Goods are now ordered from suppliers using a system called Electronic Data Interchange (EDI). Orders for goods are transferred to the suppliers electronically using a service called INS-TRADANET. The use of EDI keeps suppliers precisely informed of Tesco requirements for company’s stores. It allows Tesco to run the business more effectively and efficiently because of its speed and accuracy. It is both quicker and more cost-effective than telephone, post or fax, and eliminates errors due to loss, or to wrongly printed orders.
EDI is also used for:
- sending sales forecasts so that suppliers can anticipate demand and reduce lead-times for stock to reach the stores
- securing the best payment terms and discounts for Tesco
- simplifying the invoicing process, so that invoices are generated automatically and postage and paperwork are eliminated
- working internationally, to eliminate time and language differences.
ICT systems used in Management.
Management Information is data stored electronically for use by business executives at all levels to support their decision making. This type of information is typically historical, and needs human interpretation before a decision is made. Tesco is planning to introduce a new system, called Data Warehouse, which will give much greater analysis and flexibility, and will further enhance the ability of managers to make informed decisions.
Current Management Information
- Access to summarised data at pre-defined levels
- Most decisions made at a macro (e.g. regional level)
Planned Data Warehouse
- Access to in-depth information for informed decisions
- Decision made at micro level, e.g. in store
- Use of balanced score carding for suppliers, stores, etc. with supporting details
- Use shopper behaviour to influence new lines, promotions, and product ranging.
Current Management Information
- Mainframe, text-based reporting and analysis
- Downloaded to local PCs for in-depth analysis and graphics
Planned Data Warehouse
- Specialised hardware and software to manage data (the 'Information Warehouse')
- Information from the Information Warehouse to be accessible from anywhere within Tesco and available also to designated outside users, e.g. suppliers, agencies
- Cost of computer hardware and software is "scaleable", i.e. Tesco can add processing power and storage capacity at reasonable cost and in manageable chunks to keep pace with the information needs
- Dedicated NCR machine and peripherals.
Over 10 million customers, over 60,000 products and 586 stores
Current Management Information
- Data held on mainframe, PC or on paper
- Internal data analysed using SAR reports and MAS analysis tool (see below)
- External data received by EDI or on paper
Planned Data Warehouse
- Data collected from Tesco operational systems and external sources, and stored centrally to provide one consistent source of information
- Data is stored on customer behaviour, product performance, branch performance supplier performance, depot performance
- Data held at lowest level to enable ad hoc groupings,
e.g. salt sales in stores by the seaside last Easter.
Current Management Information
- Mainframe based
- FOCUS - report generator
- SAR - report viewer
- MAS - Tesco-written multi-dimensional analysis tool
- PC Lotus suite - spreadsheet and database applications
Planned Data Warehouse
- A simple interface with the information using the score card concept, with top level measures and capability to "drill" to the level of information required to support decisions
- IT populate the Information Warehouse and users control their reporting requirements
- Logical access to information, with user choice of level, groupings, stores, products, measures, and other parameters
ICT systems used in store operations.
IT is essential to the running of a modern store. It is used for planning, monitoring and auditing store operations. In fact, the logistics of running a major store would be severely hampered without IT, and the expansion to Superstores and Hypermarkets would have been difficult without modern IT developments.
Tesco stores vary greatly in size, from small Express stores covering 2,500 square feet to giant hypermarkets covering 120,000 square feet. The product range depends on the size of the store, and varies from 2,000 lines in a small store up to about 40,000 lines in the biggest. Computerised Store Merchandising and Planning systems ensure that Tesco get the right products to the right store, and get the right amount of space on each shelf within a store. This allows Tesco to get optimum sales for the space allocated to the product, and gives the customer the most appropriate range of products.
- As purchases are no longer entered manually into a cash register, accurate pricing is guaranteed.
- The scanning till is faster, reducing the time for which customers have to queue by about 15%.
- Produce is now weighed at checkouts, removing the need to queue twice (once for weighing and once at the checkout) as used to happen.
- Improved promotions may be offered, such as Multisavers.
