Course Code: IEP114

Course Description: Supply Chain Management

Section/s: 4IE-A, B, C, and D
Week: 16 and 17
Topic: Customer Relation Management (CRM): Definition and Concept; Customer
Segmentation; CRM Planning and Software; Recent Trends
Course Handler: aProf. Sarah C. Vanguardia

Customer Relation Management

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Companies worldwide recognize that successful supply chain management and customer

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relationship management are integral to sustaining business growth and customer loyalty. Customer

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Relationship Management (CRM) in supply chain management is a strategic approach that aims to
enhance interactions between suppliers, manufacturers, distributors, and customers, optimizing supply

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chain activities based on customer insights and demand patterns.

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CRM in supply chain management enables companies to streamline inventory management,

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refine demand forecasting, improve order fulfillment, and respond to customer needs more effectively.
This integration allows companies to balance cost-efficiency with customer satisfaction, ensuring that the

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right products reach the right customers at the right time.

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F o Figure 1. Customer relationship management (CRM) and supplier
relationship management (SRM): the critical supply chain management
linkages

CRM and Supplier Relationship Management (SRM) are complementary strategic approaches
within supply chain management, both focused on building strong, mutually beneficial relationships but
targeting different groups: customers and suppliers, respectively. Their integration enables companies to
enhance efficiency, agility, and resilience throughout the supply chain.
This framework, depicted in Figure 1, demonstrates how CRM and SRM work in tandem across
various stages of the supply chain, creating a seamless network of relationships that ultimately drive
profitability for all stakeholders involved.
 Imagine a supply chain that includes four key entities: Supplier D, Manufacturer C,
Wholesaler/Distributor B, and Retailer/End User A. At each stage, these entities are both suppliers and
customers, connected by CRM and SRM functions that manage their interactions and transactions. The
strength of these relationships not only determines individual profits but also impacts the overall
performance of the supply chain. By focusing on both upstream (SRM) and downstream (CRM)
relationships, companies can optimize costs, enhance revenue, and ultimately increase profits across the
entire supply chain. This integration ensures that every entity benefits, reinforcing the idea that strong
relationships throughout the supply chain contribute to mutual success and improved overall supply chain
performance.

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Figure 2. The customer relationship management (CRM) and supplier

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relationship management (SRM) linkage

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Source: Supplier Relationship Management as a Macro Business Process - Scientific Figure on ResearchGate. Available from: https://www.researchgate.net/figure/The-customer-relationship-
management-CRM-and-supplier-relationship-management-SRM_fig3_235288492 [accessed 30 Oct 2024]

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In the center of Figure 2, six core processes bridge CRM and SRM, serving as the backbone of a

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well-synchronized supply chain:

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1. Customer Service Management ensures seamless communication with both suppliers and
customers, addressing issues quickly and effectively to maintain satisfaction on both ends.

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2. Demand Management leverages data from CRM and SRM to forecast needs accurately,
balancing supply with anticipated customer demand.
3. Order Fulfillment is facilitated by coordinating supplier input and customer needs, ensuring that
orders are completed on time and to specification.
4. Manufacturing Flow Management involves planning production to meet customer demand
while collaborating with suppliers to maintain an uninterrupted material supply.
5. Product Development and Commercialization relies on feedback from CRM and SRM to innovate
and launch products that meet market needs, supported by reliable supplier capabilities.
6. Returns Management addresses product returns in an efficient manner, involving both suppliers
and customers to ensure a smooth process that minimizes losses.
 The interconnected arrows suggest a feedback loop, where insights from customer and supplier
interactions inform improvements across these processes. This synergy between CRM and SRM fosters a
responsive and resilient supply chain that enhances customer satisfaction, streamlines production, and
sustains strong supplier relationships, ultimately boosting the supply chain's overall performance.
The role of CRM in the supply chain goes beyond traditional customer service. It includes data
collection and analysis to understand customer behaviors, preferences, and purchasing patterns, which
allows for better demand planning, inventory management, and lead-time reduction. As customer
expectations rise, supply chains must adapt quickly to offer flexibility, transparency, and efficiency in
meeting these demands, making CRM an invaluable tool.

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Customer Segmentation

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Customer segmentation involves categorizing customers into distinct groups based on specific
characteristics, such as purchasing behavior, frequency, or order size. This segmentation is essential for

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CRM in the supply chain because it allows companies to prioritize resources, customize service delivery,
and manage supply chain processes according to each segment's unique needs.

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F o Figure 3. Supplier segmentation matrix for The Coca-Cola Company

Figure 3, known as the Supplier Segmentation Matrix, provides a strategic framework for
classifying suppliers based on two dimensions: Supply Risk (y-axis) and Potential to Add Value (x-axis).
Developed from insights by The Coca-Cola Company, it helps organizations manage supplier relationships
by segmenting them into four distinct categories, each with unique management approaches.

