The Importance of Retail Information Systems - Research Paper Example

? Importance of Retail Information System Table of Contents ……………………………………………………………………………………......3 Introduction………………………………………………………………………………………3 Retail information system………………………………………………………………………..5 Features………………………………………………………………………………………..…5 Importance of retail information system…………………………………………………………6 Managing the Complexity of Retail Operations………………………………………….6 Operational Excellence …………………………………………………………………..6 Creating new products, services and Business Models…………………………………..7 Customer and Supplier Relationship……………………………………………………..7 Improved Decision Making………………………………………………………………9 Competitive Advantage…………………………………………………………………..9 Survival…………………………………………………………………………………..10 Conclusion……………………………………………………………………………………….10 Works Cited……………………………………………………………………………………...11 Importance of Retail Information System Abstract Information that can be acted upon presents a competitive edge especially in retail management. Information technology provides more detailed information regarding customers and consumers which can be quite helpful in retail management since provision of better services and products to customer directly depend on level of information the retailer has regarding the customer. That is, the more information a retailer has regarding the customer, the higher he stands against his competitors within the same competitive environment. Information technology can be applied in retail management especially in marketing, distribution and service to enable a firm increase its efficiency, and most of all, improve their effectiveness in the increasingly competitive environment. Introduction In a highly competitive environment, effective customer services as well as relevant products to the consumers assume a high position in retailers’ priority list in the event of profit maximization. One of the most effective ways to ensure relevant product and effective services to the customer is through collection of information regarding the customer, analyzing that information and finally placing the analyzed information into work by aiding in decision making processes. (Stair, 2010) Information systems include systems that deals with the process of raw data from databases, file storage and file sources to information which are later used by middle level, top level and operational level managers in decision making thus improving their output to the consumers inform of better services and relevant products which in turn increases their returns and profit. (Stair, 2010) Information systems and organizations influence one another. According to Lucey, Information systems are built by managers to serve the interest of their firms. At the same time organizations must be aware of and open to the influences from information systems to benefit from new technologies. The interaction between information technology, information systems and organizations is very complex and is influenced by many mediating factors, including the organization structure, business processes, politics, culture, surrounding environment and management decisions. (2005) All modern organizations have bureaucracies with clear-cut divisions of labor and specialization. The main reason for organization’s failure in implementing information systems is inability to adapt to the rapidly changing technology and insufficient resources. New technologies, new products, and change in public tastes and values put strains in any organizational structure, culture, politics and people. Organizational inertia are the standards of the operating procedure coursed by the changes to the existing order as well as threats to closely held cultural values. (Mintzberg, 2007) Retail Information systems Retail Information systems are systems used to provide information to aid in retail transactions by adding value to retail transactions. Retail information system achieves this by automating the trade through the use of an electronic commerce portal on either website or purchase inventory systems. Furthermore, retail information system keeps track by monitoring communication from consumers, collecting customer data, providing platform for communications in addition to automation of the sales processes. (Rainer, 2009) There has been an increasing role of managing the complexity of retail operation with the increase in globalization of retailers, both in terms of purchase inventories, sales systems, electronic commerce and point of sales application as well as supply and incorporation of information technology. Features Herman states that retail information system link stores by allowing managers to stay in contact for effective control of profits through instant exchange of information. Most retail information systems support product management in addition to providing for detailed analysis of customer data. It should also have the functionality that enables managers to set prices for variable time period based on the location of the store. A mobile user interface is an added advantage of a retail information system especially to inventory and sales managers. (2009) Retail information system importance Retail information system has numerous benefits most of which include the following: Managing the Complexity of Retail Operations The management of retail operations such as inventory control, planning, financial management as well as logistics is usually a daunting task due its complexity especially when manually done without any help from sources such as information system. Retail information system therefore aids in managing the complexity of such retail operations. The complexity of retail operations are brought about by such factors as process complexity, product complexity, scale complexity and supply chain challenges. With the increase in globalization of retailers, both in terms of purchase inventories, sales systems, electronic commerce and point of sales application, as well as supply and incorporation of information technology, there has been an increasing role of managing the complexity of retail operations. Information technology is majorly helpful in reducing the complexity in functional areas of the retail operations and the data cleansing and architecture areas. (Herman, 2008) Operational Excellence Retail information systems improve efficiency in operations in addition to cost reduction and added value to retail operation that further aids in high profitability attainment for the retail operations. Retail information system proves itself as an important technology and tool in achieving greater productivity and efficiency such as proving a good and reliable linkage between sales systems and the suppliers. This therefore addresses the complexity in supplier chain brought about by the complex retail operations. Creating new products, services and Business Models Paul notes that business models describe how a retail company