Information System of Retail Shop

Prepared by:

• Travis McEachron
• Shakil Kamran
• Muhammad Tanvir Hasan
• Fabrice Hecdivert
• Rhea Farrell

The objective of the class project is to investigate and evaluate an information system of GAP Inc. GAP Inc. is a retail organization that is comprised of stores nationwide as well as being internationally based. They are mainly branded as Athleta, GAP, Old Navy, Intermix and Banana Republic. Its first store opened in the year 1969 and now spans across the United States of America and many other countries. Over the years, the organization has grown into large businesses with numbers of franchises. In addition to its onsite stores, it provides an e-commerce platform for its large customer base. The information system we decided to base our project on is GAP’s Supply Chain Management System.

Our team looked at the Supply Chain Management System used by GAP. Throughout, this report shows the findings, summary and recommendations for GAP’s organization. The main goal of this research is to identify how GAP operates and how does the Supply Chain Management System play a role in this. It goes into further details about competing with its competitors, and identify how GAP is performing in the apparel market.

According to Thomas Wailgum (2007), “Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers.”

“The Global Supply Chain at Gap Inc. is employed with thousands of individuals around the world whereby creating the right product, made well and delivered at the right time. Gap praise its size and scale, as it continues to change the retail industry, its Global Supply Chain is the instrument of innovativeness.”- Gap Inc. Careers.

GAP Inc. is one of the largest for pr1ofit, American specialty retail corporations. GAP was first started by Donald and Doris F. Fisher in 1969. Art Peck is currently the President and CEO of GAP Inc. Their headquarters is located in San Francisco, California. GAP specializes in selling apparel: clothing, shoes and accessories. The company has about 40 franchise suppliers, and also has over 3,700 stores worldwide. It operates in Canada, the United States, the United Kingdom, and several locations in Europe. GAP has a hybrid organizational structure.

GAP started as a single store in San Francisco, California and now has a chain of companies, including Old Navy, GAP, Banana Republic, and many more. The company offers products such as clothing, accessories, and care products for men, women, and children. GAP offers its services worldwide. Its Omni-channel supply chain allows GAP’s many branches to stay interconnected. It also provides an e-commerce division, known as Growth Innovation Digital (GID), thus being able to expand its market over the years. GAP’s main shipping carriers include FedEx, United States Postal Service, and United Parcel Service.

In addition, GAP sales revenue for 2016 was 15.8Billion; however, there was a decrease in sales growth at -3.88%. GAP Inc. competes with other large retailers, such as Macy’s, Wal-Mart, Target and other major stores. Unlike some companies, GAP only provides apparel, where companies like Wal-Mart sell apparel, furniture, house appliances and so forth.

Mission Statement

“GAP Inc. is a brand-builder. We create emotional connections with customers around the world through inspiring product design, unique store experience compelling marketing.”   

Organizational Structure

Information Systems

Gap Inc. is large business that does business which includes retailers, such as Banana Republic, Old Navy, Athleta, Intermix, etc. Therefore Gap Inc. uses a cloud computing infrastructure in order to support their global business. Gap Inc. uses an omni- channel technology which allows and ensures customers get the products they when and where they want it. Gap Inc. also developed a Business Intelligence Group which allows the organizations to stay on a unified platform data which makes Big Data accessible supporting the company’s strategic decision making. With this knowledge, I was able to decipher that this organization uses a decision support system (DSS) mainly because Gap Inc. has an automatic loop systems that fits customers’ needs with any other concerns. There is a 24hrs (automated) customer service operator unless the concern is urgent, customers will then be transferred over to customer relations specialist that best fits that category of the customers’ concern. This company does have an IT support team that is only accessible to Gap Inc. employees.

Technical Information

Any companies’ software and Hardware they buy depends so much on the size, sophistication, and budget of the retailer. The applications include merchandising systems, demand forecasting, replenishment, allocation, price management, price optimization, sourcing, product lifecycle management, inventory control, point of sale, sales analysis, merchandise planning, location planning, markdown optimization, store operations, e-commerce, analytics and business intelligence, customer relationship management, and so on. GAP Inc. is a retail chains company, so they usually used apparel retailer’s software. Apparel retailers tend to have different systems needs from hardlines retailers or grocery retailers.

GAP also use “Dressing Room” apps. Its available in Apple and Android both. This app was created to assist customers virtually. This tool came with a “try on” clothing capability and can be performed using smartphone, Augmented Reality experience. The Dressing Room by GAP app was created in association with Avametric technology, to deliver accurate shoes and texture of each clothing. GAP Inc. top priorities is continuing to improve their technical knowledge around how the fabric stretch, drape and feel impact the sensation of fit. Technology gives customers incredible autonomy around the shopping experience and its company’s opportunity to explore new ways to make customers shopping experience effortless and find different solutions that will add value to a customer’s experience. The Dressing Room by GAP pilot app is just one element of our longer-term strategic plan in this space.

