Chp9: Case2: CRM Helps Adidas Know Its Customers One Shoe

Buyer at a Time

Case2: Study Questions and Answers

Analyze Adidas using the competitive forces and value chain model.

Adidas aims to attract and retain customers through the quality of their products and customer
experience. There are many cheaper substitute products on the market, but Adidas chooses to
compete by creating a personalized experience for their customers rather than lowering their
prices. Their flexible, personalized, and convenient customer service platform strengthens their
value chain, which is concentrated in its primary activities such as operations, sales and
marketing, and service.

What is Adidas’s business strategy? What is the role of customer relationship management
in that strategy?

Adidas focuses their business strategy heavily on the customer experience. They do this by
ensuring that their products are available for customers to purchase regardless of the channel
they interact with the company through, providing personalized and convenient customer
support, and tailoring the experience to meet each customer’s needs. Customer relationship
management allows them to gain insight into their customers and adapt what it presents to the
customer to be as close to what the customer is looking for.

How do information systems support Adidas’s strategy?

To enhance the customer experience, Adidas partnered with Salesforce.com. Using their cloud-
based customer relationship management tools, they have been able to better identify key
customer segments, develop closer ties to customers, and design differentiated experiences
tailored to each customer’s needs.

How did using Salesforce.com make Adidas more competitive? How did it change the way
the company run its business?

Using Salesforce Marketing Cloud, Adidas has been able to enhance customer interaction. This
software includes predictive analytics to help them make decisions such as what channel to
communicate to customers through.

Salesforce Service Cloud has helped Adidas’s 1,100 customer service agents to automate service
processes, streamline workflows, and respond to customers across a variety of social platforms.
It has made it possible to deliver service that is more personalized and convenient.
Salesforce Commerce Cloud has enhanced the company’s business throughout the globe, helping
them use the knowledge of their customers to create better products.

Give an example of two business decisions that were improved by using Salesforce.com.
 Adidas developed a mobile app to customize the customer experience.
 Adidas used Salesforce Marketing Cloud to better communicate with customers.
 Adidas used Salesforce Service Cloud to enhance the customer service experience.
 Adidas used Cloud services to unify the customer experience, preventing overlap between
departments.
 Adidas used Salesforce Commerce Cloud to deploy its centralized e-commerce site globally.

Chp9: Case3: Versum’s ERP Transformation

Case3: Study Questions and Answers

Define the problem in this case study. What management, organization, and technology
factors contributed to the problem?

Versum continued to rely on its former parent company’s information systems after it was
divested under a transition service agreement (TSA). This was only an interim solution, however,
since Versum really needed its own IT infrastructure and enterprise system to support its new
business model and plans for growth. The company was given a very ambitious deadline of 18–
24 months to get off the TSA and have its own systems in place.

Management: The legacy ERP system had been heavily customized with various upgrades over
the years, and most of those customizations were for the parent company’s industrial gas
division, which had very different information requirements than the new Versum. Versum
Materials management didn’t want to continue using that system when it was not really suited
for the business.

Organization: Versum had a system in which a customer and the vendor could be the same
thing, but they were two different entities. This could cause confusion when trying to use this
system in the new separate operation.

Technology: As mentioned in the management section, the system had been designed for a
different division, so that the entire structure and coding needed to be addressed to be more
applicable.

Was the SAP S/4 HANA SaaS solution a good one for Versum? Explain your answer.

Student answers will vary but should include some of the following:

The new SAP S/4HANA system makes it easier for Versum to optimize operations, manage
costs, and take advantage of real-time analytics. The company now has a solid foundation for
operating as a standalone company specializing in specialty materials.
What challenges did Versum encounter implementing the new system?

Versum had to run through three cycles of data cleansing to obtain sufficiently accurate
invoicing, address, and contact information. The data structure in the old SAP ERP system was
not the same as that for the new SAP S/4HANA system, which had a new hierarchical Business
Partner structure.

How did the new system change the way Versum ran its business?

When Versum went live with SAP S/4HANA release 1610, it also rolled out other SAP
solutions, including modules for SAP Business Warehouse optimized for SAP HANA, SAP
Business Planning and Consolidation, SAP Global Trade Services, the SAP Advanced Planning
and Optimization component of SAP Supply Chain Management, SAP Solution Manager, SAP
Process Integration, SAP Data Services, SAP Governance, Risk, and Compliance (GRC), as well
as some non-SAP applications. The entire implementation took just 15 months.

