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Natural Beauty Pty Ltd
INFS1602
Information
Systems in Business
Assignment B
Semester 2 2013

Group Members:
Young Kun Kim (z3254594)
Poh Jin Shen (z3385350)
Evon Lai Yee Ven (z3421738)
$

Table of Contents



Overview 3
Executive Summary 3
1.0 Introduction 4
2.0 SCM and CRM
2.1 SCM and CRM for Efficiency and Effectiveness 4
2.2 Analytical CRM software 5
2.3 IS/IT security, Ethics and Privacy Issues 7
3.0 Recommendation of Product/Solutions
3.1 Scoring Model Analysis 9
3.2 Justification of Selection Criteria 10
3.3 Recommended Vendor 11
3.4 Cost and Benefit Analysis 12
4.0 Conclusion 12
Appendices 13
References 14










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Overview
Overview will provide how the analysis in this report relates to our course material and used
to achieve this report. To begin with, the whole group made use of the textbook and lecture
notes as the main sources of gathering information as well as understand key definitions for
terms like Supply Chain Management (SCM), Customer Relationship Management (CRM)
and Analytical CRM. The textbook only gave the group a brief idea of features and functions,
thus, information in the textbook and lecture notes were insufficient and were not really
relevant to analyse the case of Natural Beauty. Hence, further research had to be done to
provide more sufficient information to support our claims with regards to the solutions
provided in the case of Natural Beauty. The library resources such as academic journals and
also research reports are used to complete this report. We had faced a few confusions while
completing the report thus part of the group had decided to attend a Peer Assisted Study
Session (PASS). We consulted the PASS tutor to gain a better understanding on the scoring
model as well as the process to determine the criteria set in the scoring model. Weekly
attendance of tutorials had also helped us in conducting a critical analysis on the SCM and
CRM. Discussions, debates and questions that occurred during tutorials had also provided a
good opportunity for us to gain various opinion from peers. We found that assessed
component of this course particularly useful in helping us to form a well justified and
supported argument we needed as everyone had varying opinions in weekly discussions of
workshop preparations. Overall, the textbook was used as a basis of our understanding to
allow us to analyse the solutions Natural Beauty needs, further research through the internet
as well as journals helped us in preparing the report.

Executive summary
Recent acquisition and expansion of Natural Beauty had call for an improvement on the
legacy management reporting and decision support systems. CIOs priority is to improve this
poor system by adopting suitable products and solutions. The report is going to provide
recommendation of products and solution through the analysis of SCM, CRM, IS/IT security,
ethics, privacy issues and other factors. Finally the most beneficial vendor will be determined
by analysis of score model and cost and benefit model among the three competitors;
NetSuite, JDA and Oracle.