The GAP Inc. is taking advantage of software-defined (SD) networking, which is used to connect its several stores through the internet in the corporate network. It can now route traffic through the public Internet using encrypted connections. The company is installing new software-defined routers from Viptela Inc. at each store to build a more cost-effective WAN to connect store branches. Network upgrades or changes can all be done remotely, which makes GAP work easier. The routers allow GAP to segment its network as security technique. GAP Inc. is currently using the SCMS PO application to manage purchased orders. In loyalty marketing, data and technical infrastructure are critical. At GAP Inc., marketing owns the customer database, which offers a true 360-degree view of the customer.

GAP Inc. uses third party service providers to manage the site and assist with business needs. Gap Inc. may share personal information with service providers in order to deliver the site and services as described in this Privacy Statement. These third parties include Taleo. Third party providers who are receiving personal information are expected to apply the same level of privacy protection as contained in this Global Privacy Statement. Also, they are required to keep personal information confidential for any purpose other than as originally intended.

Global-Technology Platform

GAP Technology uses the DevOps principle. The DevOps principle refer to a set of practices which emphasize the collaboration and communication of both software developers and information technology professionals. The DevOps tool uses Holistic system thinking, no silos, Rapid and useful feedback and automate drudgery away.

Ecommerce Technology

GAP is comprised of 5 different e-commerce sites GAP, Old Navy, Banana Republic, Athlete and Intermix. With serving customers on a global customer base the E-commerce technology is needed. Growth Innovation Digital (GID) is the award-winning e-commerce division of GAP Inc. The Multi-brand shopping platform drives the web and mobile experience and multi-channel capabilities. Open source technology such as chef and OpenStack also plays a large role the online based websites to manage large jobs.

Open Source Technology

GAP uses Open Source technology such as chef which is used for writing system configurations. With many plugins and features at a low-cost savings is key for large businesses such as GAP. Chef is used to streamline the task of configuring and maintaining a company’s servers and can integrate with cloud-based platforms such as Chef & OpenStack, Amazon EC2 etc., Chef is able to manage large jobs on any infrastructure no matter the size. They enable services and features to deployed and update more frequently with small chances of down time. All at a respectable price range. Openstack is a free and open source software platform for cloud computing. The platform is made up of related components which control diverse, multi-vendor hardware pools for processing, storage and network resources through a data center.

Omni-Channel Technology & Logistics

Omni-channel technology and logistics uses a Global-Technology Platform. An Omni-channel supply chain uses a central stock pool to control a number of factors such as pricing, fulfilment, sales, stock management and ordering. These orders are fulfilled from numerous retail channels such as concessions, franchises, catalogue, web, stores and mobile. The central stock pool is the heart of all these operations. The supply chain is now on the front line thanks to Omni-channel. Omni-Channel interrelates everything from sales to your connected. The online store connects to the mobile store which connect to a retailor store. Such as you creating an order online and being able to go get that product from the store. It creates an interlock of transactions which is smarter and give the customer multiple choices of how to interact and get the required products they need.

Enterprise Platforms

GAP uses a custom J2EE enterprise ecommerce platform. J2EE stands for Java 2 Enterprise Edition. The Java Centric environment with a set of services, API, and protocols that provide the functionality for developing multitude, web based applications.

Security being implemented and Privacy and Ethical concerns with current laws

GAP was founded on doing business honestly, responsibly and ethically so corporate compliance is critical and taken very seriously. GAP has developed a Code of Business Conduct (COBC) where it gives employees an overview on what is acceptable use of GAP Inc. data and what is not tolerated. Each employee and director is responsible for complying with GAP Inc. COBC. GAP Inc. has created Global Integrity Department to implant the company’s existing compliance infrastructure. The Global Integrity Department works with Human Resources, Global Corporate Affairs, Internal Audit, Loss Prevention and Corporate Security to raise code awareness within the company, to monitor and audit Code compliance and to investigate all suspected code violations. For customers GAP Inc., has implemented a “Customer Bill of Rights” which is a basic customer policy on the rights you are entitled to as a GAP Inc. customer such as profiling being prohibited with any GAP Inc. facility, as well as unreasonable searches of customers by any employee. However the policy also includes rules on how GAP Inc. will react in case of any serious matters as stated “A person may be detained only in a reasonable manner and for not more than a reasonable time to permit investigation or questioning, provided an authorized employee has reasonable grounds to believe that the person so detained was guilty of criminal possession of an anti-security item or was committing or attempting to commit shoplifting on the premises (New York State General Business Law, Section 218)”. Security is also implemented physically by the presence of security guards to assure the safety of employees as well as shoppers within every GAP Inc. facility.