Chp9: Case4: The Coronavirus Pandemic Disrupts Supply Chains

Around the World

Case4: Study Questions and Answers

Define the problem described in this case study. What management, organization, and
technology factors contributed to this problem.

Entire populations were isolating and quarantining, creating spikes in demand for certain
products (such as hand sanitizer) and large drops in demand for other products. Many businesses
were shuttered for months, with small businesses, retail stores, and restaurants especially hard-
hit. Large drops in demand, shortfalls in cash flow, worldwide port congestion, factory
shutdowns, and disruptions to air cargo, trucking, and rail services paralyzed companies all over
the world.

Management: Most companies do not have supply chain visibility. The majority of enterprises
have only 20 percent visibility into their supply chains. Experts believe 70 to 80 percent visibility
is required to deal with major supply chain disruptions.

Organization: The modern supply chain is incredibly fragile. Companies have built global
supply chains based on outsourcing to external suppliers and incredibly thin margins of safety
stock. Auto parts, fashion, technology, medical gear, and drug components are especially
vulnerable to supply chain disruptions in Asia.

Technology: A number of organizations don’t use a digital inventory management platform, and
even many that do, such as Walmart, were not set up or fluid enough to react to this type of
situation in a timely manner. More intelligence needs to be built in for such occurrences.
To what extent can information technology solve this problem? Explain your answer.

A contemporary supply chain management system increases transparency and responsiveness

because all the activities in the supply chain are able to interact with one another in near real-
time. There are new digital applications and platforms to help companies establish
interconnected networks of what had been discrete, siloed supply chain processes and to manage
their supply chains more flexibly. Gartner Inc, predicts that by 2023, at least 50 percent of global
companies will be using artificial intelligence, advanced analytics, and the Internet of Things
(IoT) in supply chain operations.

What management, organization, and technology issues should be addressed to re-design

supply chains to deal with major disruptions as the coronavirus pandemic.

Management: Better awareness of what is happening with the willingness and ability to make
changes on the fly need to be available to management. What has likely been learned from this
pandemic is what many consumers might look to increase their spending when a situation such
as this comes about.

Organization: From an organizational standpoint, it is important that employees and those who
work various elements of the business know the protocols that are in place should a shift be
needed. Similar to the management element, they can learn from what has already happened.

Technology: A more robust and digital inventory management system is ideal. Artificial
intelligence is making a push in this area to help make decisions more in real time to adapt to
what is happening as prior method in the digital space might not be used to handling the sudden
shifts.

LO1: How do enterprise systems help businesses achieve operational

excellence?

Enterprise software consists of a set of interdependent software modules that support basic
internal business processes. The software allows data to be used by multiple functions and
business processes for precise organizational coordination and control. Organizations
implementing this software would have to first select the functions of the system they wish to use
and then map their business processes to the predefined business processes in the software. A
particular firm would use configuration tables provided by the software to tailor a particular
aspect of the system to the way it does business. Table 9.1 describes some of the major business
processes supported by enterprise software. These include financial and accounting processes,
human resources processes, manufacturing and production processes, and sales and marketing
processes.

Enterprise systems provide value both by increasing operational efficiency and by providing
firmwide information to help managers make better decisions. Large companies with many
operating units in different locations have used enterprise systems to enforce standard practices
and data so that everyone does buisness the same way. Enterprise systems helps firms respond
rapidly to customer requests for information or products. Manufacturing is better informed about
producing only what customers have ordered, procuring exactly the right amount of components
or raw materials to fill actual orders, staging production, and minimizing the time that
components or finished products are in inventory.

Enterprise software includes analytical tools for using data captured by the system to evaluate
overall organizational performance. Enterprise system data have common standardized
definitions and formats that are accepted by the entire organization. Enterprise systems allow
senior management to easily find out at any moment how a particular organizational unit is
performing or to determine which products are most or least profitable.

Companies can use enterprise systems to support organizational structures that were not
previously possible or to create a more disciplined organizational culture. They can also improve
management reporting and decision making. Furthermore, enterprise systems promise to provide
firms with a single, unified, and all-encompassing information system technology platform and
environment. Lastly, enterprise systems can help create the foundation for a customer-driven
organization.

