Page 252 - DMGT550_RETAIL_MANAGEMENT

Unit 14: Information System in Retailing

customers want. The integration of various modern technologies is allowing companies to Notes
access valuable information.

Did u know? The importance of information technology in retail stems from the importance
of data. Data is nothing but information that aids decision making.
14.2 Strategic Advantage through Supply Chain and Information System

E-SCM covers all aspects of a business, from the stage of raw materials right on to the end user.
Each and every aspect of the cycle is covered by the E-SCM be it sourcing, product design,
production planning, order processing, inventory management, transportation, warehousing
and customer service. The E-SCM manages the flow between the different cycles and spans
across the different departments and companies involved and the applications used by these
departments and companies should be able to talk to each other and understand each other for
the E-SCM to work properly.
In a traditional company which does not employ E-Commerce 17%-50% of the price of its
products is got from the cost of just moving the products from their manufacturing plant to shop
shelves. This includes the margin of the retailer and of the distributors. Most of the cost is
attributed to logistics and holding inventory. An efficient E-SCM can bring down the prices of
products by as high as 40% and it does so by eliminating overstocking by reducing the average
inventory levels to what is needed and by so doing lowering warehousing costs and transport
costs since there won’t be any unnecessary trips when every stage of the supply chain is in synch
with each other. This will not only give the company a cost benefit but will also result in
improved customer service levels, improved competitiveness and an overall gain in profitability
for the organisation.
In an E-SCM application system communication between the different departments or different
companies is in real time and data can be integrated with back office systems thus reducing
paperwork. Using the Web to eliminate paper transactions can generate substantial savings of
cost and time. It facilitates the removal of purchase orders, delivery confirmations, bills of
material and invoices. The switch away from paper can also speed up response and improve
communications with those in different time zones or who work outside normal office hours.
Another significant potential benefit is a reduction in the errors associated with activities such
as re-keying data and receiving orders by telephone calls and handwritten faxes.

To leverage the full benefits of e-logistics in an E-SCM and achieve full customer satisfaction
visibility throughout the entire supply chain must be completely transparent. This is achieved
through the movement of information in tandem with goods and services. Customers thus have
complete real time consignment status information over the Web, while at the same time
suppliers and delivery companies can save on the salary previously devoted to employees
answering queries on order status.
E-SCM’s main strategic advantage lies in its ability to allow real time exchange of information
to take place between the company’s employees and their trading partners, namely customers,
distributors and manufacturers, regarding product configuration, order status, pricing and
inventory availability. Such functions improve order accuracy and provide 100% order fulfilment
through accurate inventory information. This real-time data enables users to make informed
ordering, purchasing and inventory decisions and thereby enhances the quality and scope of
customer service.

In addition to increasing productivity and reducing overall operating expenses, E-SCM maximises
selling opportunities by capturing valuable customer information-buying patterns, frequency

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