Information Technology Systems In The Retail Industry

Published Date: 02 Nov 2017

OPERATIONS MANAGEMENT 2

Introduction 2

Body 3

Implications of implementing information technology systems in the retail industry 3

How retailers integrated the technologies that they use in order to develop a strategic understanding of their operations 5

Challenges to implementing technologies 7

Challenges that rapidly changing shopper and consumer expectations place on retail operations 8

Conclusion 10

 References 10

OPERATIONS MANAGEMENT

Introduction

Operations management for retail outlets is the main management concentration area. This is largely due to the fact that retail outlets have a lot of immediate interactions with their customers thus they need to better mange their operations which directly impact on their customers for better service delivery. Modern retail outlets with the best examples being supermarkets have greatly implemented information technology systems to help manage their businesses operations. This has come with a lot of advantages as well as disadvantages. Operations management is a broad concept in retail management thus all aspects of operation management should be taken into consideration while choosing which information technology system to use. This can be best captured in Skilling, 1996 "The pattern of IT adoption should rather be analyzed in the frame of system complexity, which also includes customer, economy, organizational mechanism and management practice."

To better understand the effects of this systems on the operations management of this retail outlets we need to analyze, the operations management implications of implementing various information technologies in the retail industry and how retailers integrate the various technologies they use in order to develop a strategic understanding of their operations. We also need to look at, what are some of the broader business challenges to implementing technologies successfully to improve retail supply chains and what challenges do rapidly evolving shopper and consumer expectations place on retail operations.

Body

Implications of implementing information technology systems in the retail industry

Information technology has rapidly changed the way operations are being managed in the retail industry. Better inventory management, sales forecasting, supplier integration, quelling theory and capacity planning are some of the benefits that are being enjoyed by managers who have implemented modem information technology systems. Despite this benefits information technology has also presented quite a lot of challenges to operations managers and the whole retail industry as a whole.

Better managed inventories as a benefit is brought about by timely and efficient management of the ordering process, store management through implementation of (FIFO), first in, first out and (LIFO) last in first out store management processes. Information technology has enabled perfection of this processes easening the burden of stock management for operations managers, suppliers and consumers in general.

Information technology has also enabled operations managers to integrate supplier details in their company by enabling timely ordering of supplies, timely delivery of supplies by consumers, notification of payment deadlines to the operations manager in order for the manager to benefit from an optimal cash management cycles.

Sales forecasting is of great importance to any organization. This enables proper planning through budget creation and prepares the company for the financial period ahead. Information technology has enabled proper sales forecasting by enabling fast efficient data analysis, data storage and data mining operations greatly rely on this forecast to be able to plan themselves through creation of specific departmental targets, departmental costs and total revenue allocations. Organizations that deal with a lot of customers who requires services need an efficient queuing mechanism to manage, service delivery to these customers. Information technology has enabled this organization to properly manage this service delivery mechanism by applying the right queuing theory principles to mechanization of the queuing process. Operations efficiency time spent in waiting as well as total services time has all been optimized by information technology application.

Planning as a process is essential to all organizations. It requires a lot of research on fast performance, targets setting, cost estimations as well as human resource training. These are all the components that make up the basic operations management for a retail outlet. Information technology has enabled the planning process to be done with accuracy as it avails specialized planning technology to managers that integrate all the essential components

Security is part of operations components. Information technology has enhanced the security measures available to a company for both anti pilferage, anti-theft as well as vandalism of the retail outlets properties. This has been actualized through the use of advanced technology, information systems integrated cameras, input versus output quantity management checks and many other processes. Efficiency is an essential operations management factor. An efficient operations systems means an efficient company and consequently, good performance in terms of sales and a satisfied customer. Information technology has helped increase this by automating the otherwise manual process and reducing the error rates that arise out of repetitive retail industry processes.

Information technology has however managed to come up with its fair share of challenges that pose a major operations challenge to the operations management. Some of these challenges include dependency on machinery by the retail outlets, increased costs for training of staff in the ever changing field of technology, increased costs in terms of purchase and maintenance of a stable information technology as well as vulnerability of the information systems to hackers and other typed of fraudsters.