- The customer gets an itemised till receipt giving details of the product purchased, price, weight (if weighed), total cost and method of payment. It also shows the store telephone number, plus details which will trace the sale quickly if a customer has an enquiry.
- Improved transaction accuracy: operator error is removed; fraud is limited as there is no opportunity to enter a lower price on the keyboard.
- Improved customer service - customers are important!
- Improved productivity. There is no need to label each item with its price, which can now be displayed on the shelf edge near to the product. Removing separate weighing stations removes the need for a manned point in the produce department; customers move through the checkout faster.
- Selective promotions can be initiated.
- Stock levels can be reduced as the exact quantity held is always known and re-ordering can be made more accurate
- Wastage of perishable goods is reduced, as they too can be ordered more accurately.
- Monitoring sales analysis and the effectiveness of promotions provides valuable information for Tesco buyers and also the company's suppliers.
Every product has a unique number, the European Article Number or EAN. This number is allocated to each product by the Article Number Association, which oversees the operation of the numbers for all businesses in the UK. The number can be found below the bar code. The bar code is a representation of that number in a binary form that can be read by a scanner. The scanner uses a laser and measures the difference in reflection to the laser of the bars and spaces.
The EAN and barcodes normally consist of 13 digits, although there may be only eight on smaller products. The first two digits are a national code, representing the marketing country. The next five digits identify the supplier of the product and the following five identify the product itself. The final figure is a "check digit" based on the other twelve numbers, which allows the computer to validate the code.
A further advance has come with Electronic Funds Transfer at Point of Sale (EFTPOS). This allows Tesco to transfer money from a customer's bank account or credit card account automatically. Two developments that have come from this are the debit card and "cashback".
Debit cards are a means of purchasing without cash or a cheque. Unlike cheques, there is no limit to the amount a customer can spend with a debit card as the transaction is automatically checked at the customer's bank and, providing there are sufficient funds in the customer's bank account, the payment is then guaranteed to Tesco. Unlike credit cards, the customer pays at the time of the sale.
The facility to give customers up to £50 in cash also comes from being able to check the customer's bank or credit card account, and has proved a popular innovation with customers, who are saved the necessity of a trip to a bank or cashpoint.
The ProgreSS system holds pricing details of the 60,000 different products that Tesco sells, their description, and details of any special offers on them. It records details about each sale, not just the amount of each item sold, but whether the price has been reduced, the amount of money tendered and the change given. It also controls Clubcard processing, registering the points earned on the card. Whilst the system manages the main grocery tills, it also has the ability to be aligned to specific business functions. So different "personalities" are used within the garage, pharmacy, hot chicken counter and pizza areas.
The system is also used to control the back office and cash areas. During a normal day's operation the system will transmit batches of information to the mainframe systems at Head Office. This is primarily sales data, but also includes details on reduction sales and Clubcard details, together with daily totals and so on. In return it receives price changes, and new and delisted product information.
The ProgreSS system runs on an RS6000 machine.
The stock replenishment system is called Sales Based Ordering (SBO). As its name implies, it orders new stock on the basis of what has been sold. It also manages in-store stock control and the central ranging and ordering process.
Whilst there are some 60,000 products sold by Tesco, even the biggest hypermarket will stock only about 40,000 of them. Some Express stores will stock only 2,000 lines. The system keeps track of what products are stocked and how much is in the store, and is then able to use this information, together with the sales data, to calculate how much more should be ordered. Most products have to be calculated every day, on a one or two day lead time (the time between ordering and delivery).
The SBO system also manages the recording of all store-based stock movements (for example damaged goods, out-of-code waste, transfers to other stores), stock count scheduling and validation. The stores also use the system to influence their orders, for example factoring up expected sales of ice cream when a hot spell is forecast.
ICT systems used by Customer Service Centre.
The centre provides a central customer service operation for the company; it handles requests for information and customer enquiries. It also handles the management and administration of Tesco Clubcard, and the processing of orders for the Baby Catalogue and the Home Shopping service.
The scale of the operation, and the efficient organisation of staff to provide exceptional customer service, requires the extensive use of IT both in telephone and information systems.