LO2: How do supply chain management systems coordinate

planning, production, and logistics with suppliers?

A supply chain is defined as a network of organizations and business processes for procuring
materials, transforming raw materials into intermediate and finished products, and distributing
the finished products to customers. It links suppliers, manufacturing plants, distribution centers,
retail outlets, and customers to supply goods and services from source through consumption.
Supply chain management is the integration of supplier, distributor, and customer logistics
requirements into one cohesive process.

The bullwhip effect occurs when information about the demand for a product gets distorted as it
passes from one entity to the next across the supply chain. It can also result from “gaming” as
purchasers present manufacturers or suppliers with a false picture of consumer demand. It can be
dealt with by reducing uncertainties about demand and supply when all the players in a supply
chain have accurate and up-to-date information.

Supply chain planning systems enable the firm to generate demand forecasts for a product and to
develop sourcing and manufacturing plans for that product. They help companies make better
operating decisions such as determining how much of a specific product to manufacture in a
given time period; establishing inventory levels for raw materials, intermediate products, and
finished goods; determining where to store finished goods; and identifying the transportation
mode to use for product delivery. One of the most important functions is demand planning,
which determines how much product a business needs to make to satisfy all of its customers’
demands. These functions are referred to as order planning, advanced scheduling, demand
planning, distribution planning, and transportation planning.
Supply chain execution systems manage the flow of products through distribution centers and
warehouses to ensure that products are delivered to the right locations in the most efficient
manner. They track the physical status of goods, the management of materials, warehouse and
transportation operations, and financial information involving all parties. These functions are
referred to as order commitments, final production, replenishment, distribution management, and
reverse distribution.

Firms use intranets to improve coordination among their internal supply chain processes, and
they can use extranets to coordinate supply chain processes shared with their business partners.
Using intranets and extranets (both based on Internet technology), all members of the supply
chain can instantly communicate with each other, using up-to-date information to adjust
purchasing, logistics, manufacturing, packaging, and schedules. A manager can use a web
interface to tap into suppliers’ systems to determine whether inventory and production
capabilities match demand for the firm’s products. Business partners can use web-based supply
chain management tools to collaborate online with suppliers and customers. Sales representatives
can access suppliers’ production schedules and logistics information to monitor customers’ order
status. The Internet has introduced new ways of managing warehousing, shipping, and packaging
based on access to supply chain information that can give companies an edge in delivering goods
and services at a reasonable cost.

In a push-based model, production master schedules are based on forecasts or best guesses of
demand for products, and products are “pushed” to customers. In a pull-based model, actual
customer orders or purchases trigger events in the supply chain.

In contemporary supply chain management systems, the Internet and Internet technology make it
possible to move from sequential supply chains, where information and materials flow
sequentially from company to company, to concurrent supply chains, where information flows in
many directions simultaneously among members of a supply chain network. Members of the
network immediately adjust to changes in schedules or orders.

LO3: How do customer relationship management systems help

firms achieve customer intimacy?

Customer relationship management: A business and technology discipline that uses information
systems to coordinate all business processes surrounding the firm’s interaction with its customers
in sales, marketing, and service.

Importance of customer relationships: Globalization of business, the Internet, and electronic

commerce have put more power in the hands of customers. Companies realize that their only
enduring competitive strength may be their relationships with their customers. Some say that the
basis of competition has switched from who sells the most products and services to who “owns”
the customer, and that customer relationships represent the firm’s most valuable asset.

CRM systems capture and integrate customer data from all over the organization, consolidate the
data, analyze the data, and then distribute the results to various systems and customer touch
points across the enterprise. Companies can use this customer knowledge when they interact with
customers to provide them with better service or to sell new products and services. CRM systems
integrate and automate many customer-facing processes in sales, marketing, and customer
service, providing an enterprise-wide view of customers. These systems track the ways in which
a company interacts with its customers and analyze these interactions to maximize customer
lifetime value for the firm. CRM extends to a firm’s business partners who are responsible for
selling to customers.

The more comprehensive CRM packages contain modules for partner relationship management
(PRM) and employee relationship management (ERM).