produces, delivers and sells products and services to create wealth. Retail information system is a major enabling tool for products, services and business models. This helps in addressing the product complexity brought about by the complexity in retail operations. (2005) Customer and Supplier Relationship Retail Information Systems leads to provision of better services to customers. Good services from the supplier end to the customer end ensure customer lock-in. Once a customer is locked-in by the good services offered by the supplier through the aid of retail information system, then an increase in revues and profits is experienced on the supplier end. Better services to the customer or consumer can be achieved through customer profiling with the help of information technology (IT) which aid in the collection of customers’ history from a browser and analysis of customer information accessed from the history. The analyzed information can then be used by the supplier to provide the customer with the products and services based on his or her needs. Customer information collection such as information on past purchases and transactions, is done in several ways in E-commerce websites most of which include: Cookies Cookies include small texts file that websites place in the hard disk of client computers every time they interact with the retail information systems. Retail information system typically uses the cookie file to generate a unique ID number for each visitor and stores that number on the user machine. Web Bugs Web bugs are tiny, one pixel graphic files that are embedded in email messages as well as on websites. The information of the user and the page being viewed by a user are automatically transmitted to the monitoring server with the aid of web bugs. Retail information system then gets the data and all the information required for the customer profiling form the monitoring server. Databases, Data mining, Data warehouse and Profiling With the help of these technologies, marketers are able to identify exactly who the retail information system customers are. This then presents them with the opportunity to provide the customer with exactly what they want, when they need it and at the right price since they have all the necessary information to profile the customer and know their taste and purchasing capability as well as other factors which may aid in convincing the customer to purchase a product or pay or a service. Advertising Networks Advertising networks provide the retail information system users with the banner advertisements based on the database of users’ behavioral data. Specialized servers store and send users appropriate banner advertisements. They rely on cookies and backend user profile databases to patch banner advertisements to user according to the RIS transaction results including sales. (Laudon, 2010) Customer Relationship Management A repository of customer information that records all the contacts that a customer has with a firm and generates a customer profile that is available to everyone in the firm who wants to know the customer. Improved Decision Making Retail Information Systems provides necessary information to various stakeholders in order for efficient and effective decision making. A bad decision is the decision made without any background or information support. Without adequate information from , stakeholders and managers use forecast, guesses and luck which leads to overproduction, underproduction of goods and services, misallocation of resources, poor response times, poor outcomes raise costs and lose customers. A good decision is a decision based on data or empirical facts. RIS leads to provision of adequate information which leads to good decision making. Competitive Advantage Retail Information System enables the creation of innovation or something different from competitors such as price, products and services through the use of the gathered information regarding the customer. Organizational responses are usually taken in reaction to change in the business environment or to competitors' actions. Sometimes such response may be too late. Therefore, organizations can play a proactive role and make significant changes in their industry before anyone else. A first mover strategy is risky, but can be very rewarding if successful. With RIS, retailers can provide better products and services. This can be used as a competitive advantage against the competitors.(Laudon, 2010) Survival RIS provides retailers with technology and tools which enable them to survive in their respective competitive environment. In order to survive in the competition, RIS need to comply with recent standard process for retailers and even prove to be better than the standard process for attraction of a wider customer base. Conclusion Highly competitive environment forces retailers to adopt information technology in order to better their services to the customers and provide relevant and personalized products to their customers. Retail information system enables retailers to achieve this through provision of information regarding the customers. Work cited Stair, Ralph M., and George Walter Reynolds. Fundamentals of information systems. 5th ed. Boston: Course Technology, 2010. Print. Top of Form Bottom of Form PGDBA-DLP, We Learn - A Continuous Learning Forum from Welingkar's. "Importance of a Retail Information System." Upload & Share PowerPoint presentations and documents. N.p., n.d. Web. 30 Apr. 2012. . Lucey, T.. Management information systems. 9th ed. London: Thomson Learning, 2005. Print. Rainer, R. Kelly, Efraim Turban, and Richard E. Potter. Introduction to information systems. 2nd ed. Hoboken, NJ: J. Wiley, 2009. Print. Herman, Gary. The impact of information technology in retail: globalisation and customer focus. London: Financial Times Business Information, 2007. Print. Information technology in the UK retail sector. 6th ed. Ansty, West Sussex: MACE, 1998. Print. Duggan, Tara. "Retail Management Information Systems | eHow.com." eHow | How to Videos, Articles & More - Discover the expert in you. | eHow.com. N.p., n.d. Web. 30 Apr. 2012. . Bocij, Paul, Andrew Greasley, and Simon Hickie. Business information systems: technology, development and management. 4th ed. Harlow, England: FT Prentice Hall, 2008. Print. vijay_238. "Management information system Ppt." Upload & Share PowerPoint presentations and documents. N.p., n.d. Web. 30 Apr. 2012. . Top of Form Consultants, Tulsa. Management information system. Tulsa, Okla.: The Consultants, 1973. Print. Top of Form Laudon, Kenneth C., and Jane Price Laudon. Management information systems: managing the digital firm. 7th ed. Upper Saddle River, N.J.: Prentice Hall, 2002. Print. Top of Form Laudon, Kenneth C., and Jane Price Laudon. Management information systems: organization and technology. 3rd ed. New York: Macmillan Pub. Co. ;, 1994. Print. Bottom of Form Bottom of Form Bottom of Form Read More