To give you an idea of the scale of company operation, Tesco employs over 400 staff, both full and part-time. The Clubcard loyalty scheme has over 10 million customers. In a typical week Tesco get 100,000 telephone calls, 5,000 letters, and 1,500 e-mails from customers, and company generates 7,000 outbound letters to customers.
Tesco uses IT to manage 100,000 calls a week, both to organise the calls efficiently and to provide information on the timing and length of calls for planning and monitoring purposes. Among the systems Tesco uses are:
ACD - Automatic call distribution (Meridian)
This system manages the way calls get routed to Customer Service Centre staff. Calls into the centre are distributed to ensure that call queues are managed effectively. Real time monitoring facilities provide information on service levels.
Call forecasting and scheduling system (QMax)
The distribution of calls varies significantly throughout the week. This system is used for forecasting when calls are likely to be made. The information is then used to schedule staff availability so that they are there to take the calls.
IVR - Interactive voice response
This is a menuing system on the telephone to filter out those calls that can be handled without an operator. The customer selects various options so that calls can be transferred directly to the appropriate service or person.
There are many ways in which IT provides and organises information for Tesco. For example :
- Customer services have systems to assist in logging customer enquiries, handling responses and tracking progress on outstanding issues.
- Tesco has an addressing system, based on the Post Office Address File, that enables accurate addresses to be captured quickly.
- Tesco has a knowledge base on an intranet to help staff deal with customer queries. This contains frequently asked information about the company’s stores, products, services and policies, as well as general information about nutrition and healthy eating.
- Management reporting is used extensively to provide information to the business on customer concerns. Tesco is now looking at new technology as a way of pro- actively reporting on any serious issues that emerge requiring close, urgent attention.
Orders from Home Shopping customers may be received over the telephone, by fax or via the Internet. These are collated by store and go through a delivery scheduling system which plans the most efficient delivery route, and are then transmitted to the stores for packing and delivery.
The Clubcard system enables staff to deal with customer queries related to the service. This involves managing a large number of routine calls with regard to changes of address, lost cards, and so on. IVR systems are used to intercept these routine calls so that they can be handled automatically.
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Alternative approaches which might enable the business to better meet its objectives.
The retail grocery market is intensely competitive today and no serious contender can afford to rest on its past achievements. This should encourage Tesco to pioneer many new ideas. By listening and responding to customer needs, Tesco will continue to bring in new ideas and services. Its latest venture, with the Royal Bank of Scotland, launched in November 1997, is to offer customers competitive financial services through its stores. It is fifty years since Jack Cohen opened his first self-service shop, and we expect Tesco stores in fifty years' time to be as different from those we know today as Tesco’s current stores are to the stores of fifty years ago.
Non-food retailing is a major part of Tesco strategy. Tesco is increasing competition and offering customers real value and choice in all areas from sportswear to software, electricals to spectacles. By introducing these ranges to more of company’s stores Tesco also offer customers the convenience of shopping for great value non-food along with their food and household goods.
More choice in-store includes many new lines for the home and garden, motoring and leisure, fashion and cosmetics. Opticians, mobile phones and health and beauty are examples of departments that have been expanded to meet customer demand. Tesco relaunched its clothing range to offer better value, quality and choice.
In this year Tesco should continue to bring its customers big names at competitive prices. Last year, for example, Tesco sold 14-inch Bush TVs and Vodafone, Orange, One 2 One and Cellnet mobile phones at record low prices. Film and batteries came down by 30% and cuts of between 15% and 50% are being made on stationery, pet accessories, video tapes, CDs and DVDs and many other popular products.
The convenience of shopping for non-food alongside food is what Tesco should offer customers. At the start of the year Tesco already had 90 stores trading with full non-food offer in the UK. During the year Tesco should increase this as much as possible through extensions, refits and new store development programmes.
Through these programmes Tesco will have more Tesco Extra stores including its newest at Newcastle upon Tyne. It is Tesco’s first UK store to be designed and built to hypermarket blueprint, using many of the elements which Tesco has found
29-04-2015, 04:40