B2B CRM and Supply Chain Connection- Connecting Customer Lives
B2B CRM and Supply Chain has great value when executed and connected right. Processing a
single B2B order can cost suppliers US $100 or more, and sometimes thousands of dollars. Most of
the cost is because of the number of different people who are involved in the order before
fulfillment. ERP systems were widely adopted in the late 1990s by companies eager to streamline
and automate their operations. Since then they have become the core of many corporate technology
initiatives. ERP systems were implemented for various reasons, ranging from the reduction of
inventory levels to increasing process efficiencies in the supply chain and integrating core business
In much the same way that many B2C organizations have taken to aligning their business processes
with CRM systems, ERP systems have frequently dictated B2B corporate procedures. This is
because ERP products offer easier information sharing between different departments, such as
purchasing, operations or manufacturing, finance and human resources. ERP automated key
corporate functions, making general ledger systems and warehouses brimming with filing cabinets
full of purchase orders a thing of the past. Key business processes that are automated include:
distribution and logistics management;
ERP systems allow companies to automate these and other functions and also to link them together.
This bringing together of disparate systems and processes enables integrated operations across the
enterprise; reason enough in itself for implementation of ERP. Sales teams can access a single
system to check inventory, a purchasing agent can look up a supplier's history and product
managers can track defects in their products reported by the field service operation. The links
between ERP, supply chain management and CRM are stronger than ever. Better knowledge of the
customer means better understanding of how to build the relationship with that customer. For
instance, a company's accounts receivable staff might choose not to open collections on past-due
customers who have in-process trouble tickets. Likewise, CRM business users can use accounting
and supply chain information to decide how to treat customers who do not meet provisioning
ERP vendors (such as Oracle, MS and SAP) have recognized the connections between tighter, more
integrated operations and business customer satisfaction and have released CRM modules that tie
their core products, rendering the customer a key link in the supply chain. The Picture shows the
broad range of integrated logistics capabilities that a distribution company needs to be able to
deliver in order to assist their customers in optimizing the potential of the supply chain.
Throughout the supply chain, companies are expected to provide their customers, suppliers and
partners with more information than ever before. To do that, they need the best databases, holding
accurate and current data, and the applications and processes necessary to deliver that data (not to
mention an organizational willingness to share data with suppliers and customers). The
introduction of the Web as a channel has meant that key processes such as ordering, fulfillment,
inventory management, and distribution all have to run at Web speed. The challenge of
streamlining the supply chain is compounded by this need for speed. Data is also required
internally in order to be able to anticipate demands and work with third parties to realign focus
One of the main reasons for the growing requirements for end-to-end integration, better and more
visible information, and greater speed of response is the need for some companies to act globally.
Global businesses expect a global service, while maintaining the high standards they have become
accustomed to at a local level. One of the main aims of B2B companies that operate globally is to
anticipate customer demand at a global level while acting upon it locally.
Measurement and CRM Metrics in B2B
Until now measurement of CRM performance in B2B has been largely determined from a supplier
perspective, predominantly revenue oriented: that is, reflecting not what is valued by the customer
but rather what is important to the supplier. Despite this, customer satisfaction was measured in
B2B companies long before CRM became the buzzword in B2B. Particularly in key account
management, the value of customer relationships and loyalty have been long recognized, although
it had been very ad hoc until recent years. In most cases, B2B CRM was personalized: account
managers had to manage relationships effectively in order to achieve their targets. Today we are
seeing that awareness and responsibility at an enterprise level.
The main metrics for key account managers until now have been:
Customer satisfaction (mainly based on transactions: whether the goods were delivered on
time, and so on).
We are seeing a move towards more appropriate relationship oriented measurement, measuring
for example how many senior executives have been contacted in a given time period. Inevitably,
revenue metrics (which are supplier oriented) will remain, although they will become more
relevant to the customer as risk-reward and profit sharing arrangements become more pervasive.
That is to say, the metrics will reflect supplier and customer shareholder value.
The 360-degree feedback approach, in which customers give feedback to their suppliers about the
quality of the latter's staff, has been adopted in many global organizations, and appears to be a step
in the right direction in terms of understanding the CRM performance of key individuals. The
problem here is measurement: few supplier organizations are willing to reward their
representatives for anything other than revenue. What is needed is a key set of human relationship
metrics for CRM in B2B. In the meantime, a common approach is to ask customers at the beginning
of a time period what they value and then measure CRM performance against this. Indeed this is
one of the Hitachi approach on a project-by-project basis with the pre-consulting engagement
'conditions of satisfaction' assessment, in which Hitachi asks its customers what five things it needs
to do to achieve customer satisfaction on the project.
The world of B2B marketing changed irrevocably with the advent of ERP. Today, the key to
improving CRM in B2B is integration with ERP systems. While ERP systems are usually
characterized by use of well-established metrics, this is not so for CRM in B2B. My view is that a
necessary condition for the success of B2B CRM is the adoption of metrics that make sense to
customers and to staff, and support of these metrics by appropriate incentives.