Costs associated with information systems increase the overall operations cost of any company. This in turn cuts into the overall profitability of the company and if proper appraisal of the technology is not done before purchase and implementation the company may not be able to break even the costs to the benefits of the new technology.

Increased dependency on the technology is another challenge that is faced by the companies operations. This creates a state where the operations cannot run smoothly without the use of technology to man and run the retail outlers. Since information technology systems are prone to constant system daintimes which makes the company lose quite a lot of valuable business.

Information systems are vulnerable to handing by well trained information system specialists. This create a very big challenge to operations management as extra security measures have to be put in place as well as the retail outlet maintain on all the time alert protocol to detect inform and prevent any type of system handling

Information system can thus be said to have their fair share of negatives but despite this their advantages greatly outweigh the disadvantages thus making them a necessity in the modern retail outlets operations management.

One of the major advantages of information technology to operations management is its ability to integrate several components of the retail business that is the supply chain, customer service, management and market analysis for the efficient and better utilization of the data available from these sources for operations management.

How retailers integrated the technologies that they use in order to develop a strategic understanding of their operations

A clear understanding of the business operation outlines an understanding of how suppliers operate an understanding of the customers shopping behavior as well as understanding of the internal working of your retail outlet. Managers of retail outlets are increasingly paying modern information technologies that help integrated all this aspects of their business in order to maximize the potential of their business. Implementation and management of these technologies is a costly affair that requires huge investments in forms of purchase and maintenance costs while at the same time incurring costs of training human resource or recruiting new personnel.

Every Day Low Price allows for more accurate forecasting and combined with Point of Sale data sharing with suppliers, helps reduce inventory throughout its supply chain improving inventory efficiency for both retailers and their suppliers (Tarascio, 1997). This enables the retail outlets to understand their needs in terms of supplies when their stocks are at lows and when they have high supplies of each commodity. This goes a long way in ensuring that the retail outlets maximize their earning potential by optimizing their cash conversion cycle on all its products. It also enables the organization understand when it has cash to pay its suppliers and when to order products on credit.

Customer integration on the other hand involves understanding of the customer needs through the use of information technology. This is possible through a study of the customers shopping needs, their purchase potential at different periods of their financial periods and their shopping tastes and preferences of this consumer. Information technology systems need so as to stock their outlets with the right products for their customers at all times and prevent stocking of unnecessary items.

Management support systems are the other technological integration systems that retail outlets are implementing. These systems allow the manager to use data combined from all aspects of the retail business in order to optimally manage the organization. This involves integration of data from suppliers, customers, internal mechanisms and the market analysis to be able to create rational decisions informed by market statistics for the smooth running of the retail outlet. Management support systems assist management by giving them a series of optional business solutions, business decisions to make and their possible effects, short and long term on the overall business outlost of the retail outlet.

Information systems have also enable retail outlets to be able to do a long term study of their business well being. This is by studying; their data on costs revenue, growth forecasts and is able to integrate this with their current plans and plans for their future. Consumption trends of consumers and suppliers trends are also cital in determining whether the business would be viable in both the short and long term. Sound financial analysis systems give a fair view of the possibilities of increasing profit revenues from the current business in the areas future. If the possibilities are slim or impossible then it is time for the retail outlets management to consider shifting their investment to other businesses.

Information systems have generally helped retailers to effectively understand their business. They enable a better understanding of their running costs. Their profit targets their sales forecasts their internal management affairs as well as the market that they operate in. this gives a comprehensive picture of their entire business for a better understanding of their businesses.

Challenges to implementing technologies

Successfully implementation of new technology is also a major concern for operations managers. The interest in external sources of technology is thus greatly increasing for businesses. This new technology implementation however comes with its own set of challenges for operations managers and operations in general. This set of challenges may include the initial cost of implementation, challenges of sourcing for new technical staff or having to train the existing staff, vulnerability of operations management to external threats brought about by the new technology, government policies that prevent full implementation of this technology, increased operations costs due to constant and rapid change in technology, ever changing customers’ preferences and needs that necessitate constant change in the operations and technology.

