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It mainly focuses on material flow both finished and unfinished within the firm and to the final end users or the consumers. Traditionally, this was done manually through constant monitoring and supervision. But with technological advancements, firms have opted to use software to monitor and check the whole supply chain process. The traditional supply chain management also involved the actual human capital such as the physical employment of sales persons. During this era, the sales person ordered, processed and delivered products and services to and from the firm. a huge catalogue of items to be delivered to and from the company was maintained for book keeping, a process which was tedious and time consuming. But with the invention of the new Supply Chain Management, everything is done electronically including the documentation process. The system has become more advanced with the increased internet use. Firms are now able to place orders and sell their products and services online, a move which has made transactions easy and efficient. The basic components of SCM use metrics to realize demands and ensure reliable supply chains. It records deliveries and payments for the supplied products and services. Its metric intensive ensures effective processing and controls in transport and storage of supplies from the supplier to the end users. The system also allows customers to return the defective and excess products (Lavassani, Movahedi & Kumar, 2009).
The SCM is however embedded with information technology in order to create integration and information links between the various departments within a firm. The software therefore reduces the monitoring process due to its visibility character. It enables the responsible person to view all areas up and down the supply chain thus making the detection of errors easy and fast. The traditional supply chain management mostly used fax, telephones and regular mails to contact their customers and suppliers, similarly, they advocated for a face-to-face contact with them. However, with the advanced SCM, the physical contact with the suppliers and customers is no longer important. This is because everything can be done online. There is therefore a great cost and time reduction in the new system. Since most of the SCM applications are electronically linked, they end up having a low switching cost which makes the overall system adaptable to changes. Firms are therefore able to change it with their changing trends, competition pressures and consumer preferences.
The SCM system assists the firm to solve its distributional network problems through the effective configuration of the number and the location of the suppliers. The efficient flow of information within a firm makes SCM efficient as customers are served quite on time. This is because SCM interconnects the product facilities such as the distribution centers, warehouses and consumer outlets. It enables the firm to establish an effective distribution strategy with effective delivery schemes and replenishment schemes. The integration specification of SCM makes it possible for a firm to obtain valuable information from demand signals, forecasts and transportation. And the firm may effectively use this information to its own advantage. SCM enables proper inventory management control through effective location of raw materials, work-in-in progress and finished goods. It also enables the management to effectively arrange payment terms and procedures for the products and services (Cooper, Lambert & Pagh, 1997).
Through the effective use of SCM, firms are able to respond to their customer demands fast. The SCM is synchronized with demand planning software which effectively generates demands forecasts making it easy to respond to them. Through it the firm is able to know when consumer needs more and effectively produce more to satisfy them. Ideally, an effective and efficient supply chain management tool give the firm a competitive advantage over the others in the same market and industry. It is a cost effective program since it eliminates delays, wastage and speed up the supply process. Likewise, the system enhances productivity and inventory reductions which may have a negative impact on the firm.
It maintains and ensures visibility of the whole process, thus making it possible to improve on the products and services quality. And finally SCM ensures customer satisfaction which consequently gives the firm a good competitive advantage. However, for a smooth transition from traditional management system, the firm ought to change its management functions in order to integrate well with the key supply chain processes. For instant there should be an effective integration between the purchasing and marketing departments. For an efficient SCM, the firm ought to direct its attention towards the planning and control component, work structure, product and information flow facility structures. SCM tracks the inventory and information processes within the firm. The increased use of internet has made many firms including the small and medium-sized businesses. Its adoption has continued to give them competitive advantage in the market (Lavassani, Movahedi & Kumar, 2009).
Customer Relationship Management (CRM) Systems
Customer relationship management (CRM) is a strategy that ensures a company is able to manage the contacts with clients, prospective sales persons, and customers. The company employs technology to synchronize, organize and automate the processes of business that involves its customers. This includes marketing, sales, technical support, and customer service. In establishing effective systems in CRM the company will be able to handle its communication process very efficiently since all processes are done on time. The major objective of CRM is to make sure revenue, profits and customer needs are optimized through provision of high quality and efficient services to clients. The customer becomes the main focus in view of the fact that the customer is the major source of revenue through the sales made.