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1.0 Introduction
The purpose of this report is to provide potential information systems for Natural Beauty as
their corporate strategy changes. In this report, Supply Chain Management (SCM) and
Customer Relationship Management (CRM) analyse to improve the efficiency and
effectiveness of the companys supply network and analytical CRM software discusses to
optimize customer satisfaction, customer retention and product mix. The report also identify
and analyse the main IS/IT security, ethics and privacy issues in relation to an integrated
enterprise systems strategy. From this analysis, some of products and solutions recommended
to Natural Beauty and by comparing three researched vendors, the most beneficial vendor are
determined through scoring model and cost and benefit analysis.
2.0 Supply Chain Management (SCM) and Customer Relationship Management (CRM)
2.1 SCM and CRM for efficiency and effectiveness
Supply Chain Management (SCM)
According to the Tom Guffog, SCM can be defined by Maximising added value and
reducing total cost across the entire trading process through focusing on speed and certainty
of response to the market. The main purpose of improving supply chain is to improve
product development and reduce costs to optimize the companys profitability. Supply Chain
Management (SCM) system could be broken down in to three stages which are planning,
execution and analytics. Each of components consists of many modules or application to
support and optimize the supply network.
Supply Chain planning includes demand, distribution, production and inventory planning. For
Natural Beauty Pty Ltd, inventory and cost management could improve by forecasting
accurate demand. The companys recent expansion in Australia and overseas will lead to
increase in demand and inaccurate demand forecasting will result in an over or under
production. Under production will increase the customer dissatisfaction and over production
will lead to left in stocks in its warehouse. Furthermore, the company is dealing with organic
products so the expiration date of products is relatively low, thus over production might result
in wasting inventory or increase cost of storage (Romi Malik, 2013). Therefore, accurate
demand planning and forecasting could improve the efficiency and effectiveness of managing
inventory and cost.
The recent domestic and global expansion might cause a problem of communication between
Natural Beauty and its suppliers. Communication via phone or other social media might
confuse suppliers to misunderstand shipment date or destination and result in misdelivery and
early or late shipment. Miscommunication will occur costs and time to correct. The elements
of supply chain execution such as product flow, information flow and financial flow will
improve the collaboration of all members of the supply chain by removing of paper
document, including payment schedules or supporting activities of production and
distribution. Hence increase efficiency and effectiveness of the companys supply network.
'
The managers in Natural Beauty cannot monitor performance of the entire supply chain, thus
use of key performance metrics can provide information to mangers to monitor performance
of the entire supply chain, including sourcing, planning, sales, production and distribution.
Being able to access key performance metrics can also help managers to improve insufficient
part of modules and applications and maximizing the companys profitability. Hence, use of
key performance metrics could increase efficiency and effectiveness of the companys supply
network.
Customer Relationship Management (CRM)
Customer Relationship Management (CRM) system is about managing all aspects of
companys interaction with its customer such as sales, customer service, marketing and more
on. CRM system consists of three primary components which are Operational CRM,
Analytical CRM and Collaborative CRM. Each of elements could be used to improve
efficiency and effectiveness of the Natural Beautys supply network.
Today, many companies do not provide customer services because of aggressive cost cutting
to maximize the profit. However, it is quite importance to provide customer services to attract
new customers and maintain the customer relationship (Industrytoday, 12/20/2011).
Currently, Natural Beauty provides no customer service to meet customers satisfaction. If
Natural Beauty creates customer service and support or customer interaction center, it will
communicate with customers through various communication channels such as the Web,
social media network, face to face and telephone to attract new customers and it will help to
maintain customer relationship. Also feedbacks and frequent complaint from customers could
be used to improve the quality of products and meet the customer satisfaction. Furthermore,
automated service of request, complaints, refunds and information service will effectively
solve customer complaints and increase the efficiency of using time for staffs. Hence the
system will improve customer retention in domestic and overseas.
Collaborative CRM will provide effective and efficient communication between the
customers and Natural Beauty. The companys strategy of extending online sales and
expansion in oversea will increase size of various departments and sharing useful customer
information to various departments like sales, marketing, distributing and IT support will
improve the quality of customer service and increase customer satisfaction and loyalty (John
Edwards, 2007). Therefore, integrating customers data and sharing information would
effectively improve customer relationship and maintain communication with customers.
2.2 Analytical CRM software
In this highly competitive industry, it is important for Natural Beauty to be able to provide
customer satisfaction and suitable product mix in order to retain customers. Studies had
shown that analytical CRM software is important for company to manage customer
acquisition, development and retention. It directly affects company profitability and also
customer satisfaction (Ang and Buttle, 2006). Through Analytical CRM, Natural Beauty can
analyse behaviour and impression of their customers in order to accurately offer business
intelligence and excellent customer service. As operational and analytical CRM are
(
interrelated, data gathered in operational CRM such as satisfaction surveys, customer
locations and purchase history would be entered into the data warehouse of analytical CRM,
subsequently for data mining. Analytical CRM can be divided into four dimensions based on
the diagram below:










Figure 1: Stages of Analytical CRM (Kracklauer et al., 2004)
Stage 1: Customer Identification
Firstly, as Natural Beauty is expanding its business to include international customers, a
centralised database is convenient to store increasing customers data over time. It is important
for Natural Beauty has to identify their target customers through target customer analysis and
customer segmentation. As Natural Beauty is aiming to extend online sales to international
customers, customers may be grouped based on their similar characteristics such as location,
shopping patterns, product preferences and service and support history. Conducting a target
customer analysis based on customer profiles and consumer market research, Natural Beauty
may identify their most profitable customer segment. For Natural Beauty, their target
customer segment is customers from different locations.
Stage 2: Customer attraction
The identification of target customer segment means that Natural Beauty need to concentrate
their efforts and allocate resources to attract that particular customer segment. Factors that
impact the attractiveness of products include price, convenience of purchase, and product
differentiation based on customer reviews and preferences. Databases containing customers
personal information and preferences are important in order to analyse products that are
creating value for customers. In addition to that, data from the analysis itself can be used to
filter out most profitable customers.
2.4 Analytical CRM
Figure 2.1: Analytical CRM stages. (Kracklauer et al., 2004)
customers characteristics. The selection of the target groups requires
the collection of quantitative and qualitative data on these groups.
2. Customer attraction: This stage follows customers identication. Hav-
ing identied the target groups, companies concentrate eorts and al-
locate resources to attract these segments. Competitive advantages,
such as price and other dierentiation characteristics, can be drivers
of customers attraction. Another customer attraction driver is direct
marketing. This is an element of companys marketing mix that mo-
tivates customers to place an order immediately (Cheung et al., 2003;
Liao and Chen, 2004; He et al., 2005; Prinzie and Vandenpoel, 2005).
For instance, direct mail or coupon distribution are typical examples
of direct marketing. Customer attraction involves the use of an ap-
propriate method of communication and the elimination of any sort of
wasted eort (Kracklauer et al., 2004).
17
)
Stage 3: Customer development
Customer development is vital for the increase companys profitability because it relates to
the transaction intensity, value and individual customer sales (Oliveira, 2012). Consider
customer lifetime value (total net income derived from that customer) and up or cross-selling
programs (activities to promote the usage of services or products). Promotional activities
such as long-standing customers are able to purchase a full range at a lower price may
increase the profitability of Natural Beauty, at the same time retaining existing customers.
Stage 4: Customer retention
Customer satisfaction has the largest impact on customer retention (Kracklauer et al., 2004).
Conventional marketing such as loyalty programs are still being used, but methods such as
one-to-one marketing and personalised campaigns are popular alternatives to increase
customer satisfaction. Using ACRM Natural Beauty can tailor marketing campaigns to target
the main customer segment identified, giving differentiated services to each customer with
different needs. Last but not least, having excellent customer service is vital for a successful
business that is highly dependent on the customers perception like Natural Beauty. Thus,
being able to achieve first call resolution will enhance companys positive image and keeping
good perceptions in customers minds. The overall shopping experience with Natural Beauty
can be enhanced through software such as Social Networking Add-ons, which is capable of
identifying trends through the customers daily conversations and browsing history. Knowing
the trends will lead to a better understanding of the needs and wants of customers.
2.3 IS/IT security, ethics and privacy issues
IT/IS security
! Access control
Utilization of SCM also gives rise to IT security issues, mainly, access control, which is the
authentication of identity and authorization of the employees rights. Due to the large number
of stakeholders using the integrated system, access control rises to become one of the
simplest forms potential security issue in SCM. Although it is important for Natural Beauty
to implement an integrated system to ensure timely dissemination of accurate data, Natural
Beauty also has to ensure that users are not authorized to access data irrelevant to their work
scope. A survey by Cyber-Ark reflects that 30 percent of the respondents admit to accessing
information from a system that was not relevant to their role in the firm (Peggy E. Chaudhry
et al. 2012). A potential unauthorized access to sensitive data could result in information leak
by authorised users to existing and/or potential competitors, which could result in loss of
market share. Hence, Natural Beauty should authorise the access of data based on the
relevance of the users role in the company to reduce potential unauthorised access of data,
no matter its sensitiveness.
! Security
*
By utilizing an integrated enterprise system, Natural Beauty would have a centralized
database to store all company related information. However, although a centralised database
adds to Natural Beautys competitive edge due to its convenience, it also makes the company
more vulnerable to security breaches. Peggy E. Chaudhry et al. 2012 () states that Security
breaches (malicious or unintentional) can result in continuity disruption, poor reliability of
information, lowered effectiveness and efficiency of processes, and can even have legal
implications. Hence, to reduce potential security breaches, Natural Beauty should implement
strong network security with stringent protocols by using VPN to minimize the risk of
information leakage due to data transfer between its international offices.
Although external threats can affect and contribute to possible information leakage, research
has shown that the biggest threat to information security remains internal (Peggy E.
Chaudhry et al. 2012). Due to poor IT security habits such as regular change of password or
bringing work home, employees increase the chances of compromising sensitive data. Thus,
Natural Beauty needs to enforce a set of security policy and ensure that users of its integrated
system abides to the policy.
Ethics
Given that Natural Beautys priorities are to tailor its product mix for specific outlets, while
improving customer satisfaction and retention of customer loyalty, certain ethical issues have
to be addressed. Each country has its unique culture and Natural Beauty have to consider the
varying differences of its stakeholders, such as the local communities, employees,
governments and consumers, to ensure fair and safe working conditions that would not
violate human rights i.e. hiring/workplace discrimination and fair wages.
David Krueger mentioned that International firms are still vulnerable to criticism back
home and in the eyes of the international media and international NGOs who may fairly
accuse the compliance regime of having insufficient oversight and auditing (David A.
Krueger, 2008). As Natural Beauty adopts the use of global supply chain management, not
ensuring proper ethnics within the company would result in possible reputation loss for
Natural Beauty which might affect its sales figure. Hence, a potential solution proposed by
David Krueger would have Natural Beauty demand its partners to adhere to its code of
conduct (David A. Krueger, 2008).
Privacy
As SCM requires suppliers and buyers to partner closely through a process called electronic
data interchange, privacy then poses as a challenge. Customers may feel an invasion of
privacy as they are required to provide information to companies that the learn more about
than they wish to provide (Hopwood, 2000). In addition, there is a possibility that in-house
employees would steal and sell customer information to competitors without the customers
knowledge or permission, resulting in customers loss of faith towards the company.

