CRM - October 2007 - (Page 36)

SUPPLY CHAIN CRM reusable parts, shorter development cycles for products, and frugal component counts. That means less strain on the company’s supply chain, which can lead to lower prices or additional promotions for consumers. A perfect example would be lower warranty/service charges for the automotive industry, O’Marah says. Vendors have taken note of these evolving processes and technologies, and are responding. Enterprise suite providers such as Oracle and SAP have always focused on ERP and SCM, and offer integrated packages that include their CRM applications. Still others are taking the acquisition route in their quest to marry SCM with other software applications. Oracle, for one, has been on a rampant acquisition spree over the last few years, including SCM vendor Demantra in June 2006. Just a month earlier, Infor had snatched up SSA Global Technologies, and in the process created the world’s third largest enterprise software maker behind Oracle and SAP. (SSA Global had been an acquirer itself, buying E.piphany and Baan, among others, over the previous half-decade.) The combined Infor now has its hands full merging many back-end applications—its existing expertise in SCM, ERP, warehouse management, and business intelligence with SSA Global’s focus on SCM, PLM, CRM, and marketing automation. in Asia and elsewhere, and customer bases residing in North America and Europe, companies are using SCM to determine which customers are profitable or which ones will simply burn up profit margins via high transportation costs. Aberdeen’s Enslow sees the global impact: “As the shipments flow in from China and costs build up, companies ask themselves, ‘Are those costs what I expected them to be, or did I miscalculate duties and could have sent the products via cheaper transportation?’ ” Enslow cites retailers as a perfect example of an industry beginning to combine price optimization, SCM, and CRM. With an integrated system in place, retailers will change the prices of a promotion or cancel it altogether if they feel they won’t have the inventory in stock to support it, or if market research points to reduced consumer demand. “Those companies that marry CRM and SCM price optimization are going to be the ones with the highest gross margins,” she says. THE PRICE IS RIGHT Television game-show host Bob Barker may be hanging up his trademark “the price is right” motto, but that catchphrase is fitting for SCM’s developing involvement in price optimization. Businesses are beginning to use SCM data to take some of the guesswork out of product pricing. “Price optimization from a supply chain perspective is where one of the next big pushes in supply chain and CRM will take place,” Forrester’s Tohamy says. “You’re determining the prices, promotions, and deals you offer customers based on how your inventory is shaping up for that month, quarter, or year.” To do this, companies are starting to measure inventory levels, such as constraint, capacity, or excess, and tie that information with CRM data such as customer segmentation. The resulting pricing decisions not only maximize revenue, but also serve to optimize customer relations. This also works well for nationwide corporations that have to deal with regionalized pricing, Tohamy says. “You could offer promotions to get rid of excess inventory, increase prices to deal with a constrained supply chain, or more effectively compete with regional competition by keeping inventory costs low,” she says. Businesses are also using SCM to determine which customers they want to sell to, and which mode of transportation is most appropriate. With manufacturing sites located 36 CUSTOMER RELATIONSHIP MANAGEMENT | OCTOBER 2007 “Those companies that marry CRM and SCM price optimization are going to be the ones with the highest gross margins.” THE VENDOR LANDSCAPE MOVING FORWARD: ON-DEMAND SCM On demand is the next big push in integrating SCM with CRM—but the intensity of that push is a matter of some debate. A recent study by Aberdeen Group found that 50 percent of companies surveyed said they’re using or planning to use an on-demand SCM application. A separate study, from Forrester Research, pegged the adoption of ondemand SCM at less than 20 percent. What industry pundits do agree on is the fact that on-demand SCM providers such as Mitrix, Click Commerce, and GXS (which offers a solution for B2B supply chain management) will allow small and midsize businesses to leverage the new concepts surrounding SCM. Mitrix, for one, offers Order Live, a module built for Salesforce.com’s AppExchange platform, which allows users to book and maintain orders and view inventory via the Web. In general, the cost of on-demand SCM solutions runs 20 to 30 percent less than on-premise solutions, according to Aberdeen Group. For enterprises, suite providers such as SAP and Oracle continue to gain traction against best-of-breed vendors, according to Tohamy. Currently, the functionality gap between the two sides stands at 20 percent, she says, but thanks to the strong push by enterprises to integrate SCM with multiple solutions, the day will come when the suite providers catch up. “The long-term strategy should be to go with the ERP/CRM vendors because their SCM functionality will get to the point where it’s apples to apples with the best-of-breed vendors,” she adds. Contact Associate Editor Colin Beasty at cbeasty@destinationCRM.com. www.destinationCRM.com http://Salesforce.com http://www.destinationCRM.com

Table of Contents Feed for the Digital Edition of CRM - October 2007

Contents Front Office Reality Check Customer Centricity Coupons Without the Clipping Something Special in the Air Oracle’s Name Game Market Focus: Sports & Entertainment: CRM Scores for Sports Franchises Statistically Speaking The Pulse Required Reading Are We There Yet? Help Them Help Themselves The Chain Gang Pay Day OutClick Media Gets a Second Opinion Best Kiteboarding Makes a Splash with NetSuite True-Blue Service Documentation Secret of My Success The Tipping Point Re:Tooling Pint of View

CRM - October 2007

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