Customer Relationship Management (CRM) may sound like a tool for marketing or sales, but in this day of customer-driven demand, a well-managed CRM is a supply chain manager’s key to success. We often think of the supply chain as focused on procurement, transportation, logistics, inventory, production, packaging, and distribution. So, how can a CRM system help communicate issues in the supply chain? When supply chain systems collaborate with CRM, the duo can respond directly to customer needs and demands with clear data to guide decisions.
What is a Customer Relationship Management system?
Customer Relationship Management or CRM refers to several different aspects of the relationship between a business and its customers. CRM refers to the information technology or software that manages customer information, much like SCM software and SCM systems. It also applies to the process of managing customers, suppliers, vendors, and other stakeholders, through a buying lifecycle. CRM is also the integrated approach of managing and coordinating customer interactions across multiple channels.
What is Supply Chain Management Software?
Supply chain management software is similar to a CRM in that it provides a system to execute supply chain transactions, manage supplier relationships, and monitor related processes. SCM software and SCM systems can manage customer requirements, purchase orders, sales and distribution, inventory management, warehouse management, sourcing, and enterprise resource management. Often, companies have specific software they choose to use for this aspect of managing the supply chain.
Supply Chain CRM Integration
Consider some of the companies that successfully use apps as part of their CRMs. Amazon, McDonald’s, Etsy, and Starbucks are taking advantage of the wealth of customer data collected while using their apps for ordering. These companies are also considered to model best practices when it comes to supply chain management systems. Companies can track data such as customer preferences, which franchises they visit, buying patterns, and which products are in demand. This information translates into valuable insights for supply chain systems. It impacts where to send which supplies, which suppliers are delivering the most in-demand products or services, and how well products and services are performing. Integrating CRM systems with supply chain software can create a powerful tool.
In the new book, Competing on Analytics: The New Science of Winning, authors Thomas Davenport and Jeanne Harris write, "Many companies in a variety of industries are enhancing their CRM and SCM [supply chain management] capabilities with predictive analytics, and they are enjoying market-leading growth and performance as a result."
McDonald’s capitalizes on their app insights by sending personalized loyalty rewards directly to the customer’s phone through the app. Customers just have to open the app to redeem the offer at the point of service. This can lead to more loyal customers. McDonald’s outsources its supply chain, but also maintains regional menus and suppliers. The insights gained from the app provide valuable information to guide supply chain decisions.
The data and information from an effective CRM inform supply chain decisions such as supplier choices, shipping, which supplies are in higher/lower demand, and how the customer uses products through their lifecycle. Supply can meet customer demand in a more efficient way when it works directly with customer information from a CRM.
Davenport and Harris note there are challenges in transitioning from the usually isolated CRM and SCM databases and software. Marketing and sales departments need to integrate with procurement and logistics, but if they do so effectively the benefit is a business that has supply and demand chains that are more responsive to customer demand.Another bonus of adding a CRM to supply chain management software is it can be used to manage suppliers.
CRM is often broken down into three aspects: Strategic, Operational, and Analytical. The “Strategic” aspect considers various methodologies to determine customer value and how to develop customer experiences. This includes defining strategically significant customers and how to create their ideal customer experiences. This is valuable information for supply chain managers as they consider inventory and logistics. For example, many strategically significant customers value 2-day shipping; a crucial role for a supply chain.
Operational Customer Relationship Management is the automation and integration of sales force, marketing, and customer service. When companies are considering integrating a CRM software program, they benefit from including supply chain managers in their decisions. CRMs can track an overwhelming number of metrics and supply chain managers can use this information to create a valuable supply chain that is customer-focused and prepared to respond to demands.
Analytical CRM refers to how an organization uses relevant data and transforms that data into action. Supply chains can use these valuable insights about customers to meet their business objectives.
Finally, a well-executed CRM can lead to strategic partnerships between the organization and its suppliers. McDonald's and The Coca-Cola Company have had a symbiotic relationship since 1955. McDonald's uses Coke's international offices when setting up new franchises, Coke uses a particular stainless-steel delivery truck designed explicitly for McDonald's, and the two companies have been running promotions together for over 20 years. While this partnership was forged before the advent of CRM automation, it is an enduring example of how sharing customer data with a supplier can inform supply chain decisions and create a successful model for both organization and supplier.
How does all this transfer into your program?
Students in Kettering University’s Online master’s degree in supply chain management take a course dedicated to the relationship between Supply Chain Management and Customer Relationship Management. Students research the best CRM software for an organization, consider the relevant metrics to track, and discuss an appropriate implementation plan under the guidance of their experienced instructor. For more information on the KUO Master’s in Supply Chain Management talk to a KUO enrollment advisor.
Davenport, T. H., & Harris, J. G. (2007). Competing on analytics: The new science of winning. Harvard Business Press.