Ritz, a camera retailer and e-retailer, understands that it is vital in responding to your customer needs, and the use of technology assists them. “Businesses that couldn’t offer timely and accurate order fulfillment or secure online transactions were quick to fall off consumers’ bookmark lists” (Ismretail 2002). At the start, Ritzcamera. com did not have adequate real-time order management and lacked integration with the front-end software. All processes were done manually including customer service emailing customers when a back-order existed.
Employees would manually print the order off the website, and enter the data into the inventory and warehouse management system. The invoice and packing slip would then be sent to another department where they would find the product off the shelves, package it and ship it to the customers. A new MQ Series middleware system was then installed that communicated to both the front-end and back-end platforms. This allowed customers to use interactive shopping carts, seek current prices, and be notified of the current availability status, all in real-time.
It also allowed for credit card payments to be processed immediately, and ensured that the payments went through a screening process to avoid any fraud. In addition, the software searched all warehouses for products, which helped the company save money on fulfillment costs. Moreover, the software communicated with distributors to seek availability and delivery of products. This cut down customers calling to ask when their products would be delivered. This was furthered by communication with the actual delivery company, and provided a real-time order number.
Customers would have access to this number, and be able to track the status of the product delivery online. By having all their independent data systems communicate, it provided an electronic digital forum which allowed Ritz to expand via mergers and acquisitions without making any material changes to the current structure. The company demonstrated with the correct usage of technology integration that online success is possible. (Case study developed by Ismretail 2002). Ace Hardware Ace Hardware is a retail support company which acts as the intermediary for cooperative retailers.
The firm utilizes Vendor Managed Inventory (VMI) for Ace to monitor daily stock status data and transfer the information via electronic data interchange to the manufacturers. The information created is the number of products sold, inventory levels, and amounts on order, where a weekly order is then placed automatically to replenish the stock levels. More recently, Ace has installed Web-Enabled Vendor Managed Inventory (VMI), which allows manufacturers to have direct access to the data systems via the internet.
Some of the improved benefits allow the manufacturers to know which products Ace cannot fulfill on time, and what the best possible solutions are to ensure the end client receives the product in a timely fashion. The new system’s main goal is to ensure that it is the vendor’s responsibility to replenish the stock levels, and not that of Ace. This has created savings for Ace as it has reduced the many levels of their internal supply chain function. (Case study created by Ismretail 2000). MyGrocer The core objective for MyGrocer, an EU sponsored company is to create advanced B2C e-service intelligence via mobile access devices.
The technology the company has introduced is to provide total supply chain management to achieve Efficient Consumer Response ECR initiative. This system will be realized through full interactivity, personalization, and automated replenishment of household goods using both radio frequency identification (RFID) and wireless networking (Kidd 2001). The end result would be to provide cost efficient savings from the supplier all the way to the consumer. RFID capability is to provide “faster inventory counts based on shelf content as well as significant reductions in point of sale (POS) costs” (Kidd 2001).
An Andersen Consulting study indicated that 53% of out of stock conditions are due to replenishment inefficiencies (Kidd 2001). For MyGrocer to be successful, it is essential that all information systems be compatible from the manufacturer to the end consumer to exchange meaningful data. This has created the need for standardization which involves identification and intelligent tagging. The efforts of the Global Commerce Initiative (GCI) have become a forefront coalition for user groups to develop a Uniform Code.
Other technological improvements for MyGrocer to work successfully include Enterprise Resource Systems (ERP), Supply Chain Management and Advanced Planning and Forecasting (ASP) systems to be implemented (Kidd 2001) which will allow the free flow of information between all participants. As MyGrocer is continually developing technological advancements to create a working model, it has had some difficulties of acceptance by consumers. The main objective is the collection of personal data and RFID readers in consumers’ home (to enable intelligent homes) as well as a perceived lifestyle change for the customer.
(Case study developed by Kidd 2001). Current Issues As technology has improved both the front-end capabilities for the consumer, the seamless integration to the back-end support systems to allow for improved delivery of goods – one issue that has not been fully automated and creates levels of discomfort for consumers is the ability to return goods. Traditional shopping allows the consumer to walk into the store, explain the reasoning behind the return, which allows the staff to recommend solutions that potentially may save the sale. However, this convenience – both to the e-retailer and the consumer does not exist.
Some consumers are not comfortable buying online as the difficulty in returning the product. And when done so, it will be at an increased cost due to shipping and handling charges. In addition, it becomes a manual process for the e-retailer to retrieve the goods, ensure the product is in good shape, and then enter the return into the system. This is a costly procedure as it requires staff on hand to manually do this. Technology in the return policy and the e-retailers assurance to consumers to create an efficient process is a key for internet sales to become increasingly favourable. Conclusion
The emergence of the internet and on-line shopping has developed a need to integrate all aspects of the supply chain management. With the usage of digital interfaces from the front-end spectrum of obtaining clients, to the back-end support system of ensuring the goods are available and delivering them on time – both the front and the back have now become one complete supply chain. Technological advancements have been used on both ends of the spectrum to ensure seamless integration, to promote to selective target markets, and to ensure customer satisfaction via back-end support efficiencies.
The competitive market and the ability to utilize information technology as an advantage, e-retailers can now promote their products and services on a personal level through personal data collection and analysis on consumer behavior. Although, this has always been done on a collective, the personal promotion aspect is a new tool for marketers that some feel is an infringement on consumer rights. The understanding of consumer requirements for online purchasing is essential for the continual success of e-retailers.
To be able to deliver goods on time, have sufficient stock available, provide a return policy similar to traditional shopping, and provide a safe and secure payment facility are the main issues consumers would like addressed. Managing these aspects of the supply chain, logistics, delivery, and sufficient stock levels have become the realized goal of e-retailers through the usage of information technology. The e-retailers that have been successful in addressing these issues by improving both ends of the spectrum have been able to succeed in a very competitive market.
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