Management Information System
Executive Summary
Organizations today have to adopt the latest technologies to carry out the processes to have a competitive advantage over others. The increasing complexity and uncertainty in the market requires organization to be highly responsive to the changes in the situational factors. The complexity of the processes in the retail organizations is increasing, which requires them to integrate their systems in a manner that it provides the employees an effective way to carry out different processes. Woolworths is Australia’s largest supermarket chain and has the highest market share. Since the organizational activities are increasing to accommodate the customer preferences the organization’s supply chain has not been effective. Many stores face a situation of stock outs every day, which is influencing the customers to switch to other retail brands. An integrated POS ERP system is one of the information system, which would enable the retailer to overcome the issue in its inventory management. This system will enable the back office members to have the real time information about the stocks and arrange for the fresh stocks to be supplied to the stores immediately. It also enables the organization to stock the required inventory in the stores and avoid stock outs and it will also enable the organization to forecast the demand of the products effectively.
Introduction
The complexity of the organizational processes is increasing at the same pace as the development of technology and hence organizations have to adopt the new technologies to function effectively and efficiently. The processes in retail industry are getting complex due to increasing number of products, customer segments and their ever changing needs. Woolworths is the largest supermarket chain in Australia and has been having the largest market share in the country since decades. The organization has adopted various technologies to run its processes effectively but due to rapid changes in the technologies and increasing complexity in its supply chain it is not able to stock many products effectively in the stores and they face the issue of stock-outs many times in several stores. There is a need for the organization to opt for an effective business information systems, which will enable it to overcome the issue and stock every product effectively without any shortages. This report proposes an implementation of new information system at Woolworths, which will enable the retailer to overcome the issue and manage stocks more efficiently and accurately.
About Organization- Woolworths
Retail industry is one of the fastest growing industries in Australia. Australia’s retail sector is expected to grow further and the focus would be more on the sales through online shopping. It is expected that the shopping with the retailers will become personal, transparent and seamless. Woolworths is the largest supermarket chain in Australia (Rowsell 2015). The retailer has around 872 stores across the country and has around 11,000 employees across the stores, distribution centers and support offices, which provide excellent service and range of products and services, which add value and convenience to its customers (Woolworths Holdings 2015). With increasing demand of customers to shop from home the retail company provides the facility to the customers to shop from home through its website and Woolworth’s Supermarket App (Knox 2015). The retailer is proud to work with the Australian farmers and growers and ensure that the best and fresh products are offered to the customers. Woolworth offers fresh food to people by sourcing 96% of the fruits and vegetables and 100% of meat from Australian farmers and grower (Woolworths Holdings 2015). The vision of the organization is to become a world leader in retail brands that appeal to the people who care about quality, value, innovation and sustainability (Knox 2015). The organization works with the values of providing excellent quality of products and services, innovation, integrity, energy and sustainability (Knox 2015). Woolworths’ growth plan is built on four priorities, which are extending leaders in food and liquor, act on developing the portfolio, which would enable the organization to maximize shareholder value, building on new growth businesses and putting in place the new enablers of new era of growth (Woolworths Holdings 2015).
The organization is working harder to serve its 18 million customers every week and it listens, acts and learns from the customers, which enables it to offer the products, which the customers look for and provide them good shopping experience (Knox 2015). The company uses the information obtained from its loyalty card to provide personalized offers that can bring increased value to the customers. Woolworths not only values its employees but also value its suppliers by working fairly with them. The company has partnership for over a decade with more than 80% of its suppliers. Besides the worldwide brands it offers its own brands, which include Home brand, Select and Macro, which provides range of quality products (Knox 2015). The organization had a strong market share for several decades but according to Moody’s Woolworth’s is facing tough competition from ALDI and David Jones (Roy Morgan 2014). Woolworths is facing serious competition from Aldi even though it continues to have the largest market share in Australia. The retailer hence is required to be highly responsive to the market needs. The low prices products at Aldi has been attracting customers to a great extent along with each Ali provides wide range of food and beverage options Woolworths (Roy Morgan 2014). According to UBS Supermarket Supplier Survey, Woolworths scored lesser than Coles in its overall performance. It was found that Woolworths was not performing well in the customer-facing areas, such as offering value for money, in-store services, effectiveness of promotional campaign (Mitchell 2015). The survey also highlighted that on-shelf availability of goods was poor, quality of fresh produce was not as desired, calibre of in-store staff was not very good, competitive pricing also lacked (Mitchell 2015). Woolworths as a result requires to implement effective and innovative strategies in different areas of the business, which will enable it to maintain an effective supply chain , reduce operational costs and provide good competitive prices to the customers and improvise the in-store customer service, which otherwise can have negative impact on the image of the organization.
