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Homework #3 - CRM / SCM analysis.doc

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  • 1. Jason Thomas BUS 311 Section 2, TTR 1030 HW3 I. Compare CRM and SCM. (What are these systems and their characteristics?) Customer Relationship Management (CRM) CRM is a diverse set of strategies used by business entities to optimize profitability through customer satisfaction. CRM software applications cover everything from contact and lead management to marketing and sales force automation. CRM has three main components: 1. Operational CRM (front-office). These include: a. Sales Force Automation b. Customer Service and Support c. Enterprise Marketing Automation 2. Analytical CRM (back-office) a. Analysis of sales and marketing trends b. Competitor analysis c. Communication optimization 3. Collaborative CRM – Internal and external communication functions. CRM applications tend to focus more on customer relationships than transactions. For this reason they are said to concentrate mostly on “down-stream information flows” that attract and maintain customers. Applications come in “out of the box” configurations, fully customized configurations, and everything in between. In some cases the applications are “on-premise” meaning the software is physically located on a computer or server at the enterprise utilizing the software. In other cases the software is said to be “hosted” when the application or set of applications reside on the servers of the company who designed the software or on the servers of some other 3rd party. Jason Thomas Page 1 5/24/2010
  • 2. Supply Chain Management (SCM) In contrast with CRM, SCM concentrates mostly on “up-stream information flows.” SCM has two main objectives. One is “to accelerate product development,” and the other is to “reduce costs associated with procuring raw materials, components, and services from suppliers.” Supply Chain Management must address issues with the organizations distribution network configuration as well as the distribution strategy. A properly designed SCM solution can reduce cost of goods sold as well as improve relationships with customers through more efficient, cost-effective operations. SCM architecture can be divided into Supply Chain Planning (SCP) and Supply Chain Execution (SCE). SCP can be further subdivided into: 1. Demand Planning and forecasting 2. Distribution Planning 3. Production Scheduling 4. Procurement Planning SCE is the execution of the SCP. It can be further divided into: 1. Product flow 2. Information flow 3. financial flow II. CRM Vendors and Products www.adaptcrm.com CRM Products: ADAPTcrm Price: Starting at $1,000 to $1,500 per user license. Type: On premise Major functions: Jason Thomas Page 2 5/24/2010
  • 3. Automates and manages: • Accounts, activities and tasks • Marketing campaigns, events and ROI • Sales opportunities, pipelines and competitors • Service contracts, warranties and incidents. • In addition, ADAPTcrm is equipped with real-time back-office accounting/ERP and Microsoft front-office integration. www.appshore.com CRM Products: Free Edition Professional Edition Premium Edition Type: Hosted Price: Free. Paid edition starts at $9 per user per month Major Functions:. • Contact management • Lead management • Sales force automation • Customer relationship management • Document management • Collaboration • Marketing automation • Project management www.entellium.com Jeff – 206 245 2355 jeffg@entellium.com Type: Hosted/ CRM Products: Entellium Suite eSalesforce - hosted eCustomerCenter eMobile My entellium Jason Thomas Page 3 5/24/2010
  • 4. Price: Starting at $50 per user per month. Major Functions: • Sales force automation • Contact Management • Customer Service & Support • Mobile CRM • Opportunity management • Sales process management • Pipeline management • Activity management • Lead management • Service Resolution Management • Real-time dashboards • Live Collaboration/Chat • Contract management • Bidirectional Outlook synchronization • Report generator • Searchable knowledge base • Offline access www.surado.com Type: On-Premise CRM Products: Surado CRM Enterprise Suite Surado Small Business CRM Pricing: Pricing to lease: 3 Users: $28/user/month 5 Users: $25/user/month 10 Users: $21/user/month Major Functions: • contact and account management • sales automation • marketing automation • customer support/service Jason Thomas Page 4 5/24/2010
  • 5. www.frontrange.com Type: On-Premise PRICE: $179.95 (downloadable or CD-ROM one-time software install) CRM Products: Goldmine Standard Edition Goldmine Corporate Edition Major Functions: • Rich contact management • Time management • Sales force automation • Opportunity tracking • Team-based collaboration • Reporting and analysis • Forecasting • Synchronization CRM Conclusion: Gold-mine Standard Edition from Front-Range Solutions fits the needs of our e- commerce business (bike and moped surf rack retailer) just fine at this stage. The business is still very small so it is important to keep costs low. Although there are some cheaper solutions available, the Front-Range solution appears to have the best balance of price and functionality in this class of CRM applications. I like that it is a fixed, one-time cost as opposed to an on-going monthly fee. I also think that the on-premise solution versus a hosted solution is good because processing power is relatively cheap and more reliable than bandwidth these days, so performance should be a bit higher and more reliable with this implementation. Unlike some of the other competing vendors, Front-Range provided an excellent flash demonstration of the software so I really feel comfortable knowing what it is that I am buying. At this stage one of our companies’ biggest goals is developing a network of dealers for our products in various states and countries. The amount of contact information that could be compiled in a short amount of time is somewhat daunting, but Gold-mine should allow us to manage the information (mainly contact info) effectively and translate it into profitable opportunities. We plan to use this CRM implantation in conjunction with an Amazon.com store. The Amazon store provides additional CRM functionality, but for the purposes of this project Jason Thomas Page 5 5/24/2010
