Information System Based Sectors In Tesco Information Technology Essay

These days chain supermarkets are complex places handling thousands of customers a day, many are open 24/7, and they have tens of thousands of products with a high turnover rate. For the most part the stores they handle this quite well with existing technology. Because of their small operating margins, the stores must do whatever they can to reduce waste, control inventory, reduce cost and minimizing shopping time wherever they can and make use of information systems to return value for both themselves and their customers. Information systems are an important part of technology used by supermarket managers to acquire customers’ satisfaction in an international scale.

In this paper, Tesco’s information system will be discussed to analyze what ICT opportunities exist that Tesco can enhance its business operations whether locally or globally to bring its customers satisfaction. This study is based on documentation taken from Infolinx, Emerald Management Xtra, SpringerLink, relevant presented lectures and also self-observation that boosts the content of the research to the optimum level.

Information technology presents powerful systems to help firms achieve and make the superlative use of information. Firms have to make a decision on suitable systems consistent with the area of their businesses. In the current business atmosphere, knowledge has a key role in the information systems. As long as collaborative innovation has become critical, it puts organizations under pressure. These challenges of innovativeness and the rising pressure to diminish cost necessitate companies to redesign their operational processes (Dous et al. 2005).

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In the landscape of 21st century, firms must participate in a challenging context that is being transformed by a number of factors, from globalization, technological development, and increasingly rapid diffusion of new technology, to the development and use of knowledge (Hitt, Keats, & DeMarie, 1998) which leads firms to sustainable competitive advantages (SCA).

In particular, supermarket retailers use technology to raise sales and increase profits as well as to reduce operational costs where possible to compete in the competitive market of 21st century (Edward F. Steinfeld, 2001).

This paper reviews different aspects from Tesco’s IS as an example from many multi-national organizations managing information system with the aims to give customers a pleasant shopping experience that they are expecting from their supermarket. Also possible advantages that can be achieved by using Tesco’s information system are discussed.

2/ Procedure

The entire paper is presented in the following sequences. According to that, perspective can be obtained in the introduction part. The appropriate methods which can be deployed for conducting the study are introduced in methodology part. This part followed by empirical data to present the selected case study. Along with that, the taken data is examined to prepare ultimate findings and conclusion of the research in the last part of the paper. Further down references and bibliography are presented.

This research aims to determine the effect of information systems on the operations of the selected firm. It explores how firm acquire the right data and how they process these data in order to generate and deploy information. The result can be used to give a clear understanding of the relation between managing firm’s operations successfully and the role of information systems. In the standpoint of the discussion the aim of the research is phrased as follows:

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Figure 1. Research aim

3/ Research Methodology

The concept of information system has been discussed in a range of researches but smaller number works tried to concentrate on information system in the supermarket sector. Also, there is a lack of a comprehensive approach to measure the information system capability in Tesco’s operations.

Hence, the work is associated with analysis of the latest results in related literature and a case study results of Tesco. The given findings encompass a wide look at different dimensions of information system in more details than prior related researches. This study has significant suggestions for companies using information technology to recover their operations through effective use of information system.

According to the different approaches presented by Neuman (2003), in this study the descriptive approach has been chosen to describe a social phenomenon associated with the study where the appropriate theory already provided.

Yin (2003) declares that “the various sources are highly complementary, and a good case study will therefore want to use as many sources as possible”. This study has been based on documentation as the most important source of evidence. Documentation includes many different forms and is a secure source, which can be evaluated continuously and is used in most of case studies. For instance, the required e-journals and articles have been taken from sources like ScienceDirect, Emerald Management Xtra, SpringerLink, Web of Science and Business Source Premier. Having reviewed their abstract, the relevance of the articles have been investigated and those which have a better transparency chosen to be used.

4/ Tesco Analysis

Nowadays, Tesco is the largest British retailer and world’s third main retailer, behind Wal-Mart of the United States and Carrefour of France (UK grocery retailers, 2008). According to Tesco annual report 2009, their annual sale is about £60 billion in 2009.

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Figure 2. A comparison of Tesco group sales (Tesco PLC official website, 2010)

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Figure 3. Tesco group sales regionally in 2009 (Tesco PLC official website, 2010)

Tesco has 4331 stores in 14 countries, equipped by over 470,000 employees and almost half of them are positioned outside England (Tesco PLC annual report, 2009). These days, Tesco presents a real retail firm based on what its customers want, it has time after time surpassed competitors and improved market share. The authority and diversity of Tesco’s brand is indubitably remarkable (Tesco official website, 2010).

With a strong future strategy, Humby and Hunt (2004) consider Tesco as one of the world’s most victorious users of information technology. Moreover Tapp (2005) mentions that “The big success story of database driven management is Tesco”.

Specifically, the management information system in Tesco is in charge of all following operations presented in the following framework. Each one of them would be presented and analyzed in order to look for possible advantages the information system could dedicate to Tesco:

Figure 4. Information system- based sectors in Tesco

From all the features that information system used by Tesco has, the most significant one is the Point of Sale (POS) checkout system. At each checkout in Tesco, there is a POS till. POS till consists of a scanner has the ability to read bar codes, a credit card reader, a digital display and a till drawer.

