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Supply Chain Management and Customer Relationship Management

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                The analysis of conventional and unconventional management techniques is essential for understanding difference in approaches, efficiency level, cost savings, and firm profitability. Specifically, supply chain management and customer relationship management are two spheres whose popularity is growing due to the alternative approaches to managing organizational processes, employee relations, and customers’ demands. A detailed overview of literature reveals a number of discrepancies between traditional outlook on management, which is confined to internal processes and profitability of an organization. In contrast to traditional management, the new models of control represented in supply chain management and customer relationship management are different in terms of focus on organizational activities, person-centered approaches, and development of cooperation with organization’s stakeholders. All these assumption will be considered in terms of differences in approaches, achieving efficiency, cost savings, and firm’s profitability.

Difference in Approaches

            Understanding the importance of external, environmental processes in managing business and dealing with customers has become a priority for supply chain and customer relationship managers. So far, an operational manager mainly considers the importance of internal processes, such as retention rate, labor intensity, personnel relationship. In addition, the nature and the quality of customer relationship management depend on the context and practices that define the functions, responsibilities, and approaches to controlling business and organizational activities. For instance, Acharyulu (2012) investigates the role of customer relationship in such service organizations as hospitals. Specifically, the author introduces the concept of customer relationship management in the context of supply chain management that in turn implies meeting clients’ concerns and performing the function of care givers. Success of hospital services relates to the nature of quality service that is provided to clients. Therefore, the shift from a profit and performance orientation to relationship marketing deviates from the traditional outlook on marketing. Further, Foster, Wallin & Ogden (2011) have introduced a comparative analysis of operational management and supply chain management in terms of quality tools and methods employed in each field. The findings demonstrate that supply chain managers introduce collaborative techniques that place an emphasis on complaint resolution and supplier development. These ideological and strategic frameworks differ slightly from operational management that focuses on procedural aspects, such as supply evaluation and services delivery. These aspects ignore the roles and responsibilities performed by the personnel.

            Aside from the difference in approaches, the majority of organizations tend to consider supply chain management as the broader context, in which customer relationship management should take its position. Due to the fact that these two spheres are relatively different, they are similarly affected by such factors as greater customer demands, new technology, governmental actions, and competitive initiatives (Melnyk et al., 2009).  Specifically, the Melnyk et al. (2009) insist that “management needs better understanding of the risk drivers and strategic importance of risk management” (p. 4642). Therefore, in order to handle strategic issues within an organization, the traditional management should undergo significant transformation in terms of evaluation of financial support, technological innovation, and external processes. There is the necessity for introducing defference between supply chain network designs, including real time information, and optimization.

            The difference in efficiency of conventional management techniques and those implemented in supply chain management and customer relationship management are predetermined by the differences in structure and organization. In this respect, value streams of supply chain should be worked out for value creators employing prioritization mechanisms and defined procedures. Instruments for computer mapping of numerous supply networks would be useful, as well as the development of choke points of supply chains.

Difference in Approaches in terms of Achieving Efficiency

The changing nature of customer relationship management and supply chain management is also predetermined by different outlook on technological innovation and how these technical tools are implemented in the working environment. However, the effectiveness of alternative strategic management depends on a range of challenges. Specifically, Kangal (2012) identifies four major problems of implementing customer relationship management. To begin with, inadequate environment can be provoked by the impossibility of introducing a customer strategy prior to implementing customer relation management. Second, the organization structure should be reconsidered to decide on the software that will be used. Third, CRM technology is more advantageous as compared to other software devices because it establishes contact between the service provider and the client. Finally, the problem of forming relations with inappropriate customers can also become a serious obstacle for shaping efficient customer relationship management strategies. All the challenges should be eliminated once the customer relationship management is applied. According to (Kangal, 2012), “for a successful CRM initiative a cross-functional integration of processes, people, operations, and marketing capabilities that is enabled through information, technology and application required” (p. 49).  The author also argues that customer relationship management reduces the costs of attracting new customers, services costs, costs of sales, and service life. In this context, general marketing strategy of the organization is another important aspect that influences the efficiency of CRM. Specifically, it has been discovered that CRM implementation can be effective when CRM strategy is aligned with the strategic framework of an organization.

