<< . .

. 48
( : 53)



. . >>

students for projects / recruitment, etc., by avoiding tedious campus interviews, placing
advertisements, etc.
Projects/summer training: In this section, companies from different disciplines display
information related to projects and summer training available in their organizations.
Students seeking Final Year Projects, Workshops and Summer Training can select the
appropriate industries and mail their resumes accordingly. This saves precious time,
which can be utilized for academics.
Placement: Various options are provided to the students, so as to help them view the
different requirements of the Industries. This facility is also an incentive for the students
to fare well and concentrate on academics. Students also do not have to run around in
search of placements and their precious time is saved. Industries also save time and
money by the omission of screening of candidates and subsequent interviews.


General

Online book store: Here the idea is to make books and Computer-Based Training (CBT)
kits available to colleges and students, not only at their doorsteps, but also at discounted
rates directly from publishers. Books required by engineering students are listed on our
portal and orders can be placed with us “ Online. Our company makes sure that the books
are door delivered at the desired address. Specific information about each book like
Subject, Title, Author, Publisher, Price, Edition, Index, etc., is made available on the web
portal. This would help the students and college librarians to select suitable books of
desired subjects. Books that are difficult to procure and those, which may not be listed
with us, can also be made available.

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
358 Mahajan, Umrani & Chaudhari


PG opportunities: Details of universities/colleges/disciplines/number of seats, etc.,
offering post graduation opportunities are provided here. Brief guidance is provided to
students opting for Post Graduation competitive / entrance exams as well.
News from DTE: This section provides information from the Director of Technical
Education (DTE) about the List of Universities and Colleges under them, total seats,
revisions in DTE guidelines, etc.
Contact: Through this section, students can directly contact University authorities,
College Departmental Heads, Directorate of Technical Education (DTE) or any educa-
tional officials regarding their queries related to studies or education system.


User

User Portfolio: Here the students maintain their Personal Diary, store their Medical
Profile, record Contacts in the Address Book, store their Academic Profile and Company
Profile, etc. The academic profile includes: (i) Details of the total marks sheet for all
semesters, (ii) Projects and summer training undertaken, (iii) any other relevant informa-
tion. The medical and academic profiles of all the students are made available to the
industry in a specific format.
College Katta: This is a classified section for students trying to avail and provide
information about the day-to-day happenings like Hostel accommodations, engineering
materials and tools, college activities like cultural programs, seminars, treks and picnics,
etc. It is concerned with the day-to-day happenings, where students can share informa-
tion under five different headings, namely, Travel, Classified, General, Humor and Sports.
Quiz & Contests: This section contains General / I.Q. / Aptitude tests. The quizzes have
different levels that will help students to evaluate themselves.
E-mail and Chat: Students can get in touch with their teachers, batch mates through e-
mail and chat facilities, when not in regular contact.


Others

Engineering colleges: A platform has been provided for the college to put up relevant
information. Students and their parents can procure detailed information about colleges,
with the aim of securing admissions to desired B.E. disciplines. The aim of the whole
exercise is to present authentic information about the college for the benefit of all users,
especially students and industries. Moreover, the college can reach out to students
worldwide and indirectly advertise its salient features like disciplines offered, number of
seats, hostel and laboratory facilities, staff strength, etc.
Parents: Here the parents / guardians of all students can keep a check on their wards™
performance from anywhere. Academic performance (Report Card), attendance records,
performance in extracurricular activities, etc., can be regularly monitored and remedial
action if required can be taken at the earliest. Parents/ guardians are provided unique user
names and passwords so as to access their wards™ details.



Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
Corporate Strategies in a Digital World 359




Chapter XVIII



Corporate Strategies
in a Digital World:
Supply Chain Management
and Customer Relationship
Management “
Development and
Integration - Focus
Purva Kansal
Panjab University, India

Keshni Anand Arora
Indian Administrative Services, India



Abstract
These days, the majority of management literature stresses the concept of “learning
organizations”, i.e., an organization™s capacity to change. However, it is not easy for
people to accept this fundamental aspect especially when it comes to the Internet and
technologies™ growing importance in business operations. They claim it™s a temporary
trend that will leave little visible change in the way business is conducted. For these
businessmen, the philosophy seems to be “keep making better products and offering
new services, and the customers will keep buying”. They ignore changes occurring in
the buying habits of customers and impact of technology. There are some businesses
who are happy to follow the leader and adopt tools like supply chain management.


Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
360 Kansal & Arora


Supply chain management is a recognized discipline to shorten cycle times, reduce
inventories, decrease logistics costs and streamline communication process across the
business network. On the other hand are the businessmen who understand the learning
organization concept and develop a forward orientation. They are prepared to ride the
technology wave to new heights and accomplishments by using technology as a
defining element in business operations. This chapter suggests a new approach to this
new breed of entrepreneurs. In this chapter, we are trying to give supply chain
management a customer orientation and to study its results. We highlight the synergistic
advantage of linking supply chain management with customer relationship management
into a tightly knit network using technology. The main focus is on finding a solution
to deal with Internet empowered customers and to learn how to apply technologies
demanded in the new digital economy.




Introduction
The corporate strategies drawn by companies in today™s digital world have forced them
to inculcate technology in all spheres of their operations. Satisfaction in a consumer
emanates from the feeling of pleasure or disappointment resulting from comparing the
products perceived performance in relation to his/her expectations (Kotler, 1998).
Conceptually, if performance falls short of expectation, the customer is dissatisfied. If
it matches his expectations, the customer is satisfied and if it exceeds his expectations
the customer is delighted.
As put forth best by Sam Walton, this concept can be simply stated, “There is only one
boss, the customer. And he can fire everybody from the chairman on down, simply by
spending his money somewhere else” (Your Customer “ Your Boss, 2003). This has led
to the development of customer-oriented markets, i.e., “Buyers Markets.” Therefore,
successful companies these days are targeting customer delight as a tool for retaining
customers and ensuring success. The increasing use of technology in the development
and marketing of products has forced companies to turn toward customer retention as
an essential ingredient of corporate success.
Moreover, researchers have pointed out that these days retaining customers is a smart
strategy. Their work has proven that it is more economical to retain customers than to
acquire new ones. The Forum Company estimated as early as 1989 that the cost of winning
the new customer is five times as much as that of pleasing an old customer (Sellers, 1989).
On similar lines, Dr. Jason Chen (2002) stated that:
• A 60-100% company profit boost can be achieved by only 5% customer retention
efforts
• One dissatisfied customer tells eight to ten people about his experience
• Odds of selling a product to a new customer is 15 % while selling to a existing
customer is 50%
• Up to 98% of promotion coupons are thrown away


Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
Corporate Strategies in a Digital World 361


• Referred customers generally stay, use more products and become profitable
customers.


Quantitative analyses like these have motivated companies to understand “customer
expectations” and to find tools which would help them achieve customer delight
(Gattorna and Walters, 1996). In this paper we discuss two such tools, Customer
Relationship Management (CRM) and Supply Chain Management (SCM). The use of
technology to integrate these tools has become a focal point in many firms to gain
competitive ground.
Many companies have been using these tools profitably however in others the approach
has been centered around adopting them individually. In this paper we establish how the
singular approach managed to change the expectation set of the customers permanently.
However, with the proliferation of these technologies and tools, gaining competitive
advantage has become increasingly difficult. Thereby, it is essential for companies to
search for new tools to gain a competitive edge in the market.
We explore the feasibility of one such tool, i.e., an interactivity approach between SCM
and CRM vis-a-vis India.
India is one of the most rapidly growing economies with a distinct set of customer logics
and supply chain. Indian customers have been introduced to the concept of “customer
power” only recently with the proliferation of existing and emerging technologies and
they are coming to terms with it progressively. This rapid development has made their
expectation set very volatile. Meanwhile, there exists a three-tier distribution channel.
This leads to sharing of control between manufacturers and channel members. However,
this makes the job of offerers, i.e., targeting customer satisfaction, difficult.
In this chapter we explore the option of applying this interactivity tool to the Indian
economy.




