Chapter 9
Broad Questions:
1. Definitions:
Enterprise Systems: Enterprise systems feature a set of integrated software modules
and a central database that enables data to be shared by many different business
processes and functional areas throughout the enterprise.
Supply Chain: Supply chain is a network of organizations and business processes for
procuring raw materials, transforming these materials into intermediate and finished
products, and distributing the finished products to customers.
Just in Time strategy: Components would arrive exactly at the moment they were
needed and finished goods would be shipped as they left the assembly line.
Bullwhip Effect: Distortion of information about the demand for a product as it passes
from one entity to the next across the supply chain.
Push-based model: Supply chain driven by production master schedules based on
forecasts or best guesses of demand for products, and products are “pushed” to
customers.
Pull-based model: Supply chain driven by actual customer orders or purchases so that
members of the supply chain produce and deliver only what customers have ordered.
PRM: Automation of the firm’s relationships with its selling partners using customer
data and analytical tools to improve coordination and customer sales.
ERM: Software dealing with employee issues that are closely related to CRM, such as
setting objectives, employee performance management, performance-based
compensation, and employee training.
SFA: Sales force automation modules in CRM systems help sales staff increase their
productivity by focusing sales efforts on the most profitable customers, those who are
good candidates for sales and services.
Cross selling: Cross-selling is the marketing of complementary products to customers.
CLTV: Difference between revenues produced by a specific customer and the expenses
for acquiring and servicing that customer minus the cost of promotional marketing over
the lifetime of the customer relationship, expressed in today’s dollars.
Churn Rate: Measurement of the number of customers who stop using or purchasing
products or services from a company. Used as an indicator of the growth or decline of a
firm’s customer base.
2. Explain Nike’s supply chain management.
Ans:
The upstream portion of the supply chain includes the company’s suppliers, the
suppliers’ suppliers, and the processes for managing relationships with them. The
downstream portion consists of the organizations and processes for distributing and
delivering products to the final customers. Companies doing manufacturing also
manage their own internal supply chain processes for managing materials and inventory.
The upstream portion of Nike’s supply chain would actually comprise thousands of
entities. Nike also has numerous distributors and many thousands of retail stores where
its shoes are sold, so the downstream portion of its supply chain is also large and
complex.
3. What happened to P&G’s inventory of disposable diapers along its supply chain? How
did P&G fix the issue? (See page 387!)
Ans: Procter & Gamble (P&G) found it had excessively high inventories of its Pampers
disposable diapers at various points along its supply chain because of such distorted
information. Although customer purchases in stores were fairly stable, orders from
distributors would spike when P&G offered aggressive price promotions. Pampers and
Pampers’ components accumulated in warehouses along the supply chain to meet
demand that did not actually exist. To eliminate this problem, P&G revised its
marketing, sales, and supply chain processes and used more accurate demand
forecasting.
4. List some of the challenges of implementing Enterprise Applications. (Page 401, 402)
Ans: List some of the challenges of implementing Enterprise Applications are:
1. Enterprise applications involve complex pieces of software that are very
expensive to purchase and implement.
2. Enterprise applications require not only deep-seated technological changes
but also fundamental changes in the way the business operates.
3. Employees must accept new job functions and responsibilities.
4. Enterprise applications also introduce “switching costs.”
5. Draw a diagram to show how Enterprise Systems (ERP) work. Explain the business
value of Enterprise Systems. (Page 384)
Ans:
Enterprise systems feature a set of integrated software modules and a central database
that enables data to be shared by many different business processes and functional
areas throughout the enterprise.
(Don’t need to memorize this portion, but understand the concept of the diagram)
If a sales representative places an order, the system verifies the customer’s credit limit,
schedules the shipment, identifies the best shipping route, and reserves the necessary
items from inventory. If inventory stock is insufficient to fill the order, the system
schedules the manufacture of more, ordering the needed materials and components
from suppliers. Sales, production forecasts, general ledger and corporate cash levels are
automatically updated with the revenue and cost information from the order. Users
could tap into the system and find out where that particular order was at any minute.
Management could obtain information at any point in time about how the business was
operating. The system could also generate enterprise-wide data for management
analyses of product cost and profitability.
Business value of Enterprise Systems:
1. Increasing operational efficiency
2. By providing firmwide information, help managers make better decisions.
3. Respond rapidly to customer requests for information or products.
4. Eliminated many redundant processes and systems.
5. To evaluate overall organizational performance.
6. Allow senior management to easily find out at any moment how a particular
organizational unit is performing.
Determine which products are most or least profitable.
And calculate costs for the company as a whole.
