Page 163 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes Their frenetic growth and power is entirely due to their technological adoption. Indian retailers
are now having detailed knowledge of the market and stocking the merchandise that they want.
This information is helping them in their warehousing, shelf-space management, and inventory
control and optimum space, merchandise and capital utilization. Like it happened internationally,
Hindustan Lever and P&G will shift from adversarial to partnering role, requesting retail data
from organized retailers to use it for their marketing programmes. HLL went a step forward by
getting into e-retailing through SangamDirect – and an ulterior motive was to get continuous
insight into customer psyche and purchase pattern.

QRIMS: Indian retailers can use IT integration as a development tool, like the Quick
Response Inventory Management System (QRIMS), which links the stores through
computers and satellites to the vendors. Vendors can have the latest data on merchandise
movement in the stores, and be saved from excess inventory and stock, preparing their
delivery schedules ‘just-in-time’. Neither the Indian retailers nor the vendors need wait
for the tedious order requests, processing procedures and consignment-to-consignment
negotiations. They can now be partners in a quintessential win-win scenario, assuring
each other of long-term relationship contracts and avoiding being narrow minded. In the
end, Indian retailers can make the vendors a major stakeholder in their success, and can
only be done with the appropriate technology, using it for a decisive competitive advantage.

Wal-Mart is today the world’s numero uno company (with a turnover $245 billion) only
due to its superior technology and knowledge management. There are over 1,000 software
‘techies’ in Wal-Mart’s headquarters in Bentonsville, Arkansas, doing dedicated work for
it. It is able to keep operating expenses below 15 per cent of sales – far below its competitors
like K-Mart, by its superior technology which it uses for its supply chain management,
customer tracking, inventory control, logistics management, etc. Bar code scanners are
used to clock sales, track inventory and shelf movements. There is computer connectivity
in terms of Local Area Network (LAN) and Wide Area Network (WAN) between regional
warehouses through which merchandise managers make their orders. The warehouse
computers are linked to over 200 vendors through satellite, making deliveries in the least
possible lead-time. Wal-Mart has been able to peg its shipping cost 50% that of its nearest
competitors, giving it a decisive competitive advantage.

Indian retailers are yet to have such collaborative systems with their vendors.
Radio Frequency Identification Devices (RFID): This invention is completely changing
the face of retailing and the innovator is Sanjay Sarma, 35, a robotics expert and professor
of engineering, AutoID Centre, Massachusetts Institute of Technology, US. The RFID system
is based on chips that can be read remotely, with radio frequency via wireless Internet
connections. Merchandise is now being tagged with radio frequency ID systems, which
are soon going to be replacing bar codes. It can be used to track soaps, fruit juices in tetra
packs, shampoo, pickles – all straight from the factory to the warehouse to the shelves of
the superstore.
Wal-Mart’s Chief Information Officer, Linda Dillman is spearheading the adoption of
Sarma’s innovation in the length and breadth of the retailer’s vast supply chain. She forced
the top 100 suppliers of Wal-Mart to adopt RFID tags for all their goods by 2005. Retailers
are able to better track inventory, keep shelves always full, and reduce shoplifting, loss
and inventory costs for retailers and their vendors. It has become the technology standard
for the entire $2.7 trillion US retailing industry.
Michael Dell of Dell Computers is using RFID tags on parts so that “online orders are
transformed quickly into radio signals which instruct Dell’s automatic parts-picking
machines to round up the components for each PC.” RFID transmitters beam assembly
blueprints to workers and track the shipping of the finished product, enabling Dell

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