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Organizational Macro-Processes and Effective Management

The effective management of an organization’s macro-processes goes a long way in determining its success. The notable macro-processes that an organization needs to take into consideration include customer relationship management, internal supply chain management, and supplier relationship management. Each of these three macro-processes is important to businesses since they facilitate the optimization of client-employee, worker-employer, and employee-process interactions. For this reason, the present-day corporate world has seen many organizations achieve success after effectively handling their macro-processes. However, others have also failed to realize competitiveness due to the lack of proper mechanisms for dealing with the above macro-elements. In this respect, this paper describes their importance before identifying the effect of undermanaging such procedures. Furthermore, it reveals measures that can enhance the efficiency of these macro-processes. It also provides examples of companies that have succeeded or failed due to the effective or ineffective administration of their macro-procedures.

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Customer Relationship Management and its Importance

The connection between an organization and customers is crucial since it has a considerable influence on its brand image. In this light, organizations promote effective customer relationship management (CRM) due to its significant impact on an institution’s public outlook. According to Khodakarami and Chan (2014), CRM refers to the approach that an organization adopts to streamline its relationship as well as interactions with the existing and potential clients. Customer relationship management, as a macro-process, may appear in the form of a strategy, process, or technology that seeks to enhance an organization’s dealings with its clientele.

CRM as a strategy requires a company to develop a philosophy that spells out the way it relates to customers (Garrido-Moreno, Lockett, & García-Morales, 2014). The nature of CRM as a process is characterized by systems adopted by an organization to nurture and manage its relationship with customers. Furthermore, CRM as a technological product facilitates the recording, reporting, and analysis of a company’s affairs with clients. In this light, CRM is an essential aspect of contemporary organizations because it influences customer service excellence.

Particularly, in addition to reinforcing institutions’ connections and dealings with clients, it facilitates the smooth running of processes, hence boosting profitability levels. CRM promotes the realization of desirable relationships in a way that fosters the acquisition as well as the retention of clients. Additionally, customer relationship management enhances process efficiency by deploying technology to track the prospects of an organization and its consumer base (Khodakarami & Chan, 2014). As such, a business can use CRM to improve its activities, thus address customer service issues in the best way possible.

Moreover, CRM is an important aspect of upgrading the productivity of an institution. As Garrido-Moreno et al. (2014) highlight, CRM may be used to analyze the performance of sales teams within a business, thus facilitating the identification of measures that can augment the realization of the set targets. Additionally, CRM is a fundamental element of marketing since it allows an organization to forecast patterns in the market by identifying opportunities for growth and expansion. Overall, CRM has a bearing on the profitability of companies in present-day customer-driven markets.

Internal Supply Chain Management and its Importance

Organizations in the contemporary world need to uphold the importance of streamlining processes that facilitate the provision of goods and services to customers. As a result, the concept of internal supply chain management (ISCM) has been embraced considerably in the business setting. Specifically, ISCM refers to a company’s chain of processes that facilitate aspects of purchasing, production, sales, and distribution. According to Basnet (2013), ISCM as a macro-process concentrates on strengthening operations within the workplace environment to ensure that organizations realize an efficient workflow. Therefore, ISCM is an important success factor in the modern-day organizational setting because it ensures the existence of efficient operations and, consequently, high levels of competitiveness.

According to Zsidisin, Hartley, Bernardes, and Saunders (2015), ISCM plays a crucial part in facilitating the production of goods by allowing organizations to plan for the acquisition of raw materials from suppliers. In particular, ISCM takes into account the importance of involving service providers to reinforce the existing production processes. As such, this concept is vital since it fosters the realization of effective relationships between companies and suppliers. In this view, streamlined buyer-supplier interactions positively influence institutions’ financial well-being.

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Basnet (2013) emphasizes that ISCM is important for businesses because it influences the determination of whether goods produced by an organization are ready for distribution to customers. This concept also upholds the production of high-quality commodities that meet consumers’ needs and expectations. In this view, ISCM affects the product development aspect of marketing. Furthermore, the ISCM enhances the timeliness of production to allow organizations to meet the prevailing market demand. This concept of ISCM guarantees the prompt distribution of the appropriate commodities and services by encouraging businesses to supply items that fulfill the anticipated market demand.