There are four major functions that are supported by the traditional CRM systems; these are firstly, automating and reorganization the sales, marketing and customer service functions; secondly, administration of customer information and transactions that flows in and out of every department; thirdly, to analyze the data gathered from customers from each department of the business; and fourthly, planning and managing sales and marketing strategies and operations.
According to Bernett, and Kuhn, (2009) in the article “The Emergence of Electronic Customer Relationship Management” the demand for CRM products in the world has significantly increased despite the low spending in non-government information technology. The figures from the study indicated that there has been a significant rise in CRM sales from 2001 up to 2006. In addition, the financial companies were more interested with the CRM products followed by manufacturing and communication industries.
Traditional CRM was invented in the 1990s, where the first generation applications were developed; these were simple set ups which supported single functions. There was a setup of help desk that would assist everyone with what they wanted and direct and organize all the events of the company. The employees designated with the task of being at the help desk would assist customers in making sales or he or she would market the products. Other companies would set up a call center that performed particular functions. The traditional set ups were only more helpful to the employees such that they were able to help them do their jobs better; on the other hand they were not accessible to the company’s clients. These inadequacies meant that there was dire need for a more efficient CRM system that would incorporate the missing functionality.
The need for better functionality meant that there was need to develop the CRM further; this gave rise to second generation applications. The 360 degree view of client relations was the software developed during this period. As opposed to the first generation that included all departments and functions in the same software, the second generation included different modules that would cover different modules such as sales, customer support, marketing, call center functions and analytics. This was a way to fully cover all the company’s range of services to the clients by means of a common set of database in the CRM integrated system; this also had third party applications. The integrated database management system incorporated all systems that a company would have in that it would have a centralized decision making system which was comprehensive and informed. The second generation application still had some uncovered functionalities where the employees did not access some functions which were essential to the business. The link between the employee and the customer still remained a very vital function which must be covered by every CRM application (Bernett & Kuhn, 2002).
The growing volume of sales within the business premise and outside requires an up-to-date customer records in order to enhance efficiency. Likewise, firms should also ensure that their mobile staffs acts professionally and decisively whenever they interact with the consumers. An efficient use of CRM applications may enable the firm get access to their critical customers whenever their service representatives are working with clients. And such connection greatly boosts the firm’s productivity through an increase in sales volume.
Since the CRM system enhances efficient reporting of the staff time, expenses and their follow-up work, firms are able to identify the needs of their customers and work towards satisfying them. Ideally, the CRM system stores the historical view and analysis of acquired and potential customers. These records assist the firm to direct its needs towards meeting the customer’s needs and thus increase their business. Likewise, the system contains every details of a customer making it easy for the firm to track the profitable customers and leave those who are not. CRM system groups the customers according to their physical location, making it easy to track them whenever necessary (Taylor, n.d).
Customer Relationship Management is a cost-effective system, since it involves less paper work and lesser staffs to manage. The CRM system software is also very cheap and smooth to use compared to the traditional method. The system is centralized within a firm and thus it reduces processing time and increases productivity. And since the system is aimed at providing customers with what they actually need, it boosts satisfaction and a chance of getting more business. And in the long-run the system ultimately enhances an improved turnover and profit. Likewise, customer satisfaction encourages loyalty and hence we can say that efficient implementation of CRM increases customer base and the overall net growth of the business.
All businesses critically require upgrading their Supply Chain Management and Customer Relationship Management systems for an increased efficiency in production. They should uphold the new electronically empowered systems which are cost-effective and adaptable to the current market changes. The adoption of such management systems will assist the firm to not only focus on their today’s needs but also on their future sustainability in the market. It will also enable the firm to strategically position itself well in the market and have a competitive advantage over the others. The SCM ensures efficiency and smooth flow of production which boosts the firm’s profitability level. The CRM on the other hand enhances good customer relationship as the firm seeks to satisfy their needs. It enhances customer loyalty and also enables the firm to increase its customer base. For a sustainable and productive venture, the SCM and CRM systems are vital components within a firm.