Customer Relationship Marketing &
Supply Chain Management: Tools Used
to Satisfy Customers
Customers usually have an intuitive sense of what they want. However, these expecta-
tions are continuously influenced by variables like personal needs, past experiences,
alternatives available, promises made by manufacturers, etc. (Ziethmal and Bitner, 2003).
Companies, in an attempt to win over customers, promise them product and service
variables vis-a-vis other products. Thereby, molding the expectations of a customer.
According to the Levitt, “The new competition is not between what companies produce
in their factories, but between what they add to their factory output in form of packaging,
services, advertising, customer advice, financing, delivery arrangements, warehousing
and other things that people value” (Levitt, 1969).



Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
362 Kansal & Arora


Figure 1. Product variables and CRM and SCM: Relationship

DIG 1: Product Variables and CRM and SCM: Relationship.




FORMAL CORE AUGMENTED
PRODUCT PRODUCT PRODUCT
Packaging Delivery
Brand Installation Services
Color Guarantees
Styling Replacement
Attribute Finance
Instructions Manual Customer Training
Quality Customer Complaint
management
After Sale Services



PRODUCT
(Offered to a customer)


CUSTOMER ORIENTATION (CRM & SCM)




Companies employ varying strategies to differentiate their products, requiring the need
for a different set of technologies and business processes.
A product involves its presentation to the consumer as a composite package. It refers
to a core product, the formal product, and an augmented product (Figure 1). As pointed
out by Levitt, the core product remains the same in an industry, what changes is the formal
and augmented product composition.
The formal product variables help customers differentiate a product from that of the
competitors. Hence, companies try and customize these attributes. Investment in
customization motivates a company to promise customers a certain set of distinct
attributes. These promises in turn influence the customer™s satisfaction.
The augmented product variables determine the competitive advantage of a company.
The level of on-time delivery, customer training, after sales services, guarantee and
replacement schemes, influences the customer™s satisfaction. Therefore, in order to have
competitive advantage in a particular market the manufacturers need to compete not only




Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
Corporate Strategies in a Digital World 363


in terms of what they produce in the factories (core product) but in terms of value-added
variables.
The role played by the technological development of the company plays a crucial role
at this stage. To date, companies have been adopting their customization strategy by
targeting selected variables of augmented and formal product sets. However, the
increased levels of competition and technology proliferation have forced companies to
look at the product as a whole. Moreover, for a sustained competitive advantage
companies need to orient their technologies in their operations and also use them to adapt
the variables in a product to a customer perspective. One way of achieving this is through
CRM.




CRM - The Concept
CRM refers to the approach adopted by an organization to understand and influence
customer behavior through meaningful communication, so as to improve customer
acquisition, retention, loyalty and profitability (Deck Stewart, 2003).
CRM is a comprehensive strategy and involves technology and tools used to understand
customer needs and behaviors in order to develop stronger relationships with them. It
is a process that helps bring together previously dispersed pieces of information about
customers and their behaviors, strategies for sales and marketing, their effectiveness and
responsiveness and market trends (Raut, 2003).
In a macro sense, the main philosophy behind CRM is to ensure customer delight rather
than mere satisfaction by using services as a tool, to provide customers with a service
level that exceeds their expectation set. Moreover, having learned from their experiences,
customers now demand a product that matches their expectation logics exactly (Ziethmal,
n.d.). This involves the integration of data captured by various functions in a company
and blending the data to develop a comprehensive knowledge about the needs of the
consumer and the product.
The motivation behind companies™ efforts to understand their customers is the desire to
have a competitive advantage. The more capable a company becomes at understanding
its customers and giving them what they want, the more difficult it is for the competitors
to entice them away (Switching Costs).
Many corporations have exploited this tool successfully in developed countries. For
example Amazon.com, Tipper Tie, Hewlett Packard, Canada Post Corp., Student Advan-
tage, Dell Computers, Microsoft, McDonalds, Pizza Hut, Dominos, etc. These companies
are not famous for their advertising campaigns but their service level (Augmented
Products). The advancements in present day digital economies have however made some
of these technological advances and tools a mere necessity from their earlier status of
a highly valued choice.




Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
364 Kansal & Arora


Case Study: Tipper Tie (2003)
Tipper Tie Inc., owned by Dover Corporation, is a multi-billion-dollar entity publicly
traded on the NYSE (DOV). The Tipper Tie Inc. family consists of four companies Tipper
Tie, Tipper Tie-Net, Tipper Tie technopack and Tipper Tie Alpina. Their products
portfolio includes clippers, aluminum clips, aluminum wire products, electric fence
supplies and netting. Tipper Tie was selected as a small-to-midsize enterprise winner of
the Spring 2002 Gartner CRM Excellence Awards. Tipper Tie customers (in the food-
processing industry) use costly machines for packaging the food items. These packing
machines need service, new parts, and plenty of wire and clips. Tipper Tie is a customer-
oriented company and their field sales reps and service technicians make personal visits
to customers while call center fields their questions, requests and complaints. Believing
in the fundamentals of CRM (customer retention) the sales rep used to spend 75% of their
time dealing with old complaints and satisfying the old customers (Boeing Center, 2003).
This helped the company to increase its customer base and goodwill in the market.
Success stories like these motivate companies to strive for improved customer relations.
Therefore, in the past few years, companies increasingly invested huge amounts in CRM
infrastructures. The need for such tools has influenced the direction and the develop-
ment of technological advances needed to satisfy the needs of the companies.
The extensive use of CRM concepts and tools led to a modification of a customers™
expectation set.
This led to CRM transiting from its status of a competitive advantage tools to a mere
strategy. Therefore companies directed their efforts to look for competitive advantage
alternatives which could fill the void left by transition of CRM but do so cost effectively.
Companies having made extensive use of technology to further their cause via CRM then
turned to develop further processes and tools to gain competitive ground.
It is against this backdrop that the discipline and philosophy of logistics & supply chain
management moved into limelight.




Supply Chain Management “
The Concept
In 1954, Paul Converse, pointed out the need for academicians and practitioners to
examine the distribution side of marketing (Converse, 1954). Later Peter F. Drucker
indicated that physical distribution was akin to the “Dark Continent,” i.e., it was an area
that was virtually unexplored and hence unknown (Drucker, 1962). He said 50 cents out
of every dollar that a consumer spends on goods goes to activities that occur after goods
are made, i.e., physical distribution.
Physical distribution is a cluster of activities which creates time, place and form utility
through the movement of goods and persons from one place to another.



Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
Corporate Strategies in a Digital World 365


Over time physical distribution has been expanded to include total materials management
and information flows within a channel and is now called logistics (Kapoor and Purva,
2003).
Contributions in these areas from scholars like Heskett (1973), Shapiro (1984) and
Sharman (1984) have helped thrust logistics into the spotlight. These days logistics is
perceived as a tool for improving efficiency of customer service programs, decreasing
total costs and profit leveraging. For example, Michael Dell in his book Direct from Dell
(Harper Business) Stated, “In 1993, we had $2.9 billion in sales and $220 million in
inventory. Four years later, we posted $12.3 billion in sales and had inventory of $233
million. We™re now down to less than eight days of inventory [on hand] and we™re starting
to measure it in hours instead of days” (Allen, 2003). Similarly, logistics deals with
reorganizing material handling functions, determining equipment selection and replace-
ment policies, order-picking procedures and stock storage retrieval, etc. Today™s digital
world has seen a new dimension being added where the product does not have any
physical form and can be delivered electronically directly from the Web to the buyer™s
computer. Use of the Internet and various technologies has also reduced the communi-
cation gap between the businesses and consumers.
To synergize these cost reduction benefits, the term logistics has been further expanded
to supply chain management. Supply chain management has been defined as the chain
linking each element of the manufacturing and supply process from raw material through
to the end-user, encompassing several organizational boundaries and treating all
organizations within the value chain as a unified virtual business entity (Scott and
Westbrook, 1991).
Therefore, anyone or anything that influences a product™s time-to-market, price, quality,
information exchange, and delivery, among other activities is part of the supply chain.
The supply chain management aims at integrating efforts in terms of target 7R™s, i.e.,
creating the right product, at the right time and right place, in the right quantity and in
right condition for the right customer at the right cost (Kapoor and Kansal, 2003). A well-
planned SCM system helps an organization achieve
1. Lower costs
2. Competitive edge
3. Reliability of delivery
4. Order fulfillment accuracy
5. Flexibility in replenishment
6. Accuracy of documentation
7. Continuity of supply

<< . .

. 48
( : 53)



. . >>