This type of application is set up in usual checkout system as well as in self checkouts. Point of Sale applied to self checkout systems, let customers to scan their chosen products and pay for them with no help of Tesco’s staffs. Thanks to information system used in Tesco, this type of checkout system is now available in most of stores. Supermarkets including Tesco using self-checkouts are not only able to reduce the length of long lines but also will succeed over their competitors who simply add self-checkouts and cut back on cashiers (Imlay, 2006). Specifically, Tesco set up the Axiohm A756 for its market. This technology is a ground-breaking hybrid printer providing receipts promptly (Maxatec, 2010).

Another application of information system in chain supermarkets is ESL (electronic shelf labels). ESL is designed to exploit store’s lighting infrastructure to transmit information. LCD shelf tags, which are related to POS data to prevent instant inaccuracy and inconsistency, change the price displayed without human intervention. This makes Tesco provides precise price and it can build consumers loyalty. Moreover, stores reduce labour costs by removing the need to print and replace paper labels. Tesco as the leader supermarket in UK started to use this technology since 2006 when ZBD displays system employed in Leicestershire and High Wycombe (Retail Week, 2008).

RFID (Radio Frequency Identification) technology, which using an object incorporated into a product for the purpose of tracking by means of radio waves, can be a substitution for bar code, which identifies only categories of items. Each tag is unique so that each item can be tracked independently (OL, 2009). This technology facilitates Tesco’s information system to track tags and there is no need to scan items at the checkout.

Also Tesco makes use of ‘smart shelves’ which sense when products are running low. Tesco uses this technology to keep track of stock levels (RFID Journal, 2003).

Furthermore to information system advantages, Tesco takes advantage of loyalty card to support customers to make use of its particular shops while points are awarded when a customer buy something in the shop. Tesco utilizes the information to find out if a buyer is about to shortcoming too.

Since the first client comes to use the Clubcard it has offered power to Tesco to be at the top of the UK retailing sector. It is not an accident that since Tesco uses the scheme it has surpassed Sainsbury’s to become the UK’s best retailer in 1995 and debatably one of the world’s most booming promoters of knowledge management (KM). The Tesco’s Clubcard is the best kind of customer knowledge Programme presently running in the UK (Humpy et al. , 2004).

Information system used by Tesco is also in charge to control “labour scheduling”. This part of information system determines the number of staffs required by the supermarket in proportion to parameters initiated by the manager. It aims to optimize number of workforce required and their time shifts. This function is very important because hiring staff is a major cost for supermarkets (Verisae, 2009).

A completely different features that has, is DSD (direct store delivery). With this technology is possible to steer clear of retailer’s warehouse; this feature delivers goods right away from the distributor to the supermarket rooted in just in time technology (JIT) (Tesco official website, 2010).

Item price verification is a feature of the information system that allows audit prices from shelves. This price verification requires from a wireless device to check prices from any product stored in shelves with the price that is says that cost (Tesco official website, 2010).

Finally, in terms of Internet applications of the information system used by Tesco, Tesco provides websites which allow customers to shop in home trough Home Delivery service (HD) (C.Teller, 2006). Goods are then delivered to the customer’s home. They started to take advantage of internet as allowing customers to purchase goods and services online, making money by advertising and interacting with customers easily by encouraging them to give feedback on their products.

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Figure 6. Tesco’s Website(Tesco PLC official website, 2009)

5/ Conclusions and Recommendations

In the current business environment, supermarket organisations are able to face up new changes with enough advances in information technology. Nowadays, these businesses have to perfectly managing information and communication technologies in their environment supporting relationships with suppliers, and customers and the entire value chain partners. Hence, Tesco is permanently utilizing new services which were inconceivable in early times.

To give some advices to Tesco to use information system more effectively, Tesco has to adjust its strategies to achieve a series of operational objectives which permit to project administrative management towards compete with other market leaders including Azda, Sainsbury’s and Morrison’s.

Firstly, Tesco’s information system will be useless if it does not offer compatibility between the business and its collaborators. Therefore, if the system is not compatible with Internet usage, Tesco would be losing a huge amount of informative value related to customers.

Secondly, an attempt of increasing alliances to establish agreements, which help to provide services/products, has to be taken in account. A clear instance is how Tesco make it possible for Iphone or Ipod holders to use their device to collect points easily or alliance with HSBC banks to use automated teller machines inside the Tesco’s branches. But more options have to be implemented with suppliers and important purchasers to attract more buyers.

Thirdly, from the staff users view point, Tesco has to try to reduce ability needed for its utilization. For instance, it can be added applications as remote control, orders through voice, tactile screens or video conference.

Lastly, it seems to not be a bad idea for Tesco to provide a database of the special offers of products and services at each branch according to its stock availability. This will encourage customers to buy more for fewer prices. This can be shown by means of LCDs or wide screens all over the supermarket.