            In contrast to traditional management in business, which relies mainly on tasks accomplishment and process control, supply chain management and customer relationship management pay close attention to the role of human resources in accomplishing these tasks. At this point, the transition from task-centered approaches to person-centered approaches is the leading change that distinguishes conventional outlooks on management from the currently existing administrative styles. Hamid & Akhir (n. d.) argue, “…in order to enhance customer relationship companies need to emphasize on services that appeal to customer emotions, that is, the service attributes that make customer feel they are treated well enough to attract them to keep coming back” (pp. 2-3). Therefore, the shift in focus is essential because it does not only contribute to organizational performance, but also creates incentives for employees to work better. In the context of managerial strategies, supply chain management also undergoes similar changes in terms of customer relations. While investigating the sphere of healthcare, Acharyulu (2012) introduces a new definition of supply chain management, which implies turning a client into a patient with special needs. While dealing with patients, health care professionals should rely more on social, cultural, and psychological dimension of treatment. In this respect, managers should pay closer attention to the development of training programs and financial investment for restructuring and reorganizing the network system.

            A client-centered approach to supply chain management is also represented in the studies conducted by Foster et al. (2011). To enlarge on this issue, the researchers attain much importance to understanding how quality tools and methods contribute to the improvement of managing personnel within the organizational network. Additionally, awareness of possible risks and emergency situations must be taken into the deepest consideration to define the extent to which employees and clients are protected. Safety and ethics are among the main pillars of effective supply chain management because they ensure a powerful framework for strengthening relationships with customers, acquiring new clients and retaining the old ones. Quality of services developed through supply chain management has a potent impact on the quality of relations between the client and the service provider.

            The changing nature of customer relationship management and supply chain management is predetermined by the shifts in outlook on leadership and strategic management. Currently, supply chain sheds light on managing supply chain risk and strategic position of an organization. The strategic framework deals specifically with product design rather than with tasks accomplishment due to the globalization process. Importantly, it refers to cost management and saving as well as recognizes the risk evidence. All these conditions must be considered in the context of gaining a competitive advantage, which is possible to obtain through the development of effective strategies that become the leading functions and responsibilities of the personnel.

            A shift from baseline reorganizations to strategic integration is the main point of mapping out alternative approaches to management. All these stages are absent in traditional approaches to management because  “…supply chain management can be a core competency and where one of the goals is to develop a supply chain where its capabilities support current strategic objective and enable the firm to better serve its critical customers” (Melnyk et al., 2009, p. 4644). Therefore, the firm’s effectiveness relies mainly on the way leaders and managers introduce the new structures. Indeed, motivation and change are two main challenges that managers should overcome prior to establishing a new ideological system within an organization. Specifically, employees should have sufficient incentives to accept changes and develop the corresponding strategies for going through a transformational process. In contrast to this approach, the conventional management is more specifically oriented and often neglects such issues as external stakeholders and social corporate responsibility. The latter plays an important role in mapping out the basic principles of customer relationships, but this principle is insufficiently tackled in traditional managerial approaches.


Cost Saving Aspects in Supply Chain Management and Customer Relationship Management

Cost saving is another important issue which defines the gap between traditional and non-traditional approaches to management. Specifically, conventional approaches to management fail to provide a fresh insight on how technological innovations should be adjusted to the clients’ needs, as well as which changes should be adopted to make the employees enhance their competence. As a result, the availability of resources and materials will allow the industries and companies to better allocate financial resources. The task of the supply chain management is to find reliable partners so that to organize efficient assembly of production.

            While considering the differences in traditional and other models of management, the emphasis should be placed on the analysis of the connection between strategic frameworks and organization’s profitability. To enlarge on this issue, Hamid & Akhir (n. d.) prove that developing a new customer loyalty program can contribute significantly to firm’s profitability. Therefore, the emotional and psychological stances of controlling organizational processes have a potent impact on organization’s productivity. Therefore, customer experience should be prioritized by the organization along with other important aspects of customer relationship management. According to (Hamid and Akhir, n. d.), “properly executed experience management will induce a sense of loyalty not only through a functional design but also by creating emotional connection through engaging, compelling, and consistent context” (p. 3). The main purpose of establishing a supply chain management framework is to develop multi-channel communication with clients and suppliers. The technological progress provides clients with a range of options in terms of receiving updated information and comparing service features through online websites, social networks, and mobile applications. In contrast to this model, the traditional management framework is limited in its technological opportunities and, as a result, the employees and their managers communicate in isolation. In this respect, the development of new channels of communication does not only facilitate the production process, but also contributes to faster information exchange among the employees. Ensuring better communication will enrich the organizational culture, which also creates a detailed algorithm with clients, leading to th advanced as well as good customer relationship.