Category 1. Strategic Suppliers (High Supply Risk, High Value Addition)

Strategic suppliers are critical to the organization due to their high value addition and essential
role in achieving long-term profitability and competitive advantage. These suppliers often provide unique,
high-quality products or services that are difficult to replace, making them vital partners. Close
collaboration and relationship management are crucial here to ensure stability and innovation.
Category 2. Leverage Suppliers (Low Supply Risk, High Value Addition)
Leverage suppliers offer significant value but with low supply risk. They typically operate in
competitive markets with multiple suppliers, allowing the organization to capitalize on cost advantages
and negotiate favorable terms. While these suppliers add value, the organization has flexibility in managing
costs due to the availability of alternative options.

Category 3. Bottleneck Suppliers (High Supply Risk, Low Value Addition)

Bottleneck suppliers present high supply risks despite having a low potential to add significant
value. They often supply niche or non-standard products, which can be challenging to source and replace.
Due to the potential for disruption, organizations need contingency plans, proactive management, and

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alternative sourcing strategies to minimize risk.

Category 4. Routine Suppliers (Low Supply Risk, Low Value Addition)

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Routine suppliers provide standardized products or services with minimal risk and limited
potential to add value. These suppliers operate in competitive markets, making them easy to replace.

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Routine suppliers are managed with a focus on cost-efficiency, transactional processes, and streamlined

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procurement.

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To effectively manage these supplier categories, organizations need to assess a range of factors

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(listed on the left side), including product quality, capacity, financial stability, and social responsibility.

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These factors help determine the strategic approach for each supplier type, whether focused on cost

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control, innovation, or alignment with corporate values.
This matrix provides a roadmap for companies to prioritize and tailor their supplier management
strategies based on the supplier's role in the supply chain, balancing risk and value to optimize

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performance and resilience.

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Table1. Segmentation Models and Their Impact on Supply Chain

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Model Impact

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Behavioral By analyzing past purchasing behaviors, supply chain managers

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can predict demand, plan production, and manage stock levels for
each customer segment

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Value-Based High-value customers often receive prioritized delivery, dedicated

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service agents, or faster shipping options. For these segments,
companies might maintain higher stock levels or offer guaranteed
delivery times, optimizing inventory and minimizing stockouts.
Geographic Customer location impacts distribution networks, transportation
costs, and delivery speed. Regional segmentation allows for
tailored logistics strategies, with products warehoused closer to
high-demand regions, reducing lead times.

Effective segmentation helps align the supply chain with customer expectations, reduce waste,
and optimize order fulfillment processes, leading to higher customer satisfaction and loyalty.
 •indicates how recently a •measures the number of •value represents the
customer made a purchase, purchases over a specific amount spent by a
helping to predict the period, allowing for customer, providing insight
likelihood of repeat orders prioritization of regular into high-value clients who
customers may need additional
inventory management
strategies to meet demand

Recency Frequency Monetary

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Figure 4. RFM Segmentation Framework in CRM-Driven Supply Chain

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CRM Planning and Software

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Planning CRM in the context of supply chain management entails setting clear objectives,
integrating CRM into existing supply chain processes, and identifying metrics that reflect both

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customer satisfaction and operational efficiency. CRM planning involves:

Customer Data
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•Collecting comprehensive data on customer orders,
preferences, and feedback helps refine supply chain

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processes
Collection

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•CRM activities, like tracking customer satisfaction and
managing returns, should align with supply chain

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functions such as warehousing, inventory
Synchronization management, and logistics

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•Choosing the right CRM software to support supply
Technology chain integration is crucial, as it must be able to

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connect with ERP systems, handle customer service
Selection data, and provide real-time insights

or Figure 5. CRM Planning Key Activities

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Table 2 shows the comparison of popular CRM software solutions that enable effective
supply chain integration, supporting functions such as demand planning, customer interaction,
and order management.

Table 2. CRM Software Options for Supply Chain Integration

CRM Software Features for Supply Chain Integration Cost (Approximate)
Salesforce CRM Advanced analytics, ERP integration, AI-driven insights $25–$300 per user/month
Zoho CRM Automation, multichannel support, custom reporting $14–$52 per user/month
HubSpot CRM Pipeline management, real-time customer tracking Free to $50 per
user/month
SAP CRM Extensive ERP integration, real-time analytics for SCM Custom pricing
Oracle CRM Cross-functional integration, sales & customer insights Custom pricing
Selecting the right CRM software helps streamline communication, reduce costs, and improve
overall customer satisfaction by aligning CRM capabilities with supply chain goals.