Present-day organizations need to continually uphold the idea of ISCM since it facilitates in-depth planning of operations to optimize efficiency. According to Basnet (2013), ISCM reinforces various aspects of business activities by streamlining strategic planning, demand forecast, and supply projection. As such, through the enhanced scheduling, ISCM boosts operations in a way that meets the interests of customers, employees, and suppliers. Therefore, it is important for organizations to continually guarantee the efficiency of processes associated with purchasing, production, sales, and distribution.

Supplier Relationship Management and its Importance

Supplier relationship management (SRM) is another macro-process in the organizational setting that focuses on streamlining and enhancing interactions between organizations and their suppliers. As Zaremba, Bode, and Wagner (2016) reveal, SRM concentrates on the cultivation of mutually beneficial relationships between businesses and service providers. In this light, the main agenda of SRM is the synthesis of interactions between companies and their external stakeholders who provide the raw goods or services required for smooth operations.

According to Tseng (2014), the implementation of SRM may be facilitated by technological innovations. In the contemporary business world, companies have deployed the SRM software to foster the effectiveness of their interactions with suppliers. The SRM tool enables the automation of an organization’s supply chain procedures, including the request for information (RFI), the request for proposal (RFP), and procurement processes. In this regard, the SRM software enables various departments such as the production and marketing units to easily interact with the companies’ external suppliers.

SRM plays a huge role in boosting organizations’ operations since it offers benefits ranging from the consolidation of supply chains to the realization of increased efficiency. To achieve the consolidation goal, SRM allows businesses to understand how their service providers work, thus creating an avenue for adapting accordingly (Tseng, 2014). In addition, the SRM software enhances the communication between a company and its merchants in a way that builds mutual understanding of how each party’s input contributes to the achievement of the shared goals. This enhanced understanding enables stakeholders to accommodate each other, thus conduct business in a manner that paves the way for mutual benefits.

Additionally, SRM fosters the continuous improvement of operations between a business and its suppliers, thereby ensuring increased efficiency. In the end, the streamlined exchange of information and ideas between an institution and its dealers facilitates the adoption of measures that restructure the effectiveness of the logistics network (Tseng, 2014). For example, a company may consider establishing a joint venture with one of its important suppliers to foster the efficiency of key aspects such as product development and inventory control (Tseng, 2014). As a result, the continuous improvement of the supply chain through SRM positively affects the associated costs as well as customer service.

Effects of Under Managing CRM, ISCM, and SRM

The poor management of macro-processes, including CRM, ISCM, and SRM significantly undermines the success of an organization. As Khodakarami and Chan (2014) argue, under managing CRM may damage a firm to the extent of causing the collapse of a business. Specifically, an organization that poorly handles its CRM may influence many of its existing customers to leave while at the same time pushing away potential clients. Consequently, dissatisfied service or product users may use any of the available online platforms to express their poor experiences with the concerned company. This move tarnishes its reputation. Furthermore, as Garrido-Moreno et al. (2014) assert, poor handling of CRM may prompt the exit of employees, hence negatively disrupting the company’s human resource management.

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The ineffective supervision of ISCM also challenges the success of any particular company. According to Basnet (2013), the poor management of ISCM may trigger overproduction, which results in the wastage of resources since the organization fails to effectively undertake demand planning. Furthermore, failing to implement ISCM effectively is directly associated with the development of inventory wastes. Poor interactions between a firm and suppliers may lead to excess production or stock-outs, a situation, which denotes inventory wastage that has a negative impact on the financial position of an organization. In addition, as Zsidisin et al. (2015) reveal, under managing ISCM destabilizes the success of an institution’s marketing strategies by creating a form of interaction that does not support the exchange of ideas regarding product development among other processes. The absence of effective dealings between a firm and its vendors negatively affects its ability to deliver products in a timely way. Moreover, the poor implementation of ISCM creates a sense of uncertainty that undermines a company’s sales, thereby affecting its profitability negatively. Overall, the improper management of ISCM has a negative bearing on a company’s competitiveness because it hinders the streamlined flow of processes associated with purchasing, production, sales, and distribution.