Problem/Opportunity for IS/IT at Woolworths
Woolworth currently faces several issues in various business aspects, which is impacting its market share. The company is having a tough competition with Coles and Aldi over pricing quality and range of products and in-store services and stocks availability. Woolworth though has an efficient supply chain the stores still have shelfs where items are not stocked as soon as they are over. Many of the stores fail to reduce the stock-out issue, which has added to the dissatisfaction of the customers (Knox 2015). With the changing demands and increasing sales the organization t time is not able to predict the stocks required in the stores, which leads to stock outs. The organization should enhance its systems, which indirectly influence its supply chain process. The Point of Sales terminal used in its store scans number of items every day for large number of customers, which recognizes the items bought by the customer and is aimed at providing the bill for the items purchased. One of the opportunity for the organization to add value to its supply chain is to integrate point of sales to the inventory management system. Woolworths can implement an integrated system wherein the POS when scans for an item automatically updates the stock of the relevant item. This addition of information system to the existing systems will enable the organization to effectively manage the stock levels in the organization. Woolworths’ is currently facing the issue of stock outs, which in long run can influence the customers to switch their loyalties since not only the substitute of the product is available but also there are other retailers who offer similar products at a more competitive price.
Proposed System- Integrated POS/ERP System
Data collected at the POS in very important for all the retail companies. Point of Sale mainly deals with billing the customer and providing the bill purchases made. It includes cash register, which enables the retail company (Finn & Sivonen 2009). POS records the information of the purchases made and is a very effective system, which can be used for effective inventory management (Finn & Sivonen 2009). Integration of POS with the back office would enable the retailer to manage the stock and provide accounting capabilities. Integration of POS with the ERP system would enable the retailer to link the front end and back-office, which would help the retailer to reduce inventory and enhance the stocking activity wherein retailer can avoid facing the issue of stock-outs (Dyba & Dingsoyr 2008). The information obtained from the POS has become very crucial since it has become very important for the retailers since the volume of stock held by retailer ties up the certain amount and also if the stocks are not available as desired it can lead to stock-outs and create a negative image in the minds of the customer and might influence them to go to other retailers. This system will enable Woolworths to enhance its existing inventory management system and allow it to manage the stocks in the stores even better. This integration will enable the retailer to automatically update the number of stocks whenever the customers finish purchasing and paying at the POS. The number of stocks will automatically get deducted and the procurement or stock manager would be able to check on their systems the stocks available instantly without having to wait for the employees to check the stocks at the end of the day.
The proposed system will automatically update records about the stocks of particular item by linking it through the bar code and once the items fall below the threshold it will automatically place an order with the suppliers so that the retailer will never run out of stock for any of the items and also can stock them in the stores effectively. This will help Woolworths to save time and enable it to place orders for the stock more effectively without having to order them in access or in less quantity. This integrated system will also enable the retailer to track the purchases of the items and forecast the demand and preferences of the people. Integrated POS with ERP system will enable the retailer to manage the inventory effectively without ordering it in access or falling short of the stocks. The existing ERP system updates records at the end of the date when each store calculates the total sales of each item at the end of date and provides details to the back-end office. This at times does not provide the information on actual sales of the items and hence the stocking of the item might not always be accurate. By implementing the proposed information system Woolworths would be able to stock the products effectively and would not have any issues in managing the stocks accurately.
Implementation of ERP System
System Development Life Cycle (SDLC) refers to describing a process for planning, creating, testing and deploying an information system (Heagney2011). SDLA aims to implement a high quality system, which meets or exceeds the customer expectations designed based on their requirements (Schmidt, 2009). SDLC in its first phase carries out a feasibility study of the proposed system to be implemented wherein economic, operational, organizational and technical feasibility will be analyzed (Kennaley 2010). In this stage the verification of the effectiveness of the system to be installed is carried out by identifying the strengths and weaknesses of the system (Boyde 2014). In the next stage the system analysis is carried out, which is a process of collecting factual data, identify problems and recommend feasible recommendations for improving system functioning (Dyba & Dingsoyr 2008). It includes the analysis and identification of the requirements, the person responsible for implementing it and understanding how it can better the existing process.
The next stage is of system design wherein the proposed system is designed. In this stage the input, output, databases, the approach to write codes, processing specifications are chalked out in details (Boyde 2014). In this stag an outline of entire system is done, which includes deciding on the programming language, data structure, control process, limitation of the system, the interface of hardware and software, documentation, training and the procedure of using the implemented system is detailed (Kerzner 2013). These stages fall under the planning phase and the next stage is of creating wherein the coding is done. The coding is done in the specified language and the required controls and other specifications are considered while coding the system to ensure all the requirements are fulfilled and the system will provide the desired output (Hanley 2015). Once the coding is done testing of the system is carried out, which involves program test and system test enabling the person who has done the coding to ensure that the program works effectively when actual data is entered (Suh 2005). The final stage is implementation, which is also an important phase in SDLC and includes acquisition and installation of the hardware and software required for the system, conversion of the system to the actual settings where the system would be used, training sessions for the user of the system and documentation (Kerzner 2013).