Recent Trends
1. AI-Driven CRM Solutions
Artificial Intelligence (AI) in CRM enhances supply chain management by automating demand
forecasting, predictive analysis, and customer interaction. AI-driven CRM solutions help supply
chains anticipate changes in demand and proactively address potential bottlenecks or disruptions.
For instance, AI can analyze historical order data and forecast potential delays, helping supply

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chains respond dynamically to shifts in demand.

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2. IoT-Integrated CRM Systems

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The Internet of Things (IoT) has revolutionized CRM by enabling real-time tracking of goods,

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providing critical information like location, temperature, and product condition during transit. For
industries with strict compliance standards, such as pharmaceuticals or food, IoT-enhanced CRM

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ensures product integrity and reduces risks. By using IoT-enabled CRM systems, supply chains can

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offer customers greater visibility, fostering trust and satisfaction.
3. Customer Self-Service in CRM for SCM

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Many CRM systems now incorporate self-service portals, allowing customers to check order status,
access support, and manage returns independently. This trend aligns with the supply chain

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objective of reducing touchpoints and improving service delivery speed, as customers can access

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information in real time, without waiting for support representatives.

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Examples and Best Practices in CRM-Driven Supply Chain Management

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To better understand the impact and implementation of Customer Relationship Management

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(CRM) within supply chain management, let’s examine real-life examples from global companies and focus

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on successful practices from companies in the Philippines. These examples illustrate how CRM strategies

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enhance supply chain efficiencies, reduce costs, and improve customer satisfaction.

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Global Examples of CRM in Supply Chain

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Amazon: Personalization and Data-Driven Supply Chain

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Amazon is a global leader in CRM-driven supply chain innovation. By leveraging big data and

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predictive analytics, Amazon collects detailed customer information that informs its inventory
management, demand forecasting, and order fulfillment processes. The company uses machine learning
to predict which products customers are likely to buy based on their previous shopping patterns,
personalizing recommendations and aligning inventory locations accordingly.
Best Practices in Amazon's CRM-Supply Chain Integration
➢ Advanced Data Analytics - Amazon’s data-driven CRM captures insights on customer
preferences, shipping preferences, and feedback, feeding real-time data into its supply
chain.
➢ Inventory Management - To meet the promise of fast delivery, Amazon strategically
places inventory in warehouses closest to high-demand regions, optimizing delivery
times and customer satisfaction.
 ➢ Customer Experience Focus - Automated CRM notifications keep customers informed
about order status and estimated delivery times, a key factor in Amazon’s high
customer satisfaction.

Coca-Cola: CRM-Enabled Demand Forecasting

Coca-Cola uses a sophisticated CRM system integrated with its supply chain to analyze sales
patterns and demand trends, adjusting production levels accordingly. The company collects data on
customer consumption patterns across different regions, allowing it to stock distribution centers
strategically based on projected demand. CRM insights also inform promotions, campaigns, and seasonal
product releases.

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Best Practices in Coca-Cola’s CRM Strategy

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➢ Localized Production and Distribution - Coca-Cola’s CRM data helps identify regional
preferences, enabling the company to adjust distribution channels and reduce

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transportation costs.
➢ Demand Forecasting for Seasonal Variations - The CRM system anticipates demand

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spikes during holidays, allowing Coca-Cola to stock accordingly and avoid shortages.

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➢ Customer Feedback Integration - Feedback is collected through CRM touchpoints,

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providing valuable input for product improvement and new flavor launches.

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CRM and Supply Chain Management in the Philippines

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SM Retail: Integrated CRM in Inventory Management

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As one of the largest retail chains in the Philippines, SM Retail operates with a focus on CRM-
driven supply chain practices. Its CRM system tracks purchase histories and preferences of loyalty program
members, which informs stock management and helps SM anticipate demand for specific products in

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different locations.

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Best Practices in SM Retail’s CRM Integration
➢ Inventory Optimization - By using CRM data to analyze customer buying behavior, SM

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Retail adjusts stock levels in different stores to align with local demand, reducing

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overstock and waste.

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➢ Loyalty Programs for Demand Insight - The SM Advantage loyalty program collects

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valuable customer data on shopping patterns, which feeds into demand forecasting
and inventory planning.

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➢ Personalized Promotions - SM Retail uses CRM insights to personalize promotions for
loyalty members, improving engagement and driving in-store traffic based on customer
preferences.

