-Customer relationship management -Customer service management -Demand Management -Order fulfillment -Manufacturing flow management -Supplier relationship management -Product development and commercialization -Returns management [SLIDE 1] Business processes are bundles of interconnected activities that stretch across firms in the supply chain. Those process are key areas where one or more firms in the supply chain are constantly working in order to reduce cost or increase revenue. There are eight primary areas where firms are interested in supply chain business processes: -Customer relationship management -Customer service management -Demand Management -Order fulfillment -Manufacturing flow management -Supplier relationship management -Product development and commercialization -Returns management [SLIDE 2] Customer relationship management (CRM) allows companies to prioritize their marketing focus on different customer groups according to each group’s long-term value to the company or supply chain. CRM is a process that helps differentiate customers and to identify the highest value customers. Those customers that are bringing in a significant portion of revenue or profit can be targeted with special programs in order to increase customer satisfaction that leads to long-term revenue. At the same time, CRM does not mean you ignore the other customer segments. Rather, it provides the information that helps understand the return on investment (ROI) for all the customers. Lower value customers are still important, as long as the investment in getting and keeping those customers provides a positive ROI. While the CRM concepts do not require a software system, the ability to track large amounts of data and complexity of analysis provided by such systems has let to a phenomenal level of growth in CRM software systems in the last decades. [SLIDE 3] Customer service management presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced. CRM systems help to identify prospects and gain customers, while the customer service management system is aimed at providing the service needed for customer retention. Customers and prospects expect service delivery from the moment of contact. Pre-sales services should flow smoothly into post-sales service. It also does not matter how the customer gets the product or service; they want consistent services. For instance, Dell sells computers directly to customers, via their web site, and through reseller partners. When somebody has a computer from Dell, the company wants to know about it. Dell created a service system that lets them see partner information about the customer in order to have a more complete picture of the customer and the customer’s issues. [SLIDE 4] Demand management seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and creating demand-related plans for action prior to actual customer purchasing behavior. As pointed out with customer service management, identifying high-value customers does not mean a company should ignore other customers. Demand management is the process of understanding supply and demand and then working to minimize the cost of serving the multiple types of customers. Sales and operations planning (S&OP) is a method companies use to align production with demand by merging tactical and strategic planning methods across functional areas of the business. Boot manufacturer Red Wing Shoes implemented S&OP and it was able to reduce inventory by 27% while simultaneously increasing customer service rates by 8 to 10 percent, leading to cost savings that could be passed on to customers. [SLIDE 5] The order fulfillment process is a highly integrated process, often requiring persons from multiple companies and multiple functions to come together and coordinate to create customer satisfaction at a given place and time. eCommerce is an example of the multi-company example with which most readers should be familiar. A company has a product to sell via Amazon or eBay’s platform, and then a shipping company delivers the product. Then there are the companies involved in supporting the warehouse systems including the growing presence of robotics. The customer wants to know when the product will be delivered and they want to have a consistent front. All of those companies must share information to provide a clear order fulfillment system. Order cycle time is the time delay between the placement of a customer’s order and the customer’s receipt of that order. Without the above integration, companies are usually at a competitive disadvantage in order cycle time. [SLIDE 6] Manufacturing flow management is the process concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move product through a multi-stage production process. The manufacturing flow is very dependent on a strong supply chain system to provide the flexibility to adapt manufacturing to demand requirements. The process includes more than static agreements; it needs flexible agreements with suppliers and shippers in order to meet unexpected demand. Two terms are in wide use in the business world: lean and agile. Both can support the manufacturing flow: -Lean manufacturing: products created in advance, but there is a focus on minimizing waste in the process. -Agile manufacturing: tends to wait for customer demand to produce in a flexible way that can quickly provide the demanded items. The two methods do overlap, as the lean concept of minimizing waste can still be used within an agile system. [SLIDE 7] The supplier relationship management process is focused, as the name implies, on identifying and maintaining relationships with highly-valued suppliers. It is the corollary to CRM, focused up the supply chain rather than down to the customer. Building long-term supplier relations provide clear benefits. Both sides of the relationship can improve efficiency in the bottom line. Sometimes the need for a strong relationship can lead to a merger to achieve vertical integration. [SLIDE 8] In previous lessons, development and commercialization were discussed in detail. As is now seen, a company often has many suppliers in order to create a product. The product development and commercialization process includes the group of activities that facilitate the joint development and marketing of new offerings among a group of supply chain partners. The partners in the supply chain know far more about their resources than does the manufacturing company. By working with the supply chain, a company’s development cycle can be improved by finding more cost savings and efficiencies than they might by doing the product design by themselves. That information can change the product mix by changing the details of the product and costs associated with manufacturing, which in turn affect price. [SLIDE 9] The returns management process enables firms to manage volumes of returned product efficiently while minimizing returns-related costs and maximizing the value of the returned assets to the firms in the supply chain. Returns have the potential to affect a firm’s financial position in a major and negative way. In certain industries, such as apparel, returns can amount to 40 percent of sales volume. Having a strong process can minimize the costs associated with returns. In addition, returns are a chance for another customer touch point. Handling returns quickly and professionally can improve customer satisfaction and drive future business. Just as importantly, tracking returns provides information to better understand the market and to adjust the marketing mix. Both facets of returns handling can help maximize the value of the returned asset.