ASB SUMMER UNIVERSITY: ERP & SUPPLY CHAIN MANAGEMENT
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Transcript of ASB SUMMER UNIVERSITY: ERP & SUPPLY CHAIN MANAGEMENT
Group (C) Project Presentation
Andrew, Newton & Peter
Wednesday 1st August 2007
ASB SUMMER UNIVERSITY:ERP & SUPPLY CHAIN MANAGEMENT
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Group (C) Project Objectives:
Using SCM theory(ies), identify the strengths, weaknesses, opportunities and threats of Danisco’s recent implementation of an enterprise-wide customer segmentation model.
The learnings should be a clear understanding of the processes Danisco went through and how these processes positively or negatively impacted the policy deployment and process management.
The outcomes should be a concise set of recommendations as how Danisco could use this experience to improve future policy implementations.
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Presentation Structure:
Introduction & Background [Andrew]:
• General introduction to Danisco
• Discussion of CRM & customer segmentation from a Danisco perspective
Review [Peter]:
• Segmentation model
• Discussion of the policy implementation
Analysis [Newton]:
• Summary
• Conclusions and recommendations
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Introduction & Background
What is Danisco?
What is Danisco’s business model?
What is ERP and SCM within Danisco?
What is customer segmentation?
Why should Danisco implement a customer segmentation model?
What are Group C’s sources?
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What is Danisco?
A global production company,
Producing sugar and food ingredients that are used into both food and non-food sectors,
Production at more than 50 sites globally and headquarters in Copenhagen
Almost 10,000 employees and a presence in 50 countries
Revenue in 2006/07 approx. DKK20 billion, or USD350 million,
Quoted on the Danish stock market and is one of the 20 largest Danish companies, although small/medium in a global perspective,
Business split into 4 product areas, divisions…….
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Organisational Structure:
DANISCO
SUGAR
Previously core business, but declining due to
European sugar reforms
TEXTURANTS & SWEETENERSGenerally mature
industries with only modest growth
BIO-INGREDIENTS
Fast growing, technologyintensive sector
CORPORATEFUNCTIONS
FLAVOUR
Recently soldproduct division
REGIONAL SALESFORCE &
INNOVATION
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What are some of Danisco’s business model elements?
Mission: ….to accommodate consumer demand for healthy, safe and tasty food and to provide value-adding sustainable bio-based solutions to industry
Branding: high quality products with strong technology platform and customer support structure – slogan ‘first you add knowledge……’
Recent developments: new CEO with renewed focus on EBIT margins and RONOA….. and therefore cost control across all aspects of the business
ERP: SAP implemented in Danish parent company 2002 and template roll-out to be completed during 2007
SCM: although an enterprise-wide ERP system the supply chain is still somewhat ‘departmentalised’ some elements integrated but not all
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CRM within Danisco:
Danisco has purchased the add-on CRM module to SAP,
CRM module is essentially a large database of customer data, with some resource planning (workflow) & analysis functions,
The objective of the module is to achieve customer satisfaction with the most efficient deployment of resources possible,
These resources (services) could be sales manager visits, innovation projects, new application testing, new letters, product launches etc,
But CRM is the analytical tool, not the solution how to best use resources………
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Customer segmentation within Danisco:
Customer segmentation however is a concept that can be used to rationalise how customers services are deployed, this requires developing a set of rules or ‘criteria’ that then determines the appropriate service level,
Prior to 2006 the service customers received could vary greatly between product divisions and regions,
Therefore in 2006 an enterprise-wide segmentation model was developed and implemented, with the objective to:
“…..provide a superior decision making tool on best use of resources for delivery of profitable growth across Danisco”
In other words to:
Create guidelines for resource allocation by defining ‘service levels’ to the different customer segments,
Enable market intelligence – by understanding better potential growth opportunities, and
Facilitate agreement on shared services in the regions, divisions and innovation
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The new segmentation model
The new model places customers based on:
A score that signifies the current profit contribution made by the customer
A score that signifies the expected profit contribution made by the customer
“The objective is to provide a superior decision making tool on best use of resources for delivery of profitable growth, intelligent maintenance and constant review”
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Expected profit classificaction
Points Classification
>= 24 A
20 – 23 B
16 – 19 C
<= 15 D
Tot. Potential access. salesScoring: 1-6 pts
Tot.Potential access. profitScoring: 1-6 pts
Potential Cross SellingScoring: 1-6 pts
Premium BuyerScoring: 1-3 pts
Strategic importanceScoring: 1-3 pts
Loyalty to DaniscoScoring: 1-3 pts
Input in CRM bySales Manager
Input in CRM bySales Manager
Input in CRM bySales Manager
Calculation inCRM
Calculation inCRM
= necessary input from sales managers
Points Classification
>= 24 A
20 – 23 B
16 – 19 C
<= 15 D
Tot. Potential access. salesScoring: 1-6 pts
Tot.Potential access. profitScoring: 1-6 pts
Potential Cross SellingScoring: 1-6 pts
Premium BuyerScoring: 1-3 pts
Strategic importanceScoring: 1-3 pts
Loyalty to DaniscoScoring: 1-3 pts
Input in CRM bySales Manager
Input in CRM bySales Manager
Input in CRM bySales Manager
Calculation inCRM
Calculation inCRM
= necessary input from sales managers
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The new segmentation model
Fut
ure
cont
ribut
ion
ABABDCDC
AAAAPlatinum
Bronze Silver
Gold
BBBB
CCCC BCBC ACAC
CACA BABA
DBDB
DCDC
DADA
CDCD BDBD ADADDDDD
D C B A
A
B
C
D
Current contribution
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Problems with the implementation
In spite of a great effort, things did not go as planned
• There were a growing resistance towards the new system• The scoring-system was built on unreliable data and on the
subjective opinion of the manager.• In some areas service levels are still being regionally defined
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Growing resistance
When facing changes we react in different ways:
• Cognitive resistance• Cognitive resistance shows when the employee does not understand
why the changes he is being subjected to is needed.• Emotional resistance
• When dealing with emotional resistance, the resistance is not necessary against the change itself, but more against the way the changes are being made.