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3.0 Recommendation of Product/Solutions
3.1 Scoring Model Analysis

Criteria Weight
(1-10)*
Vendor
1:
NetSuite
Score Vendor
2: JDA
Score Vendor
3:
Oracle
Score Best
of
Breed
= V1
+ V2
Overall
Score
Demand
planning and
forecasting
9 60 540 80 720 80 720 80 720
Communication
with suppliers
8 80 640 80 640 70 560 80 640
Order
Management
5 70 355 60 300 70 350 70 350
Supply chain
collaboration
and
Performance
management
7 70 490 70 490 70 490 70 490
Contact and
support service
center
9 50 450 60 540 65 585 60 540
Distribution 5 55 275 50 250 60 300 55 275
Grand Total



2750

2940

3005

3015
*The weights range from 1-10 with 10 being the most important and 1 being the least
important.


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3.2 Justification of Criteria Selection
Demand forecasting and planning
This will increase the precision of Natural Beauty in their plan and forecast of inventory to
meet future demand of the market. As over production will lead to increasing storage costs,
production of inventory should be just enough to serve demand of customers. Besides,
considering that cosmetics are perishable goods, keeping over produced inventory might lead
to increased costs of expired products.
Communication with suppliers
The importance of this component can be demonstrated in keeping adequate inventory levels
with suppliers. It provides real time information of inventory so the suppliers are up to date.
Automated electronic document exchange between Natural Beauty and suppliers improves
overall efficiency because allows the reduction of errors of communication and reduction of
order-making time.
Order management
A good order management module will improve the billing and invoicing of Natural Beauty.
Not only will Natural Beauty have a good record of sales, customers will also be able to
receive their orders on time, which creates value for the customers. Ultimately, it leads to
customer retention and satisfaction.
Supply chain collaboration and Performance management
Often miscommunications occur due to the inefficiencies of information tranferring medium
such as mobile phones. With the help of exchanged information between Natural Beauty and
the suppliers, errors that will occur on paper documents can be eliminated.
Contact and Support Service centre
A vendor which provides contact and support service will assist the business in improving its
customer satisfaction and retention through the addressing of customer queries and concerns,
it will also gather any dissatisfaction of the customers through the various channels such
emails, calls and social media.
Distribution
Improper planning of distribution of goods might cause the goods or merchandise being stuck
at different intervals starting from the point where it is produced all the way till it reaches the
customer. Thus, a proper distribution module will aid businesses in efficiently distributing
their products through proper planning of logisitics as well as help in reducing unecessary
costs.