Business Information

The business aspect of GAP Inc. is focused on three major stages: creation, integration and impact. Creation is when they first act or develop an innovative approach to creating social or environmental change. Once they demonstrate that the efforts bring benefits both to the people and communities they serve, as well as to their business, they move on to integration. Integration leads them away from a model in which sustainability is a separate function – and toward one in which a much broader group of actors drives change. The result of this strategy is impact – on a bigger scale and in a way, that is sustainable for the long term.

A prime example of how business integration can help the company move forward involves their efforts to improve working conditions for the people who make their clothes. They have been expanding these efforts for more than two decades and have played a leading role in multi-stakeholder innovations such as the Better Work program, a collaborative approach to monitoring factories. While they have made significant progress through the work of our sustainability team, they recognize that to create lasting, widespread change, their sourcing team and brands also need to play active roles. These teams are finding new ways to collaborate every day, including the setting of shared sustainability goals.

They are also taking an integrated approach to measuring the performance of our suppliers across all dimensions that are important to them, from working conditions to environmental performance. The technology is integrated through the use of machinery that stitches together the fabrics to make a certain piece of cloth. Nowadays it’s more computerized than before so when a layer of fabric is done the other departments can see the status of the job as they can have an expected ETA of when the clothing would be boxed, packaged and ready to go. They see the retail brick ‘n mortar as costly, and Gap sees it actually as a way to connect the two areas of physical and non-physical stores. Reserving in store for quicker pick up is helpful, but it also drives foot traffic. Having the reverse ability to limit in-store products drives people online. Having it done through one seamless inventory makes sense. GAP must have a global assortment. So far, Old Navy, the outlets and GAP are all global assortment, and Banana Republic is mostly a global assortment with some changes. The assortment then goes to universal fit, so Old Navy is a universal fit, outlets are a universal fit. The retailer can now ship a unit from a store to satisfy an online customer and that process will become seamless.

The Information System and Competition

GAP Inc. is one of the many businesses in the retail market, which include a number of competitors such as Aeropostale, Macy’s, J.C Penney and many more. All of the aforementioned stores sells clothing, shoes and many different products. They all compete to sell the best quality of designer outfits all priced differently. As businesses continue to compete for a larger customer base and target groups, branding and pricing are two major factors for its growth. The advantages are providing better customer service, providing longer training periods for new employees and providing incentive programs.

A well-known company as GAP faces little threat to new retail businesses just entering the market. These businesses will initially have a hard time competing with Gap’s larger customer base, global presence, their ability to sell their apparel at a lower cost, their multimedia advertising, and their large-scale production market, which are parts of the Supply Chain Management.

Competing on a Global Scale

GAP Inc. is one of the leading international retail companies with five different brands in the United States of America, France, Canada, United Kingdom and so forth. Their supply chain franchise spans across 40 countries, in Asia, Australia, South America and Africa. Its employees play a huge role in sourcing, making, and delivering these many products. It also combines stores, outlets and multiple franchises. This allows it to compete with many retailers on a global scale. With its international presence on six continents. GAP Inc. has a huge advantage in attracting customers and making its large presence around the world known. Over the years, GAP Inc. through its many stores has provided its customers with an e commerce online market to buy products.

Competing on Quality and Design

GAP Inc. has a large customer base and has to create up-to-date trends for its customers. To reiterate, GAP Inc. is franchised in many places around the world. It provides high quality designs at reasonable prices. It has managed to add an abundance of stores to differentiate its brand from other retailers: Intermix and Banana Republic are just a few. They have also expanded their markets to attract teens, while keeping their existing customers. For example, Old Navy has added a baby department.

Competing on Business Processes

GAP works to reorganize and redesign its organizational structure of its business to help expand its company and increase its customer base. Big data plays a huge role in this goal. Companies such as GAP collect huge amounts of information to see what customers want and need. With this, large data is analyzed based on consumer trends on a day-to-day basis. This allows them to change their market strategy and increase productivity in order to deliver more value to its large customer base. Also, GAP keeps track of what its competitors are doing to see how it can improve service. Furthermore, GAP is focused on providing quality products to the market by changing its planning and allocation processes, its operation, and its process design. GAP continues to improve its global growth, customer relationships and speed. The company is using the Business Process Redesign (BPR) to exploit technologies to reconstruct its organization, two of these technologies are Omni-channel technology and e-commerce.

Porter’s Five Competitive Forces

When addressing how GAP competes with other businesses, it is essential to refer to Porter’s five competitive forces. The following shows an analysis of Porter’s five competitive forces based on GAP Inc. and highlights the view of a competitive retail industry. When looking at GAP’s competitive analysis differentiation, operational effectiveness, innovation and customer orientation strategy is essential to GAP’s goals and approach to compete with other businesses.