The unsuccessful execution of SRM undermines the innovativeness of an organization to the extent of harming its competitive edge in the industry. As Zaremba et al. (2016) underline, the presence of poor relationships between a business and its key vendors reduces chances of these parties working collaboratively toward improving processes, technologies, products, and services. Consequently, the issue of under managing SRM leads to the lack of continual improvement of activities within an organization. Furthermore, as Tseng (2014) reveals, the absence of beneficial interactions between a firm and its vendors has the potential of damaging buyers’ financial performance. The relationship between an organization and its suppliers has a considerable influence on its productivity. Therefore, businesses should consider the threat posed by under managing the concept of SRM since this macro-process directly affects the attainment of the set goals and objectives.

How to Effectively Manage CRM, ISCM, and SRM

The effective management of various macro-processes is fundamental toward fostering the success of an organization. Garrido-Moreno et al. (2014) insist that the efficient supervision of CRM practices requires companies to put in place measures that range from understanding customers’ needs to the improvement of internal communication processes. As a traditional approach, it is crucial to understand clients’ demands since this information enables them to provide products or services that fulfill such requirements. As such, acknowledging the underlying benefits and/or problems that clients experience due to their interaction with an organization’s procedures is vital in ensuring that products offered bear necessary features, which satisfy consumers. Additionally, the effective management of CRM requires a company to use customer feedback in the development of its products, thus ensuring that products meet customers’ needs and expectations.

Furthermore, as Khodakarami and Chan (2014) reveal, the deployment of technologies such as CRM software is also an important way of enhancing the efficiency of managing relationships between organizations and their customers. For instance, CRM software facilitates the sharing of information internally and externally, thereby fostering the efficiency of business-client interactions. Furthermore, the reduction of technological barriers that usually undermine customer services is crucial toward ensuring the effective flow of information between customers, companies, and other stakeholders. Moreover, an institution can enhance the efficiency of its interactions with clients by using technology to provide multiple methods of contact. The introduction of the various measures for dealing with all business stakeholders using technology can help to boost the efficiency of CRM.

The effective management of the ISCM is also crucial since it enhances the delivery of services or commodities within an organization. A company that seeks to improve its ISCM needs to focus on deploying processes that foster the alignment or collaboration of functions. According to Basnet (2013), the configuration of IT infrastructure in ISCM is important because it not only streamlines communication among different parties within an institution organization but also fosters the effectiveness of information management. For instance, an organization that wishes to improve its purchasing processes may introduce or upgrade its enterprise resource planning (ERP) technology to facilitate the centralization of information, the measurement of key performance indicators, and the development of actionable reports. Furthermore, a company that intends to enhance its ISCM needs to acknowledge the importance of efficient and timely communication with suppliers, employees, and customers (Zsidisin et al., 2015). In addition, the automation of communication to facilitate the process of sharing information with the respective partners is also critical.

Additionally, Prajogo, Oke, and Olhager (2016) assert that the deployment of change management programs is a crucial strategy, which fosters the efficiency of ISCM since it helps individuals and teams in the organization to continuously improve their approaches to different situations. Moreover, the end-to-end alignment of incentives is also an important measure toward enhancing the efficiency of ISCM. Through this strategy, individuals and teams respond to the way processes and employees are assessed after performing different tasks. Therefore, motivating the workers is one of the best ways of ensuring productivity and, consequently, the success of ISCM.

Example of an Organization that Failed Due to Poor Management of Macro-Processes

The lack of proper macro-process management at US Airways Company contributed to its bankruptcy before American West acquired it in 2005. As earlier stated, under managing an organization’s relationship with customers ultimately results in a significant decline in its profitability and performance levels. In the current context, US Airways slashed its budget on SRM to engage in a plan that involved outsourcing such services. The poor management of this company’s CRM chased away customers who could not tolerate the poor services offered. This scenario led US Airways to file for bankruptcy. This company’s situation reveals that any business that mishandles its relationship with customers risks losing talented employees, including the existing and potential clients.

