Business at work (стр. 9 из 10)

Personal Finance In 1997, Tesco decided to extend its customer offer to include personal financial services. In partnership with the Royal Bank of Scotland, Tesco is providing new ways of banking and other services to its customers.

C 3.

The impact of ICT on internal and external communications

Importance of ICT

IT is vital to Tesco because every aspect of its operation is controlled or monitored by IT - stock, distribution, payroll, accounts, and so on. For example, when an item has its barcode read at the checkout, the system not only logs the price onto the till, but also logs the financial transaction between Tesco and the customer and the fact that the stock has been reduced by one item. On the distribution side, instructions from the mainframe computer are sent directly to fork-lift truck operators at depots by radio links.

All stores are connected to the mainframes at Head Office via the Tesco Network. There are a large number of different applications that stores use both independently and via the mainframe connection. For example there are Personnel and Scheduling systems in-store, and access to electronic mail via the mainframe.

Tesco has a three-level architecture with mainframe, middle system servers and PC clients. Their main frame has a 6 million Mb storage capacity (equivalent to 6 million 500-page books!). Their private digital network to 600 stores has a capacity of 11.5 Mb. They use some 100 Tesco-written computer applications and over 200 PC packages.

Last year, Tesco spent about £133 million on IT, that is about 1.4% of turnover.

A recent independent survey of Europe's leading 500 companies in all commercial and industrial sectors placed Tesco 112th overall in Europe in terms of IT spending, but 3rd in the list of European supermarkets, and 1st amongst British supermarkets. [Source: Information Week 19-20/12/97].

Over one million on-line card authorisation requests are dealt with every day.

The Internet site receives 250,000 hits per week and was used to launch Tesco’s home shopping service and the Tesconet Inertrnet Service provider. The internet site has proved to be a great success, with the introduction of Tesco Direct, the home ordering and delivery service. Such “home shopping” is becoming increasingly important as more and more customers gain access to the internet via home PCs. Sainsbury’s, one of Tesco’s great rivals, has also now launched its own home delivery service via the internet.

Tesco own Internet site. Home page.

ICT systems used by Distribution Department

IT has revolutionised all aspects of the selling, ordering, distribution and analysis of Tesco products. The operation of Tesco large distribution centres is a highly complex business. In recent years new computer systems have revolutionised distribution operations, allowing more effective stock control procedures, increasing productivity and making the best use of time, space and labour.

The base system used to control the distribution operation was purchased from Dallas Systems and customised to Tesco requirements. There are two particularly important sub-systems, known by the acronyms DCOTA and DCAMS.

DCOTA (Distribution Centre On-board Terminal Access) is a system which sends information by radio directly to the special terminals in the trucks of the fork-lift truck

drivers at the distribution centres. The system controls the movement of stock and trucks in order to make the most efficient use of time and space, automatically matching up locations and trucks. As soon as one assignment is finished, the next brief will be transmitted to the truck-mounted terminal, showing the driver where to go next. Every warehouse location has a check number prominently displayed on the racks; this number is entered by the driver each time he visits a location, enabling the computer to check that each pallet has been placed in the correct slot.

DCAMS (Distribution Centre Assignment Monitoring System) is the system that monitors how far each job has progressed, and the deployment of staff. It is available to supervisory staff via hand-held radio frequency terminals, enabling them to predict and pre-empt problems by re-deploying staff and, if necessary, changing work priorities.

Radio frequency communications are also used in the checking in of goods.

Ordering by stores now relies heavily on IT, using Sales Based Ordering. Data is received by the distribution centre from the Head Office mainframe system, and then passed to the warehouse systems described above.

The loss of a whole mainframe would have serious effects, and for this reason company has two mainframes to provide backup capacity. In the event of a disaster which involved the complete destruction of one of the computer centres, the other could re-establish these vital systems within 48 hours. The backup procedure is tested regularly each year.

The backup systems for the distribution depots include specialist routines that allow depots to switch between computer sites, and are at the leading edge of data processing technology. If a complete computer centre were lost, IT communication with all affected depots would be re-established within six hours at the most.

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: