November 2002 | Commentary | Supply Chain Technology

CRM Plays Crucial, Often Confusing, Role in SCM

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The importance of customer relationship management (CRM) within the supply chain is vitally important. This column offers my take on some important integration issues.

The customer and the customer's customer have been a critical part of the supply chain since its inception. The customer is quite clearly what the supply chain is all about. Having procurement, warehousing, manufacturing and distribution in place is all well and good, but without a customer it is academic and lacking in profit.

CRM's standard core applications consist of sales force automation, marketing automation, and call center technology. These applications give more attention to customer needs by providing a better handle on the product or products involved, the content of the service, and added value.

Knowing your customers means knowing who your customers are, what their needs are, and the means by which you communicate with them. When this data becomes a part of your database, there is no reason to research this data again. You can focus instead on updating customer information, processing orders, and extending your knowledge of the customer.

Marketing becomes, to a great extent, a function of properly managing critical customer data. It is out of this information that you can target customers and customize communication to meet their needs.

CRM Confusion

It would be nice to think that sales, marketing, and call center technology all came from the same base and evolved the same way.

They didn't, any more than the major parts of the supply chain did. Procurement, transportation, warehousing, manufacturing, finishing, packaging, and distribution to wholesale and retail all grew up from their own points of origin.

Now add CRM to this broad supply chain management mix, and you can see the opportunity for confusion and non-compatible specifications.

For instance, a call center may use an old legacy system, a sales order may be stuck at a paper forms level, and a marketing program may be the whim of an advertising agency out of sync with everything else. As with all compounded problems, they tend to grow geometrically and get out of hand.

The same kinds of problems can be rife in an enterprise's handling and management of its supply chain. The enterprise may have fine-tuned control over procurement and inbound transportation, yet fail in providing reliable data for manufacturing production and meeting due dates. Or it may have manufacturing down and operate on the edge in its distribution network.

Challenges like these occur because supply chain functions did not grow up in lock step. They did not start out together and they did not have the same expectations. They didn't necessarily share a common goal, much less a common computer system or database. They grew more like weeds than roses.

Compounding the problems of CRM and SCM is that present day demand for full visibility of business process is not just pie in the sky but an expected reality. Companies want visibility of products and processes in real time, at the right place, at the right time.

Many companies strive to achieve visibility along an integrated set of applications that include CRM and SCM, often with an ERP backbone. But the goal goes even further and deeper—they want integrated applications visibility over the web, with as fully customized a portal as possible, available when and where needed by CEOs, CFOs, CIOs, manufacturing and warehousing vice presidents, and line managers.

The Real Benchmarks

Managers want their vital information available whenever and wherever they are. They want to be able to track, plan, execute, and control and they want the assurance that this is real data—not fudged or dated. They want security, they want sharing with their compatriots, they want to be able to communicate to their customers and their suppliers in the same breath.

This is what a real supply chain system means: through economy of means, secure data, and real-time information, companies can increase profits, reduce or hold down costs, and boost market share. These are the real benchmarks.

So the pressure is on to choose vendors that can offer optimized solutions to this growing set of integrated applications. Supply chain management vendors, customer relationship management vendors, and extended enterprise resource management vendors are all vying for best position. Each has a story to tell.

The SCM vendors come out of the world of logistics and have strength of knowledge in transportation, warehousing, and distribution. The ERP vendors have strong financial substructures and evolved application modules that have been built to fit. The CRM vendors have the energy of a higher degree of granularity in regard to the customer, and successful models including Wal-Mart, Dell, and Gateway.

Vendors that can integrate information in real time, while making available tracking, planning, executing, and controlling within a web environment, will win the customers. Wise vendors will also see that integration must work over the full life of a product, not just as a means to fulfill an order here and now. They will factor product lifecycle management into their solutions.

In the past 10 years, issues such as collaboration, web presence, and Y2K, dominated the market. For the next decade, the major challenge and preferred solution will be successful integration of all business processes within an enterprise. Integration will earn the gold star.

This may not occur until a new "meta application" hits the market. But that's another column.

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