RWC Solutions

Module III: Business Applications

CHAPTER 8: ENTERPRISE BUSINESS SYSTEMS

RWC 1: Mitsubishi Motor Sales: Implementing Customer Relationship Management Systems

1. What are the key application components of Mitsubishi’s CRM system? What is the
business purpose of each of them?

Key components and purpose:

 Call center software from Siebel Systems – consolidation of call centers and
outsourcing of basic customer calls
 Consolidated customer database
 Digital phone switch from Avaya – allows for flexible skills-based routing, to a live
representative or an interactive voice response unit
 Avaya IP Agent – listening to customer calls and monitoring agent activity and
response
 Blue Pumpkin Software – workforce management system that permits forecasting of
call center coverage
 NiceLog – recording and analyses of customer calls and agent response

2. What are the benefits to a business and its customers of a CRM system like Mitsubishi’s?

For the company benefits arise from several sources:

 Cost savings from improved and consolidated call centers
 Knowledge about customers and their needs and problems, gained from the ability to
listen to and analyze customer calls (both live and the ones that end up in an IVR)
 Provide greater opportunities to pitch new products or services
 Reduce turnover in customer service representatives

For the customer:

 Reduction in the number of contact points with the company – one single number to
call
 More accurate routing of calls to address their needs
 Better trained service representatives who are flexible to provide answers to different
issues

3. Do you approve of Mitsubishi’s approach to acquiring and installing its CRM system?
Why or why not?

There are two basic approaches to the acquisition and implementation of large-scale integrated
systems. One is to purchase a suite from one (or a very small number) vendor, with components
that work out fine together in a coherent way, and less integration issues, albeit each component
might not be the best of its kind. The other strategy is to acquire the best-of-breed module for
each function, and bear the weight of integrating them and developing interfaces where needed.
The case of Mitsubishi is an example of the latter. While in theory the outcome might be a best-
possible system, it also has its share of perils when it comes to implementation. The company
was able to address these issues by conducting a staged implementation, building on the
success of the previous module. The strategy was most appropriate for this case, however, it is

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not always feasible, because of time constraints and need for change, to conduct such a long
implementation.

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Module III: Business Applications

RWC 2: Agilent Technologies and Russ Berrie: Challenges of Implementing ERP Systems

1. What are the main reasons companies experience failures in implementing ERP systems?

Potential reasons could include:

 Lack of top management commitment
 Inadequate requirements definition
 Poor ERP package selection
 Inadequate resources
 Resistance to change / Lack of buy-in
 Miscalculation of time and effort required
 Misfit of application and business processes
 Unrealistic expectations of benefits and ROI
 Inadequate training and education

2. What are several key things companies should do to avoid ERP systems failure? Explain
the reasons for your proposals.

Possible actions could include:

 Foster high employee involvement, ownership and buy-in
 Comprehensive and systematic approach that addresses all parts of the implementation
 Provide adequate resources
 Extensive education and training at all levels
 Understanding that ERP implementations are not about the technology package but
rather the transformation to all processes and way of doing business of the organization

3. What do you think ERP systems in particular are often cited as examples of failures in IT
systems development, implementation, or management?

There are many IT failures that go unnoticed by the general public, not usually the case with
ERP implementations. Probably the main reason for this focus is that, because of the sheer size
of resources involved in these projects, and the public announcements company make when
deciding on doing them, expectations are very high. Accordingly, failures are very notable,
usually ranging in the tens of millions of dollars burned in ERP implementations. This
magnitude makes them very visible to be pointed at as examples of what should not be done. In
many cases, failed implementations have very severe consequences for organizations that go
beyond the direct amount of money involved in the project, up to threatening its survival.

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Module III: Business Applications

RWC 3: TaylorMade Golf and HON Industries: The Business Value of Supply Chain Management

1. How could moving business information systems with supplies and distributors to the
Web result in such dramatic business benefits as experiences by TaylorMade Golf?

While Web-based applications and systems enjoy some cost advantages and scalability that
custom-designed applications do not have, the benefits reaped by TaylorMade did not arise
from cost savings in IT development. On the contrary, they came from a streamlined supply
chain that was improved all the way from forecasting to actual manufacturing because of the
ability to share data and customer demand with suppliers and distributors. By more accurately
estimating such that parameter, the company was able to cut down inventory, make a more
efficient use of manufacturing capacity, and increase turnover. The approach taken, Web-based
systems, takes advantage of a number of platform commonalities, but it would arguably be one
of many ways to do what they did.

