Application Of Information Technology In Retail Information Technology Essay

The Indian organized retail industry is the fastest growing in the world. To keep pace with the rapid expansion, companies are forced to leverage technology to bring in operational efficiency. With the government of India allowing 100% FDI in the cash and carry segment and mulling 100% in consumer retail, major retail companies have started entering the Indian market. The competition is getting tougher by the day and companies are using technology as a differentiator. The following sections highlight the various operational areas of retail industry and how information technology is used for competitive advantage.

Supply Chain may be defined as the series of companies that eventually make products and services available to consumers, including all of the functions enabling the production, delivery, and recycling of materials, components, end products and services.

Supply chain management (SCM) is concerned with the flow of products and information between supply chain members’ organizations. Recent development in technologies enables the organization to avail information easily in their premises. These technologies are helpful to coordinates the activities to manage the supply chain. The cost of information is decreased due to the increasing rate of technologies. In the integrated supply chain model (Fig.1) bi-directional arrow reflect the accommodation of reverse materials and information feedback flows. Manager needs to understand that information technology is more than just computers. Except computer data recognition equipment, communication technologies, factory automation and other hardware and services are included.

                                               Integrated supply chain model

Bi-directional arrow reflects the accommodation of reverse materials and information feedback flows.

Supply chain organizational dynamics:

The development of Inter organizational information system for the supply chain has three distinct advantages like cost reduction, productivity, improvement and product/market strategies.

Barrett and Konsynsik have identified five basic levels of participation of individual firms with in the interorganizational system. 

1. Remote Input/Output mode: In this case the member participates from a remote location with in the application system supported by one or more higher-level participants.

2. Application processing node: In this case a member develops and shares a single application such as an inventory query or order processing system.

3. Multi participant exchange node : In this case the member develops and shares a network interlinking itself and any number of lower level participants with whom it has an established business relationship.

4. Network control node: In this case the member develops and shares a network with diverse application that may be used by many different types of lower level participants.

5. Integrating network node: In this case the member literally becomes a data communications/data processing utility that integrates any number of lower level participants and applications in real times.

Information and Technology: Application of SCM:

In the development and maintenance of Supply chain’s information systems both software and hardware must be addressed. Hardware includes computer’s input/output devices and storage media. Software includes the entire system and application programme used for processing transactions management control, decision-making and strategic planning. Recent development in Supply chain management software is:

1. Base Rate, Carrier select & match pay (version 2.0) developed by Distribution Sciences Inc. which is useful for computing freight costs, compares transportation mode rates, analyze cost and service effectiveness of carrier. 

2. A new software programme developed by Ross systems Inc. called Supply Chain planning which is used for demand forecasting, replenishment & manufacturing tools for accurate planning and scheduling of activities.

3. P&G distributing company and Saber decision Technologies resulted in a software system called Transportation Network optimization for streamlining the bidding and award process.

Electronic Data Interchange:

Electronic Data Interchange (EDI) may be most easily understood as the replacement of paper-based purchase orders with electronic equivalents. It is actually much broader in its application than the procurement process, and its impacts are far greater than mere automation. EDI offers the prospect of easy and cheap communication of structured information throughout the corporate community, and is capable of facilitating much closer integration among hitherto remote organisations.

A more careful definition of EDI is ‘the exchange of documents in standardised electronic form, between organisations, in an automated manner, directly from a computer application in one organisation to an application in another’.

Architecture for EDI

EDI can be compared and contrasted with electronic mail (email). Email enables free-format, textual messages to be electronically transmitted from one person to another. EDI, on the other hand, supports structured business messages (those which are expressed in hard-copy, pre-printed forms or business documents), and transmits them electronically between computer applications, rather than between people.

The essential elements of EDI are:

the use of an electronic transmission medium (originally a value-added network, but increasingly the open, public Internet) rather than the despatch of physical storage media such as magnetic tapes and disks;

the use of structured, formatted messages based on agreed standards (such that messages can be translated, interpreted and checked for compliance with an explicit set of rules);

relatively fast delivery of electronic documents from sender to receiver (generally implying receipt within hours, or even minutes); and

direct communication between applications (rather than merely between computers).

EDI depends on a moderately sophisticated information technology infrastructure. This must include data processing, data management and networking capabilities, to enable the efficient capture of data into electronic form, the processing and retention of data, controlled access to it, and efficient and reliable data transmission between remote sites.

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A common connection point is needed for all participants, together with a set of electronic mailboxes (so that the organisations’ computers are not interrupted by one another), and security and communications management features. It is entirely feasible for organisations to implement EDI directly with one another, but it generally proves advantageous to use a third-party network services provider.

Benefits of EDI

EDI’s saves unneccessary re-capture of data. This leads to faster transfer of data, far fewer errors, less time wasted on exception-handling, and hence a more stream-lined business process. Benefits can be achieved in such areas as inventory management, transport and distribution, administration and cash management. EDI offers the prospect of easy and cheap communication of structured information throughout the government community, and between government agencies and their suppliers and clients.