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3.3 Recommended Vendor: Best of Breed
Judging from the scale of Oracle, it appears to be the best vendor. However, after much
research and analysis, it is conclusive that the best of breed consisting NetSuite and JDA
offers a much better solution to match the priorities of Natural Beauty.
Firstly, JDA offers a better solution to demand planning and forecasting as it provides more
in-depth understanding of future demand through identification of demand behaviours,
demand histories and promotional impacts of activities and also its ability to sense and
response to daily changes in product demands quickly.
Besides that, compared to Oracle and JDA, Netsuites order management module had added
feature that allows flexible customization of its subsidiaries to meet specific geographic
business models. In addition, data can be presented in more than 15 languages to suit the
country which it operates.
After comparing all features and capabilities, all three vendors have similar strengths and
weaknesses in the supply chain collaotain and performance measurement module. All three
vendors aims to support transactions related to acquiring raw materials from suppliers and
also settlement of invoices. Also, they all have similar ability to allow flow of important
information within the supply chain like inventory levels and stock orders so all parties in the
supply chain are kept up to date.
Lastly, JDA has Omni-Channel Commerce captures interaction of customers across all
channels and also to turn in-store visits into profitable cross-channel customer engagements.
Days-of-supply calculations and profitablity algorithms helps to assure customers satisfaction
with good inventory visibility. Also Netsuite have SuiteCloud platform which allows all
parties to access real-time information of inventory through electronic devices regardless of
location. Knowing the availability of inventory means better customer engagement.









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3.4 Cost and Benefits Analysis
Costs Benefits
Might be difficult to implement both
vendors side by side.
Technical support of both vendors is
needed in the event of either one
failing.
Resistance to change within the
organisation.
Employees and suppliers need to learn
how to use both vendors.
Constant monitoring of the system.
Needs a solid intranet.
Not as broad and flexible as single
vendors.
Increases Efficiency
Able to adjust for currency, taxation
and legal compliance at the local
level.
Able to manage inventory and
fufillment across multiple locations
Better monitor of critical success
factors
Supports multiple concurrent
languages
Improved pricing and promotional
activities
Improved consumer centricity with
targeted local assortments
Extra negotiating power



4.0 Conclusion
In conclsion, SCM, CRM and other factors such as analytical CRM software, IS/IT security,
ethics and privacy issues are analysed to improve the efficiency and effectiveness of the
companys supply network and customer satisfaction and retention. Significant modules and
applications are recommended and justified. Through the scoring model analysis, Oracle
determined to be the most beneficial vendor to Natural Beauty. Some cost and benefit are
identifed by adopting new information system. Lastly, Natural Beauty expects to meet their
goal by implementing new information system.



(3013 words)



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Appendices

Assumptions
It is assumed that
Natural Beauty have enough funds to implement the recommended solution.
Best of breed can be implemented concurrently.
Fluctuating demands are observed but market conditions are stable.
There are miscommunications between suppliers and Natural Beauty that had caused
inefficiencies.
Managers are open minded enough to accept new solutions and are not resistant to
change.
Staff and IT staff have sufficient knowledge to implement the new system and are
able to provide support services if needed.



Vendors
Oracle
Oracle Corporation is an American multinational computer technology corporation
headquartered in Redwood City, California, United States.
Website: www.oracle.com
JDA Software
JDA Software Group, Inc. is an American software and consultancy company, providing
supply chain management, merchandising and pricing solutions. Located in Scottsdale,
Arizona.
Website: www.jda.com
Netsuite
NetSuite Inc. is a United States software company based in San Mateo, CA. The company
markets cloud-based software-as-a-service integrated business management software
Website: www.netsuite.com.au




#&
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