Key Developments within the Information Technology and Communication industry
...made IT a key component of logistics planning in the retail industry (Skjoett-Larsen, European Logistics Beyond 2000, 2000). Logistical and EPoS systems are both vital technologies, which are aiding in the development and growth of e-commerce for example the Tesco home delivery service relies on the fact that goods can be transported to the customer precisely and rapidly, without the loss of profit. The introduction of electronic point of sale (EPoS) during the 1980s allowed goods in stores to be tracked and stock to be automatically replenished, as apposed to the manual techniques which included staff visually inspecting stock levels. The quantity of replenishment depends initially on the amount allocated and the rates of sales. Electronic points of sale systems are also beneficial during the product reordering process where if done manually errors or discrepancies may occur. The member of staff may be interrupted during the process of reordering, therefore resulting in inadequate stock levels, which may result in the potential loss of sales and customer satisfaction when the product is unavailable. Manual ordering can also result in the member of staff overstocking, as manually reordering products can be slow and time consuming, this will also result in a potential loss for the initial company as the retailer must bare the costs of excess stock and waste. This could potentially be a problem within the grocery sector as excess stock may result in waste as goods usually have expiry dates. Efficient Consumer Response (ECR) ordering which is particularly effective in the grocery sector, where ordering takes place automatically as goods are purchased through the store, this data is then sent to the distribution centre (DC) and then to the suppliers. This efficient consumer response (ECR) method is automatic and eliminates any human intervention, thus ensuring stores are always stocked with the relevant goods. Integrated computer-based ordering systems assist in providing useful information to other ECR functions. The ability to monitor and forecast demand for a wide range of differently performing goods, including slow movers, special promotions and seasonal goods, provides information that is key to a wide range of category management areas (Mintel, Efficient Consumer Response, 1997). Electronic point of sales systems (EPoS) adopt technologies such as scanners, light pens or bar code readers, all these products help to identify and track products passing through a check out point, or point of sale. The information contained on a bar code or magnetic stripe is automatically scanned into the system as apposed to the checkout operator manually entering the price or code of each item. Bar coding is one of the most popular ways of capturing data and is commonly used in supermarkets and other shops, where the majority of items are bar coded. Bar coding is seen to have major benefits with capturing relevant stock and product information, the major benefits can be identified in the fact that information is captured and provided to management where they receive detailed up to date information regarding the product aspects. This information can then be collected allowing decisions regarding stock and product management to be made more rapidly and effectively. Typically this information is used in the ordering and stock replenishment process where faster selling items can be identified and reordered to ensure a plentiful stock and therefore can be repositioned within the store so that fast selling stock may have more floor space compared to slow selling stock, on an alternative note slower selling items may also be identified, preventing a stock build up and waste. Historical data may also be collected from the sale of goods; this can help identify seasonal items. Bar code scanners have proved to be extremely accurate and are used throughout numerous industries such as; warehousing, transport and distribution, manufacturing, marketing, medical and banking services. This form of data communication is typically know as electronic data interchange (EDI), where advances in communication technology such as the internet and e-mail have allowed multiple retailers to link their stores to centralised warehousing or to company headquarters. Electronic data interchange (EDI) is basically a direct link between both retailers and suppliers, it is typically beneficial during the stock ordering process as goods can be ordered instantly without the aid of staff, for larger supermarket chains such as Tesco and Asda this will show a significant benefit with the reduction of labour costs, potentially saving the companies millions every year. Advances in computer technology have created the opportunity for large amounts of data to be stored and transferred at a relatively low cost. Retail Information Systems (RIS) and relational databases have meant data can be compared and analysed to produce the best possible outcome. The retail information system (RIS) has become a dependant part of any retail organisation as retailers can target certain people with specific goods. This storage capacity has meant that retailers can track customers and purchases with a high degree of accuracy. By tracking customer purchases the retailer is able to build a customer profile, which can benefit both parties. For the retailer this information is vital in determining product sales and successful stock, this can help retailers maximize sales of certain fast selling goods by creating a larger floor space for these goods or strategically placing items within store hot spots. For the customer the benefits of this information are apparent with the customer being targeted with specific goods of interest, such as special offers and in store deals. A longer-term focus enables new products to be developed to meet evolving customer needs (Dawes and Worthington, Information Systems and Competitive Advantage, 1996). This form of data collection is typically effective with store loyalty cards, where the information is processed through the PoS (point of sale) systems. This technique is important with customer-relationship management where retailers are finding it increasingly difficult to target segmented markets. Loyalty cards are seen as a recent marketing phenomenon and focus on a customer-relationship basis, where rewards are offered to frequent shoppers. Loyal customers, for example, by more, pay premium prices and bring in new customers through referrals (Richheld and Sasser, Zero Defections: Quality Comes to Services, 1990). Two companies which have both effectively adopted the loyalty card scheme are Tesco and Boots the Chemist. Boots with over 11 million cardholders typically communicate to their customer through in store Advantage Point Kiosks, where a profile of the consumer is kept and personalised rewards are offered through a purchase and points scheme. The technological advances in computer hardware and software have enabled the marketing sector to develop a better understanding of customers. Information collected through EPOS systems and loyalty card schemes have allowed the...