B2B CRM and Supply Chain Connection- Connecting Customer Lives

Dears,

B2B CRM and Supply Chain has great value  when executed and connected right. Processing a single B2B order can cost suppliers US $100 or more, and sometimes thousands of dollars. Most of the cost is because of the number of different people who are involved in the order before fulfillment. ERP systems were widely adopted in the late 1990s by companies eager to streamline and automate their operations. Since then they have become the core of many corporate technology initiatives. ERP systems were implemented for various reasons, ranging from the reduction of inventory levels to increasing process efficiencies in the supply chain and integrating core business systems.

In much the same way that many B2C organizations have taken to aligning their business processes with CRM systems, ERP systems have frequently dictated B2B corporate procedures. This is because ERP products offer easier information sharing between different departments, such as purchasing, operations or manufacturing, finance and human resources. ERP automated key corporate functions, making general ledger systems and warehouses brimming with filing cabinets full of purchase orders a thing of the past. Key business processes that are automated include:

·         inventory management;

·         production forecasting;

·         distribution and logistics management;

·         finance;

·         HR processes.

ERP systems allow companies to automate these and other functions and also to link them together. This bringing together of disparate systems and processes enables integrated operations across the enterprise; reason enough in itself for implementation of ERP. Sales teams can access a single system to check inventory, a purchasing agent can look up a supplier's history and product managers can track defects in their products reported by the field service operation. The links between ERP, supply chain management and CRM are stronger than ever. Better knowledge of the customer means better understanding of how to build the relationship with that customer. For instance, a company's accounts receivable staff might choose not to open collections on past-due customers who have in-process trouble tickets. Likewise, CRM business users can use accounting and supply chain information to decide how to treat customers who do not meet provisioning deadlines.

ERP vendors (such as Oracle, MS and SAP) have recognized the connections between tighter, more integrated operations and business customer satisfaction and have released CRM modules that tie their core products, rendering the customer a key link in the supply chain. The Picture shows the broad range of integrated logistics capabilities that a distribution company needs to be able to deliver in order to assist their customers in optimizing the potential of the supply chain.

Throughout the supply chain, companies are expected to provide their customers, suppliers and partners with more information than ever before. To do that, they need the best databases, holding accurate and current data, and the applications and processes necessary to deliver that data (not to mention an organizational willingness to share data with suppliers and customers). The introduction of the Web as a channel has meant that key processes such as ordering, fulfillment, inventory management, and distribution all have to run at Web speed. The challenge of streamlining the supply chain is compounded by this need for speed. Data is also required internally in order to be able to anticipate demands and work with third parties to realign focus accordingly.

One of the main reasons for the growing requirements for end-to-end integration, better and more visible information, and greater speed of response is the need for some companies to act globally. Global businesses expect a global service, while maintaining the high standards they have become accustomed to at a local level. One of the main aims of B2B companies that operate globally is to anticipate customer demand at a global level while acting upon it locally.

Measurement and CRM Metrics in B2B

Until now measurement of CRM performance in B2B has been largely determined from a supplier perspective, predominantly revenue oriented: that is, reflecting not what is valued by the customer but rather what is important to the supplier. Despite this, customer satisfaction was measured in B2B companies long before CRM became the buzzword in B2B. Particularly in key account management, the value of customer relationships and loyalty have been long recognized, although it had been very ad hoc until recent years. In most cases, B2B CRM was personalized: account managers had to manage relationships effectively in order to achieve their targets. Today we are seeing that awareness and responsibility at an enterprise level.

The main metrics for key account managers until now have been:

• quarter-end revenue;
• year-end revenue;
• Customer satisfaction (mainly based on transactions: whether the goods were delivered on time, and so on).

We are seeing a move towards more appropriate relationship oriented measurement, measuring for example how many senior executives have been contacted in a given time period. Inevitably, revenue metrics (which are supplier oriented) will remain, although they will become more relevant to the customer as risk-reward and profit sharing arrangements become more pervasive. That is to say, the metrics will reflect supplier and customer shareholder value.

The 360-degree feedback approach, in which customers give feedback to their suppliers about the quality of the latter's staff, has been adopted in many global organizations, and appears to be a step in the right direction in terms of understanding the CRM performance of key individuals. The problem here is measurement: few supplier organizations are willing to reward their representatives for anything other than revenue. What is needed is a key set of human relationship metrics for CRM in B2B. In the meantime, a common approach is to ask customers at the beginning of a time period what they value and then measure CRM performance against this. Indeed this is one of the Hitachi  approach on a project-by-project basis with the pre-consulting engagement 'conditions of satisfaction' assessment, in which Hitachi asks its customers what five things it needs to do to achieve customer satisfaction on the project.

The world of B2B marketing changed irrevocably with the advent of ERP. Today, the key to improving CRM in B2B is integration with ERP systems. While ERP systems are usually characterized by use of well-established metrics, this is not so for CRM in B2B. My view is that a necessary condition for the success of B2B CRM is the adoption of metrics that make sense to customers and to staff, and support of these metrics by appropriate incentives.

 Loving P&C

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