• Personal resistance • Personal resistance shows where there are deep cultural differences
between the employees and management. It results in hostility towards management.
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Growing resistance
The resistance at danisco is mainly built on cognitive and emotional resistance
• the cognitive resistance shows where the employees have not been properly informed about how and why the changes are needed. Danisco needs to carefully explain these things to their employees so there will be a greater understanding and appreciation to why the changes are needed.
• in order to minimize the emotional resistance management need to involve the employees when making changes instead of pulling it down over their heads. Doing this will also enable the employees to voice their opinion about what works and what does not work.
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Unreliable data
• Another problem with the new CRM module is the actual segmentation model. The model is built around profit per costumer, However the system that calculates profit per costumer is also under development. It cannot calculate profit per costumer accurately, meaning that the data/information the segmentation is based on is unreliable.
• Also most of the points the costumer can get is based on the managers subjective opinion
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Policy deployment
New Supply Chain
New Capabilities
Favorable Outcomes
Unfavorable Outcomes
Further Optim
ization Opportunity
Principles of SCM
Environment
Stakeholders
System Integration/ Optimization/Synchronization
The Overall Performance of the SC
Catch Ball Deployment
Purposeful SC and Long-term Vision
Continuous
Improvem
ent/Reengineering Planning and Execution Processes
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Catch-ball deployment
Catch ball content
Catch ball processes
Segmentation strategy
CRM module
Operational level
Catch Ball
Catch Ball
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SUMMARY - SWOT ANALYSIS:
Strengths Weaknesses
•Identification of customer-driven demand for an improved service, proposed solution was based upon a long-term vision and a known SC principle.
•General support at all levels for the underlying need and proposed solution (concept).
•Underlying data was unreliable (gross profit data) or subjective (future expectations) which negatively impacted the credibility of the proposed solution.
•Implementation was very much at a strategic and tactical level, but often not reaching the operational, which in this case was fundamental to the model.
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Important factors to consider before implement CRM systems
Decide what you want from a CRM system.• S.M.A.R.T. objectives (Specific, Measurable, Achievable, Realistic,
Time-bound)
Consider if the current employees will embrace or resist a CRM system.• NT + OO = EOO• Where NT = New Technology; OO = Old Organisation
and EOO = Expensive Old Organisation.
Consider if the current available data across departments etc can be pooled together and made into information.
Get referrals from users of each system under consideration.
Develop and implement a training program.
Review of CRM module………..
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Implementing CRM system is a process
Deming’s PDCA Cycle
Plan
Act Do
Check
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Implementation strategy
Radical change
Minor change
Core environment
Great level of vulnerability
High level of conflict
Low degree of vulnerability
Moderate level of conflict
Low degree of vulnerability
Low level of conflict
Moderate level of vulnerability
Low level of conflict
Source: Buchanan, D & D. Boddy (1992)
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CONCLUSIONS – SWOT ANALYSIS:
Strengths Weaknesses
•Identification of customer-driven demand for an improved service, proposed solution was based upon a long-term vision and a known SC principle.
•General support at all levels for the underlying need and proposed solution (concept).
•Underlying data was unreliable (gross profit data) or subjective (future expectations) which negatively impacted the credibility of the proposed solution.
•Implementation was very much at a strategic and tactical level, but often not reaching the operational, which in this case was fundamental to the model.
Opportunities Threats
•Focus on giving the segmentation model more credibility (and therefore acceptance) by focusing on the underlying information quality.•Greater involvement of employees at the operational level to ensure the system (model) is used and maintained to its full potential.
•The longer the segmentation model operates sub-optimally the greater the difficulty of improving implementation.•That the desired level of data quality cannot be realized.
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RECOMMENDATIONS:
The CRM system should be based on reliable source of data
Greater involvement of employees at the operational level
Incremental implementation of the CRM system, instead of Big Bang
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Q & A