EDI can be used to automate existing processes. In addition, the opportunity can be taken to rationalise procedures, and thereby reduce costs, and improve the speed and quality of services. Because EDI necessarily involves business partners, it can be used as a catalyst for gaining efficiencies across organisational boundaries. This strategic potential inherent in EDI is expected to be, in the medium term, even more significant that the short-term cost, speed and quality benefits.

IT in Purchasing Management

Electronic data interchange was developed in 1970 to improve the purchasing process. The growth of internet spurred the growth of non-proprietary and more flexible internet based e-Procurement systems. Earlier critics argued that e- Commerce have been over inflated and it results in larger expenses than its savings. Today though many well managed e-commerce firms are beginning to thrive as users realize the benefits of their services. The automation of the entire process and the ease with the function is carried out has added a lot of value to the changing world of retail.

The material user initiates the e-procurement process by entering a material request and other relevant information. This is then submitted to the purchasing department. After verification of this the buyer transfers this data to the e-procurement system and assigns qualified suppliers to bid for it. Suppliers connected to this system receive the bid instantaneously. The purchasing department maintains a list of preferred suppliers for each category of material. Thus the buyer is able to submit the bid request to numerous suppliers within seconds.

SAP® Business One

Purchasing management is a core functionality of the SAP® Business One application that enables you to use its integration features to manage your entire procurement process from purchase order creation to vendor invoice payment. You can create purchase orders in easy-to-understand screens and use the stored data as a basis for subsequent goods receipts.

IT in Forecasting Demand

Forecasting sales and cash flow is never a simple task, and the shaky economic recovery is making the process downright perplexing. We’ve compiled the best tips for forecasting this year.

Business forecasting can be completed using a process called data mining. The data mining process uses predictive models based on existing and historical data to project potential outcomes of business activities and transactions. 

The ultimate goal of data mining is to find hidden predictive information in large amounts of data. The data mining process involves using existing information to gain new insights into business activities by applying predictive models, using analysis techniques such as regression, classification, clustering, and association. Data mining helps organizations leverage data warehouses to forecast future business outcomes.

Various forecasting techniques are as follows:

Jury of executive method

Delphi method

Sales force opinion

Consumer survey

Simple average forecasting

Moving average

Weighted moving average

Exponential smoothening

Regression analysis

Some of the forecasting software used are:

ƒ˜ Forecast Pro Software: It is used by over 15,000 companies in 84 countries. The software is easy to use and has a built in expert selection system that analyzes the data, selects the appropriate technique for forecasting, builds the model and calculates the forecast.

ƒ˜ Smart Software: This software is used by companies such as HP, Mead Corporations etc. This is designed to run on Windows 2000, XP, Vista

IT in Performance Measurement

It is said that “You can’t improve what you can’t measure”.

Performance measurement is the use of statistical evidence to determine progress toward specific defined organizational objectives. The daunting task of measuring performance for organizations across industries and eras, declaring the top performers, and finding the common drivers of their success did not occur to anyone until around 1982 This task becomes more complex as corporations diversify into multiple industries. A researcher must take this into consideration when conducting a comparative analysis of companies.

Performance Measurement Guidelines in SCM:

ƒ˜ Total SCM cost

ƒ˜ Supply Chain production flexibility

ƒ˜ Supply chain delivery performance

ƒ˜ Supply chain e-business performance

ƒ˜ Supply chain perfect order fulfillment

The evaluation of performance of the suppliers, material etc. requires a lot of data and continuous evaluation is required. Due to large volume of information available it has become almost impossible to do this evaluation process manually and thus the role of IT in this area has been increasing. One of the most recognized methods for integrating supply chain and measuring their member’s performance is the Supply Chain Operations Reference (SCOR). This model is used as a supply chain management diagnosis, benchmarking and process improvement tool by manufacturing and service firms in a variety of industries across the globe. This follows weighted approach to the areas that need more competencies.

IT in Inventory Management

Inventory control is delicate issue in any business since it is the process of balancing between the costs involved and profits to be generated. At the same time such control also involves calculating stock in hand. Taking count of the stock in hand is always important for assessing the profitability aspect of any business. However in these days of computer and information technology, use of retail software for the purpose has become common feature of the commercial world.

Use of Retail Software for Inventory Control

An inventory control system is a process for managing and locating objects or materials. In common usage, the term may also refer to just the software components.

Modern inventory control systems often rely upon barcodes and RFID tags to provide automatic identification of inventory objects. In an academic study[1] performed at Wal-Mart, RFID reduced Out of Stocks by 30 percent for products selling between 0.1 and 15 units a day. Inventory objects could include any kind of physical asset: merchandise, consumables, fixed assets, circulating tools, library books, or capital equipment. To record an inventory transaction, the system uses a barcode scanner or RFID reader to automatically identify the inventory object, and then collects additional information from the operators via fixed terminals (workstations), or mobile computers.

http://en.wikipedia.org/wiki/Inventory_control_system

http://www.rogerclarke.com/EC/EDIIntro.html