Implementing of new technology involves quite a lot of initial cost in terms of money to purchase the equipment. This poses serious challenge to organization as they strive to implement the new technology.

New technology needs special trained staff to work on it. The cost of training of the staff or acquiring new staff is usually too high for this companies taking into consideration that the technology keeps on changing every now and then.

Technology is very vulnerable to vandalism and fraud. This can be easily omitted by professionals also have access to the system and it would be very hard to trace the proprietor.

Government places policies to safeguard the interests of their people. This may include policies that prohibit the use of technology so as to prevent people from losing their job s.

 Technology keeps on changing rapidly. This poses a challenge to the retail sector as the cost of purchase and implementation are very high thus at a high rate of change the technology may not be useful to the retail outlets. A possible solution to this problem would lie in making the right game plan and choosing the right technologies that fit the company at all times. Develop an approach to implement the technologies that fit the company’s needs and give the most advantages.  Choose matching technologies depending on the company’s needs and goals focusing on efficiency and effectiveness.

Ever changing customers’ preferences and needs are always changing the products. As customers’ preferences are changing product life cycles will be shorter, thus necessitating a continuous change in the product features that are being produced by this new technology.

Bringing the customers along with the implementation of the new technology would at times prove to be difficult. This would thus necessitate for the customers inclusion in the design phase of the product and the technology used to create the product.

Companies and their customers usually place quite a high level of expectations on new technologies that they intend to implement. This may lead to a problematic situation when the technology fails to meet the expectations placed upon it.  

In conclusion companies are facing many challenges when they are implementing new technologies, but there are many tools that can help them get past these challenges. Implementing new technologies is necessary for companies to survive in today's global and competitive markets thus successfully implementing new technologies will give the company many advantages and will lead them to success

Challenges that rapidly changing shopper and consumer expectations place on retail operations

For a more effective look at the effects of information technology on the operations management of retail outlets we need to look at the challenges of rapidly changing shopper and consumer expectations on retail operations.

Modern consumers have shown totally different shopping characteristics to those of the past. This is because of the ever changing consumer tastes and preferences which have for the past few years since the introduction of modern technology to the shopping cycle, been changing quite rapidly. As a result of this constant changes in shopper and consumer expectations operations managers have increasingly been faced with new challenges that they promptly need to handle some of this challenges are;

Continuous changes in technological needs. Modern day consumers are increasingly changing the way they shop and consume products from retail outlets. This constantly calls for change in technology so as to match the consumer and shopped expectations. Constant change in technology is a big challenge to the operations costs to levels that the company cannot break even but also exposes the company to multiple vulnerabilities as new technology requires new security measures that would not be immediately implemented.

Risk of new technology not matching the consumer expectations. Before implementation of new technologies operation managers need to do a thorough research on the match of the technology with the consumer needs. Constant change of technology means that proper research on the match of technology and consumer needs is not done thus there is a risk of the technology implemented not matching the consumer needs.

Increase in costs of operation brought about by having many business functions under one roof. Consumers are increasingly demanding for an all inclusive shopping centre where they can do all their shopping from. This places a lot of challenges to the operations as retailers must increase their floor space to accommodate more, hire more staff to enable more sales and customer handling. This also necessitates a change in technology to incorporate technology that can handle all this aspects of the business at the same time.

Consumer expectation and shopping needs can thus be said to be simply the driving needs to the many constant changes in the retail industry outlook and service delivery procedures. These changes are the challenges and retail managers must find ways to deal with then or risk losing out a new and existing businesses.

Conclusion

The combined effect of these variables of technology and other variables on the operations management of retail outlets has necessitated modern managers to do a lot of research on the ways of improving operations of their outlets. This research has yielded a lot of positive results with most of it establishing better ways of implementing new technology for operations management, the timing for implementation of this new technology as well as the effects of this technology on the overall operations of retail outlets.

Operations managers can no longer afford to ignore in formation technology as a management tool in the smooth management of the operations of the operations of their outlets. This more important given the fact that information technology in operations management can be used as a differentiation factor to help win over customers and beat competition.