Cost saving is provides a deeper insight into how alternative management style contributes to financial and economic success. On the one hand, the emergence of supply chain models presupposes a deeper consideration of cost, risk, and optimization. All these components are essential for normal functioning. On the other hand, the proposed models provide inconsistent approaches to risk minimization, cost, and optimization. Organizations strive to unite all sectors of business, but the optimization and evaluation of supply chain models are more relevant. In this respect, Melnyk et al. (2009) argue, “management needs better understanding of the risk drivers and strategic importance of risk management” (p. 4642). Therefore, the concept of risk management should be closely associated with the cost-benefit analysis. The proposed relation, however, is not explained in traditional management models (Acharyulu, 2012). While considering the competitive environments and natural disasters, as well as better awareness of risks creates an opportunity that does not only develop sustainable and distinctive cost advantage, but also invents new ways to integrate supply chain into the process of ongoing improvement. Further assessment of cost saving through the introduction of customer relationship management is possible through understanding how new technological advances and changing managerial style contribute to cost advantage (Acharyulu, 2012). The financial advantage allows hospitals to offer a range of specialized services that could be accessed at competitive prices. Consequently, both customer relationship management and supply chain management can create a solid financial ground for successful business in case their approaches are properly arranged.

            The success of supply chain management directly depends on the cost-effective mechanisms implemented within an organization. In this respect, Machowiak (2012) insists, “successful companies will be those, whose supply chains are more cost-effective than those of their competitors” (p. 278). For this reason, the success of a supply chain model depends on effective risk management and quality control of goods and services provided.  Additionally, risk management is an integral part of supply chain model that affects performance and behavioral patterns within the organization. In contrast to these explanations, operational management is also premised on philosophical and ideological frameworks, but it lacks risks management techniques, leading to company’s increased vulnerability. To support the issue, Foster et al. (2011) refer to operations management as a transformational process, an outputs’ view of the capability of the organization. From the viewpoint of quality management, operations manager relies more on internal activities, such as process improvement, process control, product design improvement, and experimental design. As a result, the marketing improvement projects have relied on cost reduction and internal process. Certainly, the significance of suppliers and clients has been considered by the quality experts. The shift from internal to external orientation emphasizes the process of integration to the global environment. In this respect, Foster et al. (2011) emphasize that managers tend to employ holistic approaches to capturing the processes within the organization. The emphasis placed on quality management highlights the difference between quality management employed by operation managers and those approaches introduced by supply chain managers, including quality tools that are essential for achieving a cost advantage.

CRM and SCM in terms of Firm’s Profitability

            While analyzing the connection between successful customer relationship and relationship marketing, it is possible to understand how psychological dimension influences profitability. Specifically, customer profitability differs a lot because not all clients have similar preferences and tastes. In this respect, Kangal (2012) insists, “from the perspective of CRM as a strategy, customers have different values…and the firm’s profitability can be increased by identifying and focusing on customer lifetime value and desired customer segments” (p. 51). Therefore, the philosophical and ideological frameworks should align with strategic objectives of the organization that imply the development of specific standards of communication with the clients. Additionally, the main solution promoting sustainable competitiveness in the current market is clients’ attitudes and perception because this point relates direct to their profits, increasing their loyalty for a long-term period.

            There is a range of methods of increasing the company’s profitability and enhancing communication techniques. To begin with, it is necessary to reach consistency and mutual understanding in messages delivered to clients and employees. Second, integrating CRM system is possible through information technologies that have evolved to ensure greater access to information. The approach enhances customer experience that allows employees to process clients’ transaction data and share information within the organization and beyond it. Third, creating values is another important function that should be added to the technology-based environment. In particular, gaining customer loyalty is the main purpose of establishing and sustaining long-term relationships with the clients. Apparently, the emergence of new technological solutions is congruent with emotional bonds shaped through accumulated pleasant experiences. Indeed, emotional elements have a direct influence on customers’ attitude, leading to the development of customers’ loyalty. Obviously, a client provided with a high-quality service is more likely to use this service once again because of a positive experience. Gaining excitement from this experience is as important as creating new values within the company.

            In conclusion, customer relationship management and supply chain management are two alternative ways of managing today’s business environment. In contrast to traditional management mechanisms, the new approaches are more concerned with the development of external bonds with customers, suppliers, and other stakeholders that contribute to company’s reputation and its competitive advantage. What is more important is that customer relationships and supply chain management contribute to such aspects as firms’ profitability, cost savings, and efficient communication technologies. All these aspects have been reconsidered to define the extent to which the modern outlook on management has been transformed. Readiness to changes is another feature that most organizations strive to attain. 

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