF
Next-Generation IT for Knowledge Distribution in Enterprises
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