In turn, operating in such conditions damages the continuity of smooth operations within this particular organization. For US Airways Company, the diminishing customer taste and the exit of talented employees eventually led to a direct revenue loss. Tseng (2014) identifies the establishment of open communication lines that facilitate interactions with suppliers as integral toward fostering the efficiency of macro-processes. US Airways failed to implement this strategy. It did not invite its key suppliers to contribute to product development processes. This poor management of macro-processes hindered the marketing aspect of the organization’s success. Such interactions could allow US Airways to enhance its relationship with suppliers in a way that could improve its financial position.

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Example of an Organization that Succeeded due to the Effective Management of Macro-Processes

The effective management of CRM, ISCM, and SRM influences the success of any business since streamlined interactions between a company and vendors directly affect its financial performance. Amazon is a renowned organization that derives much of its success from effectively managing its macro-processes. Specifically, as Weill and Woerner (2015) reveal, Amazon recognizes the importance of a customer-centric approach in its operations. In particular, it identifies consumers as the most important stakeholders of this e-commerce giant. Furthermore, the company’s CEO, Jeff Bezos, emphasizes that every employee in the business should work in the call center, implying that Amazon strives to acquire a comprehensive understanding of customers’ needs and expectations.

Moreover, the development of products by considering buyers’ desires has made it possible for Amazon to continually expand its market share in the e-commerce retail sector. According to Zaremba et al. (2016), the proper management of interactions with suppliers requires organizations such as Amazon to invest in the SRM technology. Such software streamlines buyer-supplier relationships by offering updated profiles of all suppliers, managing and monitoring vendors’ information, and identifying and accommodating new dealers. Therefore, for Amazon, the centralization of suppliers’ information using SRM software has been regarded as one of the most important ways of effectively managing interactions with its service providers.

Conclusion

The effective management of macro-processes including CRM, ISCM, and SRM is crucial in fostering the success of an organization. As revealed in this paper, these macro-procedures enhance companies’ interactions with key partners such as suppliers, customers, and employees. The deployment of technology facilitates the functionality of processes such as CRM and SRM. Consequently, efficient interactions and processes facilitate the fulfillment of key stakeholders’ needs and expectations in a way that creates mutual benefits. Amazon is one of the e-commerce giants that realized the importance of managing macro-processes effectively. As a result, this company is a leading player in the online retail industry. On the other hand, US Airways failed terribly after under managing such processes. Therefore, it is crucial for organizations to implement systems that facilitate the effective management of macro-processes because such a move significantly influences their performance, productivity, and, consequently, competitiveness.

References

Basnet, C. (2013). The measurement of internal supply chain integration. Management Research Review, 36(2), 153-172.

Garrido-Moreno, A., Lockett, N., & García-Morales, V. (2014). Paving the way for CRM success: The mediating role of knowledge management and organizational commitment. Information & Management, 51(8), 1031-1042.

Khodakarami, F., & Chan, Y. E. (2014). Exploring the role of customer relationship management (CRM) systems in customer knowledge creation. Information & Management, 51(1), 27-42.

Prajogo, D., Oke, A., & Olhager, J. (2016). Supply chain processes: Linking supply logistics integration, supply performance, lean processes and competitive performance. International Journal of Operations & Production Management, 36(2), 220-238.

Tseng, S. M. (2014). The impact of knowledge management capabilities and supplier relationship management on corporate performance. International Journal of Production Economics, 154, 39-47.

Weill, P., & Woerner, S. L. (2015). Thriving in an increasingly digital ecosystem. MIT Sloan Management Review, 56(4), 27-34.

Zaremba, B. W., Bode, C., & Wagner, S. M. (2016). Strategic and operational determinants of relationship outcomes with new venture suppliers. Journal of Business Logistics, 37(2), 152-167.

Zsidisin, G. A., Hartley, J. L., Bernardes, E. S., & Saunders, L. W. (2015). Examining supply market scanning and internal communication climate as facilitators of supply chain integration. Supply Chain Management: An International Journal, 20(5), 549-560.

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StudyCorgi. (2020, December 27). Organizational Macro-Processes and Effective Management. Retrieved from https://studycorgi.com/organizational-macro-processes-and-effective-management/

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