The threat of entry of new competitors

The threat of entry of new competitors is low. There is an abundance of retail stores worldwide who compete with GAP on a daily basis. These stores often sell substitute apparel to GAP and at a lower cost. However, advertising and the promotion of a brand name are risky for new competitors and gives GAP an advantage when new competitors are trying to enter. New customers will find it hard to compete with GAPs large customer base located in over 3,700 countries worldwide, including the United States and England.

The bargaining power of suppliers

The bargaining power of suppliers is low. GAP purchase its products from factories in almost 40 countries, including Asia and South America. The fact GAP does not dependent on a single supply makes it easier for them to bargain with its franchises. It is equally important for suppliers to kept businesses with GAP because of its high demand of orders.

The bargaining power of customers (buyers)

The bargaining power of customers is high. GAP provides to a huge customer base in countries, such as Canada, Japan, North America and the United Kingdom. With the large retail market customers have the ability to choose from an abundance of retail stores worldwide, including H&M, American Eagle and Aeropostale. However, some customers look at brand image and choose to buy at a particular store. This gives GAP an advantage because of advertisement and its many locations.

The threat of substitute products and services

The threat of substitute products and services is high. Gap’s multiple brands have become some of the most recognizable labels within the apparel industry. Many retail stores sell the same apparel as GAP, including clothing, accessories and shoes. GAP Inc. is able to compete with other companies because it is large and has the ability to sell products at a low cost. However, because GAPs’ brand name it makes it easier for them to perform with companies who sells the same products.

The rivalry among existing firms in the industry

The rivalry among existing firms in the industry is high. As it relates to this competitive force GAP’s main competitors include business such as JCPenney, Aeropostale and American Eagle Outfitters. However, despites GAP’s presence in the apparel market, it holds just about 5% in market share, when compared with Macy’s and Wal-Mart who holds 9% and 7% respectively. GAP competes with companies on a national and international scale. Over the years, GAP has been able to expand its market to reach a larger customer base, for example, adding its e-commerce market. Also, it has been able to sell its products at a lower cost to compete with other businesses.

It was found that, GAP does not have a large market share, however, GAP has the ability to maintain its competitive status. In addition, GAP is using Porter’s five competitive forces to strategically compete with other businesses. Statistics also shows that GAP has been decreasing with sales, in 2016 it showed that there was a decrease in sales growth of -3.88%.

Also, GAP has been able to keep it’s a large customer base. With GAP’s geographic presence and the help of its e-commerce market, the company has been able to expand over the years. GAP offer customers the opportunity to shop online from anywhere in the world. Customers are able to return products bought online directly to the store. GAP e-commerce presence allows for its continued growth, increase customer base and increase productivity.

Furthermore, GAP has been able to compete with new and existing businesses. Since GAP is not the only company who sells apparel, they are often challenged to fluctuate prices, and maintain a quality brand name. Using Omni-channel technology has also helped GAP significantly. This has allowed the corporation to connect its branches with a single supply chain management system to improve efficiency.

There are many recommendations unheard of by the public or consumer side of the market by GAP. Inc. Ways to make a such highly praised company such as GAP increase profit and gain more loyal customers who see more than just a brand name. Innovations that can create an unstoppable marketing and ecommerce business to bring them all the way to the top. All the competitors of GAP are thinking of new ways to beat out the company by making their market on top of the rest. Which is why clothing retail being such a hotspot due to the constant demand for clothing.

A new business based Omni-channel where they adding such devices and application to technology such as smart TV’s, Smartwatches and even a new device that allows to you order distinctly from their retailers such as Banana Republic, Athleta, Old Navy, and Intermix would be nothing but genius. This device would also include for those who shop at these of branches coupons, giveaways, discounts etc. The device would be free but would require you to be a valued customer with a GAP account for a certain number of months, years etc. This is a new idea seeing that not many retailers within the clothing company own their own device to do such a thing. It is a concept in the making and just an idea but an innovating idea at that.

New innovative ideas can help GAP tremendously. GAP has the ability to sell new products that is not offered by other and improve its original brand. I recommend that GAP provides its on customer on a high level of professional development by offering their customers extreme value, for instance, keeping up with the latest trends. In addition, the organization should provide customers with high quality product in order to distinguish itself from its competitors.

GAP has begun productivity improvement whereby they will a number of their locations worldwide and expand its brand to North America. Also, GAP must be focused on its customer base. This means that it should us collected data to see what customers are buying on daily basis. GAP is using a cloud based optimization system to focus on its inventory. This will allow GAP to strategical positon its many businesses.

GAP certainly has the ability to improve the business operations. The company can improve their e-commerce market by integrating their e-commerce platform and physical store. Overall, the GAP must improve productivity along with its profit margin.

GAP Inc. Logo GAP Inc. Market Share

 GAP Inc. Many Locations Worldwide  Omni-channel Logistics

References

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