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Applications of Information Technology in Retailing
Applications of Information Technology in Retailing
The result indicates that, retail complexities may reduce with the help of Information
Technology solutions. The right solution can result in improved productivity and
major cost saving through key advantages such as more accurate supply chain,
forecasting and better inventory management. Information Technology also help
retailers to solve major problems related to customer services like customer loyalty
and customer satisfaction.
Introduction
"Retailing includes all the activities involved in selling goods or services directly to
final consumer for their personal, non business use".
Retail is all about selling, selling big and selling huge. It's all about ensuring that the
customer first of all comes to the store and then buys. This also means that one
should connect to the customer and should be able to hold him in one place and give
him all that he desires from one location.
One of the key factors in achieving an organized and efficient retail operation is the
use of technology as an enabler . Information Technology is the key enabler to
improving customer satisfaction, operational efficiencies and by extension,
profitability. Technology has been the great enabler of business and especially retail
enterprise. We are now wireless and seamless and cashless and everything less and
can get any information we want and need.
A typical pan national retail operation would have multiple regional warehouses,
offices and retail outlets. In such an operation, how does the headquarters know the
daily turnover at each of its outlets, how does it know which products are selling the
most in which region at which outlet, how does one store know if a stock – out item
in its own inventory is available at another store location for whom it is slow moving
item? Most of these issues can be solved by the appropriate use of technology.
Information Technology
Every day, people use computers in new ways. Computers are increasingly
affordable; they continue to be more powerful as information-processing tools as
well as easier to use.
Large-scale systems are now capable of handling the mass of retail transaction data
– organizing it, mining it and projecting it into future customer behavior. This new
approach to demand forecasting in retail will contribute to the accuracy of future
plans, the satisfaction of future customers and the overall efficiency and profitability
of retail operations.
The in-store system use magnetic strips or barcodes or RFID to monitor actual
versus intended product location on the floor or in the stockroom.
IT systems are at the heart of retail operations and hence play a central role in
alleviating pressure points in the retail sector. The converse also holds true—retailers
who do not manage their IT landscape effectively will find that, in time, the IT
systems become part of the problem rather than components of the solution.
Data cleansing, and thereafter, effective mining (via large data warehouses) is
fundamentally important in the retail space because so much decision-making is
based on data. If the data is bad, the effectiveness and efficiency of carrying out
retail operations is hampered. This becomes particularly crucial when the retailer is
implementing new systems and a large data conversion effort is required—it
becomes essential that the old data be effectively cleaned, re-architect and made
ready in the new system, so that the business functions can make decisions
effectively.
Radio Frequency Identification in the retail industry has solved major problems
related to customer services. With the help of RFID it becomes easy for the sales
staff to locate a particular item in the store and check its availability in less time.
It's a data collection technology that uses electronic tags for storing data. The tag,
also known as an "electronic label," "transponder" or "code plate," is made up of an
RFID chip attached to an antenna. Transmitting in the kilohertz, megahertz and
gigahertz ranges, tags may be battery-powered or derive their power from the RF
waves coming from the reader.
Like bar codes, RFID tags identify items. However, unlike bar codes, which must be
in close proximity and line of sight to the scanner for reading, RFID tags do not
require line of sight and can be embedded within packages. Depending on the type
of tag and application, they can be read at a varying range of distances. In addition,
RFID-
tagged cartons rolling on a conveyer belt can be read many times faster than bar-
coded boxes.
Supply chains can look very different from industry to industry. But companies
across industries share a common challenge -- finding ways to better manage
growing uncertainty and complexity to improve supply chain performance.
To improve their supply chains, companies across industries have made sizable
investments in a range of technology solutions, yet significant profitability
improvements have remained elusive. Largely unaddressed has been the opportunity
to use enterprise and supply chain data to support key inventory planning decisions
that fuel execution systems and activities -- something beyond a mere spreadsheet
or desktop solution.
SmartOps customers are proactively managing supply chain uncertainty across all
stages to improve their total chain inventory planning, so that their customer service
levels can be stabilized and even increased while overall costs to the business are
minimized.
3. Point of Sale
Capturing data at the time and place of sale. Point of sale systems use computers or
specialized terminals that are combined with cash registers, bar code readers, optical
scanners and magnetic stripe readers for accurately and instantly capturing the
transaction.
Point of sale systems may be online to a central computer for credit checking and
inventory updating, or they may be stand-alone machines that store the daily
transactions until they can be delivered or transmitted to the main computer for
processing.
Point of sale (POS) systems is electronic systems that provide businesses with the
capability to retain and analyze a wide variety of inventory and transaction data on a
continuous basis. POS systems have been touted as valuable tools for a wide variety
of business purposes, including refining target marketing strategies; tracking
supplier purchases; determining customer purchasing patterns; analyzing sales (on a
daily, monthly, or annual basis) of each inventory item, department, or supplier; and
creating reports for use in making purchases, reorders, etc.
Basic point of sale systems currently in use includes standalone electronic cash
registers, also known as ECRs; ECR-based network systems; and controller-based
systems. All function essentially as sales and cash management tools, but each has
features that are unique.
Conclusion
The findings from this study shows that with an efficient IT system a retailer can
observe sales and consumer behavior more efficiently and accurately and thus plan
its sourcing and customer promotions more effectively. This result also lead to the
conclusion that use of new technologies in retailing helps to increase customer
loyalty and customer satisfaction. An IT system is also beneficial for various retailing
related operations.
Retailers need to understand that technology is not a sunk cost but rather an
investment to reduce heavy long-term costs. It is an investment to maintain
competitive advantage for long-term growth.
As a crate moves out of the shipping area past the "final" RFID reader into a truck, it
would continue to be tracked via GPS monitoring of the location of the truck, until it
finally reaches a Wal-Mart distribution center where it would be "read" into Wal-
Mart's inventory management system (and internal distribution center mapping), and
the supplier being informed of a supply