Unit 7.1

Unit 7 Intro: CRM and Supply Chain Management (SCM)

IT 233: Business Information Systems

Learning Objectives

By the end of this introductory lecture, you will be able to:

✅ Define Customer Relationship Management (CRM) and its core goal.
✅ Define Supply Chain Management (SCM) and its scope.
✅ Differentiate between the primary focus of CRM and SCM.
✅ Recognize the role of Information Systems in enabling both CRM and SCM.

Beyond the Organization's Walls

Modern business success isn't just about internal efficiency.

It's about managing a complex network of external relationships.

Customers

Building loyalty, understanding needs, and driving sales.

Partners & Suppliers

Ensuring collaboration, resilience, and efficient operations.

Two key information systems manage these external relationships: CRM and SCM.

🔍 What is CRM?

Customer Relationship Management

Definition: A strategy for managing all of a company's relationships and interactions with its customers and potential customers.

It's more than just software; it's a business philosophy centered on the customer.

🎯 The Core Goal: Improve business relationships to grow the business.

🎬 Watch: CRM in One Minute

Why is CRM so Important?

Customer Retention: It costs 5–25x more to attract a new customer than to keep an existing one.
Personalized Service: Understand customer history to provide better, faster support.
Increased Sales: Identify opportunities to upsell (better products) and cross-sell (related products). 📊
Process Automation: Streamline sales, marketing, and service tasks to improve efficiency.

CRM Impact: Retention vs. Acquisition Calculator

Adjust the inputs to see how much a business can save by retaining customers instead of replacing them.

Customers at Risk of Leaving:

Acquisition Cost per Customer ($):

🚚 What is SCM?

Supply Chain Management

Definition: The management of the flow of goods and services, from the procurement of raw materials to the delivery of the final product to the consumer.

It's the entire "source-to-consumer" journey of a product.

🎯 The Core Goal: Create an efficient, resilient, and cost-effective supply chain.

Visualizing the Supply Chain Flow

SCM coordinates every step from beginning to end:

Raw Materials ➡️ Suppliers ➡️ Manufacturing ➡️ Distribution ➡️ Retailer ➡️ Customer

⚡ Information Systems are the digital thread connecting each stage, providing visibility and control.

🎬 Watch: What Supply Chain Management Is

Supply Chain Builder: Put It in Order

Click the supply chain stages in the correct order from start to finish. Build the chain!

Your chain will appear here…

🏗️ Preview: The Structure of a Supply Chain

Part	What happens	IT that supports it (Nepal-style example)
Upstream	Buying inputs from suppliers	A cement maker emails purchase orders from its ERP to a coal importer
Internal	Making the product	Production-planning software schedules the kiln shifts
Downstream	Delivering to customers	GPS tracking of trucks heading to hardware shops in Butwal

Full detail in Unit 7.5. Example is illustrative.

CRM vs. SCM: A Core Distinction

CRM (Front-Office)

Focus: Demand Generation

Manages: The customer lifecycle (marketing, sales, service).

Key Question: "How do we find, win, and keep our customers?"

SCM (Back-Office)

Focus: Demand Fulfillment

Manages: The product lifecycle (sourcing, making, delivering).

Key Question: "How do we efficiently make and deliver our product?"

CRM or SCM? Scenario Sorter

Click each scenario card to classify it as CRM or SCM. Click again to toggle. Then check your answers!

🧩 Preview: Three Types of CRM System

Operational
The "doing" part: automates sales, marketing and customer service.
e.g. logging every call to a sales lead (Unit 7.3)

Analytical
The "thinking" part: analyses customer data to find patterns.
e.g. finding which customers are likely to leave (Unit 7.4)

Collaborative
The "sharing" part: gives every team and channel the same customer picture.
e.g. a chat agent sees yesterday's phone call (Unit 7.4)

Operational CRM collects the data; analytical CRM learns from it; collaborative CRM shares it.

🧪 Quick Activity: Operational, Analytical or Collaborative?

A gym's software sends members an automatic reminder to renew. → Operational
A mobile shop finds that buyers of one phone model often come back for a power bank. → Analytical
A hotel's front desk and its online booking team see the same guest notes. → Collaborative
A sales rep records the outcome of a meeting in the system. → Operational

The Role of Information Technology

IT provides the essential support for modern CRM and SCM:

Data Centralization: A single source of truth for customer info (CRM) or inventory levels (SCM).
Process Automation: Automating marketing emails, order processing, and logistics alerts.
Analytics & Forecasting: Predicting customer trends (CRM) and future demand (SCM). 📊
Collaboration & Visibility: Connecting internal teams and external partners in real-time.

IT Capabilities: Match the Use Case

Click an IT Capability (left), then click the matching use case (right). Match all 4 pairs!

IT Capability

Business Use Case

🌊 Preview: The Bullwhip Effect

A small change in what customers buy becomes a bigger and bigger swing in orders further up the chain.

Each partner sees only the orders from the next partner, not real customer demand.
Each adds a little "just in case" stock, so orders grow at each step.
Result: factories swing between overtime and idle time; warehouses swing between empty and overflowing.

Cure: share real sales data across the chain (Unit 7.7).

🧮 Worked Example: How Orders Grow

Illustrative numbers: students buy 10% more notebooks in the week before exams.

Level	Normal weekly order	Exam-week order	Change
Customers	1,000	1,100	+10%
Shop	1,000	1,300 (adds a buffer)	+30%
Wholesaler	1,000	1,800 (fears running out)	+80%
Factory	1,000	2,500 (adds overtime)	+150%

A 10% change in real demand became a 150% change at the factory.

Practical Application in Nepal

Example: A Nepali Beverage Company (e.g., a popular juice brand)

CRM in Action:

Running loyalty programs for Kirana Pasals (local shops).
Using social media to engage with customers and get feedback on new flavors.
Tracking sales data from different cities to plan marketing campaigns.

SCM in Action:

Sourcing fruits from farmers in the Terai region.
Managing production schedules at the factory in Hetauda.
Coordinating truck deliveries to distributors across all 7 provinces. 🚚

Key Takeaways

CRM is outward-facing, focusing on the customer relationship to drive revenue and loyalty.
SCM is inward and outward-facing, managing the entire flow of goods and services for efficiency.
They are separate but deeply interconnected. A happy customer (CRM) needs their product delivered on time (SCM).
Information Systems are not optional; they are the backbone of effective CRM and SCM strategies in today's business world. ⚡

🍗 Real Case: When SCM Fails, Customers Notice

In February 2018, KFC UK switched its delivery contract to a new logistics partner (DHL) with one main distribution centre.

Deliveries broke down in the first days; restaurants ran out of chicken.
Hundreds of KFC restaurants across the UK had to close for days.
KFC used its customer channels to apologise with a newspaper ad showing an empty bucket with the letters rearranged to "FCK".

SCM and CRM are linked: a supply failure became a customer-relationship crisis, and good customer communication limited the damage.

A KFC Restaurant

🎬 Watch: The KFC Chicken Shortage

💬 Discuss: CRM and SCM Together

Think of a time a product you wanted was out of stock. How did the company treat you?
Which failed there, CRM, SCM, or both?
What data would the company need to share between the two to avoid it?

Final Knowledge Check (1/2)

Choose the best answer for each question. Score yourself at the end!

Final Knowledge Check (2/2)