PRM uses many of the same data, tools, and systems as CRM to enhance collaboration between
a company and its selling partners. If a company does not sell directly to customers but rather
works through distributors or retailers, PRM helps these channels sell to customers directly.

ERM software deals with employee issues that are closely related to CRM, such as setting
objectives, employee performance management, performance-based compensation, and
employee training.

Customer relationship management systems typically provide software and online tools for sales,
customer service, and marketing. Refer to Figure 9-8 for a diagram of the business processes that
CRM software supports for sales, marketing, and service. Capabilities include the following:

Sales:

 Helps sales staff increase their productivity by focusing sales efforts on the most
profitable customers, those who are good candidates for sales and services.
 Provides sales prospect and contact information, product information, product
configuration capabilities, and sales quote generation capabilities.
 Enables sales, marketing, and delivery departments to easily share customer and prospect
information.
 Increases salespeople’s efficiency in reducing the cost per sale as well as the cost of
acquiring new customers and retaining old ones.
 Provides capabilities for sales, forecasting, territory management, and team selling.
 Supports direct-marketing campaigns by providing capabilities for capturing prospect and
customer data, for providing product and service information, for qualifying leads for
targeted marketing, and for scheduling and tracking direct-marketing mailings or email.

Customer Service:

 Provides information and tools to make call centers, help desks, and customer support
staff more efficient.
 Includes capabilities for assigning and managing customer service requests.
 May also include web-based self-service capabilities.
 Marketing:

 Supports direct-marketing campaigns by providing capabilities for capturing prospects

and customer data, for providing product and service information for qualifying leads for
targeted marketing, and for scheduling and tracking direct-marketing mailings or email.
 Includes tools for analyzing marketing and customer data. Identifies profitable and
unprofitable customers, designs products and services to satisfy specific customer needs
and interests, and identifies opportunities for cross-selling, up-selling, and bundling.

Operational CRM includes customer-facing applications such as tools for sales force automation,
call center and customer service support, and marketing automation.

Analytical CRM includes applications that analyze customer data generated by operational CRM
applications to provide information for improving business performance management.
Applications are based on data warehouses that consolidate data from operational CRM systems
and customer touch points. The database serves online analytical processing, data mining, and
other data analysis techniques. Analytical CRM provides information related to customer
lifetime values.

LO4: What are the challenges enterprise applications pose, and how
are enterprise applications taking advantage of new technologies?

Enterprise applications are very difficult to implement successfully. They require extensive
organizational change, expensive new software investments, and careful assessment of how these
systems will enhance organizational performance. Enterprise applications require both deep-
seated technological changes and fundamental changes in business operations. Employees must
accept new job functions and responsibilities. They must learn new work activities and
understand how data they enter into the system can affect other parts of the company. Enterprise
applications introduce switching costs that make it expensive to switch vendors. Multiple
organizations will share information and business processes. Management vision and foresight
are required to take a firm- and industry-wide view of problems and to find solutions that realize
strategic value from the investment.

Enterprise applications create new interconnections among myriad business processes and data
flows inside the firm (and in the case of supply chain management systems, between the firm and
its external supply chain partners). Employees require training to prepare for new procedures and
roles. Attention to data management is essential. Management must understand the impact that
implementing enterprise applications will have on every facet of the business. Executives must
not underestimate the time and costs of implementation, not just on the organization but also on
customers, suppliers, and business partners.

Enterprise application vendors are delivering more value by developing systems that are more
flexible, web-enabled, and capable of integration with other systems. Next-generation enterprise
applications include open source and on-demand solutions. Small companies choose open source
products because there are no software licensing fees even though support and customization for
open-source products cost extra. Major enterprise application vendors offer portions of their
products that work on mobile handheld computing devices. Salesforce.com and Oracle include
some Web 3.0 capabilities and services that enable organizations to identify new ideas more
rapidly, improve team productivity, and deepen interactions with customers.

Social CRM tools enable a business to connect customer conversations and relationship from
social networking sites to CRM processes rather than having them in separate “silos.” The tools
help organizations identify new ideas more rapidly, improve team productivity, and deepen
interactions with customers. When employees interact with customers via social networking
sites, they are often able to reach customer service functions much faster and more cheaply than
by using telephone conversations or email. Customers have come to expect rapid responses to
their questions and complaints and aren’t willing to wait on slower, outdated technologies.