  • 6. it is being proposed as more of a SCM solution. The combination of the two solutions should provide a robust CRM foundation for our company during the initial growth stages and on into the foreseeable future. III. SCM Vendors & Products www.i2.com Pricing: Not provided on website. As of this writing no reply has been received in response to email request for pricing information. (Pattern maintained across most SCM solution providers) SCM Products: Total Plan Management Total Channel Management Total Merchandise Management Total Supply Management Total Logistics Management Supports processes including: • carrier contract negotiations • transportation network modeling • shipment order handling • freight planning • order execution and monitoring, • freight financial settlement www.infor.com/solutions/scm Pricing: Not provided on website. As of this writing no reply has been received in response to email request for pricing information. SCM Products: SCM Advanced Scheduler SCM Demand Planning Jason Thomas Page 6 5/24/2010
  • 7. SCM Warehouse Management Supports processes including: • Strategic Network Design • Demand Planning • Distribution Planning • Manufacturing Planning • Production Scheduling • Transportation and Logistics Planning • Warehouse Management System • Event Management www.fideltone.com Pricing: Not provided on website. As of this writing no reply has been received in response to email request for pricing information. SCM Products: Completely customized solutions including full SCM outsourcing. Supports processes including, but not limited to: • Database Management • Forecasting • Inventory Management • Vendor Management/Supplier Relationship Management • Vendor Drop Ship Order Management • Global Sourcing www.epicor.com Pricing: Not provided on website. As of this writing no reply has been received in response to email request for pricing information. SCM Products: Many including SCM modules in various products: • Vantage Jason Thomas Page 7 5/24/2010
  • 8. • Vista • Manage 2000 • Avante Processes specifically supported by Epicor Vantage include: • Purchase Management • Supplier Relationship Management • Inventory Management • Handheld (Manufacturing Execution System) • Advanced Material Management • Shipping • Receiving • Purchase Contracts www.amazon.com Fulfillment Pricing: Finally!!! Order Handling MEDIA NON-MEDIA OVER-SIZE Per Order N/A $1.00 N/A Pick & Pack Per Unit MEDIA NON-MEDIA OVER-SIZE Units Priced Under $25.00 $.50 $.75 $3.00 Units Priced Over $25.00 $1.00 $1.00 $3.00 Weight Handling MEDIA NON-MEDIA OVER-SIZE Per Pound $.40 $.40 $.40 Jason Thomas Page 8 5/24/2010
  • 9. Use this table for non-Amazon.com Fulfillment orders.*** The total fee to process a fulfillment order = Pick & Pack + Shipping Method + Shipping Weight Pick & Pack MEDIA NON-MEDIA OVER-SIZE Per Unit $.60 $.75 $3.00 Shipping Method Per Fulfillment Order MEDIA NON-MEDIA OVER-SIZE Standard $1.90 $4.75 $7.00 Expedited $7.40 $7.75 $10.00 Priority $14.40 $14.75 $17.00 Removals**** $1.50 $4.00 $7.00 Shipping Weight Per Pound STANDARD TWO-DAY NEXT-DAY 1-15 Pounds $.45/lb $.55/lb $1.50/lb Each Additional lb, up to 70lbs $.45 $.70 $1.75 Each Additional lb, up to $.45 $.85 $2.00 150lbs***** SCM Products: Trading Exchange (Web Store by Amazon) Order Fulfillment Drop Shipping by Amazon Processes supported include, but are not limited to: • Inventory Management • Order Management • Product Intelligence • Search Engine Optimization • Reporting • Design Customization • Pick and Pack SCM Conclusion: Jason Thomas Page 9 5/24/2010
  • 10. I spent countless hours on this project researching SCM and reading horror stories about an industry segment infamous for its’ opaque pricing structure. While the SCM industry/movement has produced some notable successes, it is also responsible for many massively expensive, over-budget SCM implementations that yielded questionable ROI (return on investment) or none at all. I initially came to the conclusion that an SCM solution was not economically or technologically viable for a company of our size and type at this stage. Then it dawned on me that I might be making things a little too complicated. We have discussed distribution portals, procurement portals, and trading exchanges, but it never actually linked trading exchanges to something I was familiar with like E-bay or Amazon. It turns out that when you take a close look both Ebay and Amazon they effectively offer both CRM and SCM type solutions through their online stores or “trading exchanges.” The really attractive part from a small-business perspective is the transparent pricing model. I couldn’t find prices on any other vendor specific SCM systems. Actually, in one case I was able to find rough estimates and they started around $60,000 for a low end implementation and went way, way up from there! At this point $6,000 is barely in our budget - $60,000 is simply absurd. I ended up choosing Amazon.com for our SCM implementation because its’ order fulfillment function is a clear example of a supply chain management function that our company could completely outsource to Amazon at a fraction of the cost of employing a staff to provide the same level of support here in Hawaii. Amazon definitely gets paid - 7% per completed transaction on top of the costs listed in the chart above - but after factoring in all the costs of the labor and materials required to perform the same functions in Hawaii, it seems clear that this solution is relatively cost effective (assuming moderate to heavy order flow). We will probably pursue a delayed implementation with a unit sales trigger level. Once the SCM implementation is initially triggered we will stagger the implementation in phases in order to test Amazon’s ability to provide the advertised service. Jason Thomas Page 10 5/24/2010