Jollibee Foods Corporation: Real-Time Customer Feedback and Service Improvement

Jollibee, the Philippines’ largest fast-food chain, leverages CRM for customer feedback collection,
which informs its supply chain and customer service strategies. Real-time customer feedback is gathered
through Jollibee’s CRM system, allowing the company to adjust menu offerings, streamline operations,
and improve supply chain responsiveness to customer needs.
 Best Practices in Jollibee’s CRM Strategy
➢ Real-Time Feedback Integration - Jollibee collects real-time customer feedback on
service quality and product satisfaction, which helps adjust sourcing and operations to
meet evolving demands.
➢ Customer Data for Menu Customization - CRM data on customer preferences informs
Jollibee’s menu offerings, enabling the company to introduce items that align with local
tastes and demand trends.
➢ Supply Chain Efficiency - Jollibee’s CRM system integrates with its supply chain to adjust
ingredient sourcing based on customer demand, helping reduce inventory waste.

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Manila Water Company: CRM for Improved Customer Engagement and Service

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Manila Water, a leading utility company in the Philippines, uses CRM to enhance customer service
and manage supply chain functions effectively. Manila Water’s CRM tracks customer feedback, helping the

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company respond to issues quickly and ensuring a reliable supply of water to customers.
Best Practices in Manila Water’s CRM Approach

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➢ Customer Complaint Resolution - Manila Water’s CRM system integrates complaint

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tracking and feedback loops, helping improve customer satisfaction by addressing

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issues quickly.
➢ Predictive Maintenance - CRM data helps identify patterns in customer complaints,

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enabling proactive maintenance and reducing service interruptions.

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➢ Service Delivery Optimization - The CRM system helps Manila Water prioritize critical

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supply chain issues, ensuring continuity and reliability in water distribution.

Key Best Practices in CRM for Supply Chains (Philippines Focus)

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Based on the above examples, several best practices emerge that are critical for CRM-driven supply

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chain management:
✓ Data-Driven Demand Planning

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Both SM Retail and Jollibee highlight the importance of leveraging CRM data to forecast demand

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accurately. In supply chains, aligning inventory levels to match demand patterns reduces stockouts

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and enhances customer satisfaction.
✓ Customer-Centric Inventory Management

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SM Retail’s CRM-based inventory planning adjusts stock in specific locations based on local

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demand patterns, ensuring product availability aligns with customer expectations.
✓ Responsive Feedback Integration
Jollibee and Manila Water both emphasize real-time feedback through CRM systems, which helps
to identify service improvements, align supply chain functions, and provide quick responses to
customer needs.
✓ Personalization of Service
Personalized promotions and loyalty programs, as seen in SM Retail and Coca-Cola, leverage CRM
data to build stronger relationships, increase repeat business, and streamline inventory
management.
 Table 3 shows the selection of CRM tools that are popular in the Philippines, focusing on those
that offer supply chain integration and help with demand forecasting, customer engagement, and order
management:

Table 3. CRM Software Tools Commonly Used in the Philippines

CRM Software Key Features Typical Cost (Philippines)
SAP CRM ERP and SCM integration, analytics Custom pricing
Salesforce CRM Cloud-based, real-time tracking, AI insights Starts at ₱1,400/month (per user)
Zoho CRM Custom reporting, automation ₱700–₱2,600 per user/month
Oracle CX Cloud Customer data integration with ERP, SCM Custom pricing

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HubSpot CRM Pipeline management, customer tracking Free or ₱2,000 per user/month

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References

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Aquino, M. R. (2021). Leveraging CRM Systems in Philippine Retail for Enhanced Customer Satisfaction.

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Philippine Journal of Retail and Supply Chain Management, 18(2), 45–59.

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Buttle, F., & Maklan, S. (2019). Customer Relationship Management: Concepts and Technologies.
Routledge.

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Chen, I. J., & Popovich, K. (2003). Understanding customer relationship management (CRM): People,

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process and technology. Business Process Management Journal, 9(5), 672–688. [DOI:
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Konecka, S. (2010). Customer segmentation in supply chain management. International Journal of
Production Research, 48(20), 6103-6122. [DOI: 10.1080/00207540903337291]

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Lambert, Douglas & Schwieterman, Matthew. (2012). Supplier Relationship Management as a Macro

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Business Process. Supply Chain Management: An International Journal. 17. 337-352.

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10.1108/13598541211227153.

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Miranda, J., & Reyes, R. (2023). Adopting CRM in Supply Chains: Lessons from Philippine Companies.

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Southeast Asian Journal of Business and Economics, 29(1), 112–129.
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Marketing, 69(4), 167–176. [DOI: 10.1509/jmkg.2005.69.4.167]

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Wamba, S. F., Akter, S., & Edwards, A. (2020). The impact of big data analytics on supply chain and customer

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relationship management. International Journal of Production Economics, 227, 107855. [DOI:
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