2. How does HON Industries’ new SCM system improve the efficiency of their supply chain?

Efficiency was improved by means of two different aspects of the chosen application. One
focused on solving the capacity and measurement issues that was creating with the transport
and storage of goods and products. The other focused on the routing of orders to be
manufactured and shipped in the most efficient and cheaper way. Those two aspects are highly
interrelated. The outcome is seen in reduction of manufacturing and shipping costs, as well as
increased inventory turnover and carrying costs.

3. What other SCM initiative would you recommend that TaylorMade Golf or HON
Industries implement to improve their supply chain performance and business value?
Explain the business value of your proposals.

Examples could include:

 Web-based self-customized club ordering with an agent that assists the customer based
on past purchases and ergonomic measures
 Expand the shipping and scheduling models to include orders containing products that
would individually be better assigned to different locations but, as a group to be
shipped together, to a unique one
 Integrate product scheduling and routing with raw material and part forecasting for
each manufacturing location

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RWC 4: H-P, Eastman Chemical, and Others: The Benefits and Challenges of SCM Systems

1. Why can both large and small businesses cut costs and increase revenues by moving their
supply chain online? Use the companies in this case as examples.

The four companies illustrated in the case show large and medium-small companies partnering
to improve the combined supply chain: H-P with resin manufacturers, Eastman with raw
materials producers, Advanced International Multitech with TaylorMade and W.W. Grainger
([Link]) with thousands of small part suppliers. Companies of both sizes stand to
gain from integrating supply chains. Large companies improve their forecasting, procuring and
manufacturing operations, while smaller companies gain a steady and stable outlet for their
products, as long as they can keep up with the technical challenges. In different ways, both
types of companies stand to benefit. Moving this integration online allows for more complex
practices, such as linking together groups of companies in different stages of the manufacturing
process, which streamlines the process from basic materials to final product to shipping.

2. What is the business value to Eastman Chemical and W.W. Grainger of their initiatives to
help their suppliers and customers do business online?

The increase in sales and reduction in time and cost that steam from supply chain integration is
their main business value. By streamlining the manufacturing and distribution process, reducing
stocks and increasing turnover, companies such as Eastman and W.W. Grainger can position
themselves almost as intermediaries in the transaction, linking suppliers and customers, with
the minimum participation required to add value to the transaction (for Eastman its proprietary
manufacturing process, for W.W. Grainger the pooling of transactions in one site). For these
companies it is critical that as many of their suppliers as possible are onboard with these
initiatives, even when that means upgrading their technology themselves.

3. Why are many small suppliers reluctant to do business online with their large customers?
What can de done to encourage small suppliers online?

The reluctance probably comes from two sources. The first one is the perception that online
supply chain integration is complex and beyond their means, in terms of both knowledge and
resources. The second source would be the perception that integration favors only the largest
link in the chain, and that it is aimed at gaining increased leverage over the smaller partners,
and thus reducing their margins and any bargaining power they have. Encouragement could
come from technical assistance to set up and operate their side of the technology (maybe even
entering a licensing agreement where the large partner operates it for a fee) and from incentives
to adopt these new initiatives. Possible ones could be reflect accomplishments in setting up and
starting online integration, as well as phased out ones during a number of periods from the
beginning of the agreement.

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RWC 5: Wal-Mart and Mattel: Supply Chain Management Best Practices

1. Do you agree that Wal-Mart is “the best supply chain operator of all time?” Why or why
not?

If not the best, it would be very hard to think of another one that comes even close. Wal-Mart
has to be among the very best in supply chain management because that is the foundation of
their business. All of Wal-Mart’s operation is based on high volume, extremely quick inventory
turnover, and low prices (which come with low margins). With that business strategy, anything
other than efficient supply chain management would not allow an organization to make a profit,
and profit is something Wal-Mart is very good at making.

2. What has Mattel learned from Wal-Mart? How well are they applying it to their own
business? Explain your evaluation.

The major lesson comes probably not from technical knowledge or skills, but rather from the
concept that one company, its customers, and suppliers, can all collaborate, and that
collaboration will lead to benefits across the board for all participants. Mattel is applying that
concept to get their other retailers and distributors to share information about customer demand
and collaborate in reducing stocks in both supply chains.

3. What can other businesses learn from the experiences of Wal-Mart and Mattel that could
improve their supply chain performance? Use an example to illustrate your answer.

The best example that can be taken from the case in terms of successful initiatives other
organizations may want to apply is that high degree of buy-in Wal-Mart gets from its suppliers,
because its practices benefit both of them, rather than Wal-Mart alone. The lesson is that
information sharing and process integration can result in benefits for both companies, and that
acting more as partners rather than two parties divvying up margins can have beneficial results.

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