Implementation phase includes one key activity of deploying the new proposed system in the target environment (Boyde 2014). This phase includes supporting task of training end0users and preparing to hand over the system to the maintenance personnel or the end user. Documentation is also an important activity in the implementation phase, which should include comprehensive and easily understable documents with no redundant information (Alter, 2010).. The team should develop an organized document having all the information of the various critical tasks so that the development team members can easily refer and access the project documents as and when needed. The information about every stage should be well-documented which can be referred to by the team who has developed it and by the personnel who would maintain the system (Hanley 2015). It should have information of other deliverables from each and every lifecycle phases. In this phase implementation reviews of the routine deliverables should be included to make changes if there are any ambiguities and inaccuracy (Boyde 2014). The sponsor organization should be provided with sample templates for deliverables if possible and provide I in desired formats, which is acceptable as long as all the desired information is present in the templates which the users can refer to in case of any issues (Kerzner 2013).
The proposed system will be implemented based on the SDLC framework wherein the proposed system will be first checked for feasibility by assessing if the data coming from different POS would effective update the integrated system without slowing done the POS and the system at the back end since the transactions happen on a continuous basis. The existing systems, ERP capabilities and the server capabilities will be checked and the investment required will be identified and checked for its feasibility. The systems, which Woolworths is already using will be analyzed and the other requirements to accommodate new system will be identified. Based on this information the system would be designed and ensured that all the POS are effectively integrated with the back-end systems using the required hardware and software. Once the hardware and software are in place coding would be carried out to record the required information in different databases. The system will then be tested for its accuracy and efficiency. The testing phase would be ongoing and every requirement will be checked effectively by using different set of data and by entering incorrect data and wrong format of data, which will help in ensuring that the system recognizes the type of data and updates only the desired data. The last phase is equally important and is of implementation phase, which is crucial and would require the back-end members to be trained whereas the personnel in the front end at the POS will be briefed about the system with a small training session, which will enable them to have an idea of what does the new integrated POS ERP system do.
In the implementation phase the stores with fewer POS to carry out a Pilot run, which will enable Woolworths to verify if all the requirements are met and the system reflects the desired information. The testing will be done after the new system goes live and is handed over to the users. The organization will then carry out a training session wherein the beck end personnel will be trained on how to track the records and monitor it and verify if it is reflecting the right data. The front end personnel will have short introduction session where they will introduced to the new system and its purpose since they do not have to know about the technical aspect of it. They will be trained to ensure the items are effectively scanned since the record will not be updated unless the item is scanned effectively. The development team will effectively record the deliverables of every phase carried out by them, which will enable the management and other senior members to have an idea about the need, feasibility and effectiveness of the system. The team will document the system analysis and the changes and additions of hardware and software in the systems in the store and at the back end office. Which will clearly documented with the serial numbers and implementation date and the purpose of the implemented part. The coding will also be well documented by briefing about the various sections and their usages, which will enable the maintenance personnel to handle the situation in case there are some minor changes to be brought about in the coding. The documentation will include the results of various tests taken and highlight the issues faced and provide the solution of overcoming such similar issues. Finally, the documentation will include how to use the system and identify the various parameters it reflects in the new integrated information system.
Post-Implementation Activities
Post implementation activities is an important activity while implementing a new information system. The post implementation activities enable organizations to reflect upon the process of the implementation of the new system and identify the issues, which were faced by the development team (Alter, 2010). The post implementation activities will include assessing the approach of the organization implementing the new system. It will include evaluating if the system chosen was right and is it fully serving the purpose and is there any further scope for improvement. The team will also continuously test for any glitches, which may arise when many POS will be integrated with the back end ERP system. The post-implementation activities will include assessing if the member are operating the new integrated ERP system effectively and what are the issues they face and has it brought the changes in the inventory management activities. The activities will include in overall assessment of all the stages and monitoring if the new system is having a positive or negative impact on the performance of the organization. The stocks in the stores will be closely monitor for some period and would be checked if the system has enabled it to prevent the stock-outs and if it has enabled the retailer to have better control over the inventory.
Risk Management and Change Management
Risk management includes process of identification, evaluation and prioritization of risks, which are then addressed and necessary measures are taken to minimize the risks and control the impact of unavoidable events (Raydugyin 2013). The risks in implementing the new Integrated POS ERP system are not very major if the design and implementation is effectively planned. The probable risks include incompatibility of the new system with the existing system, which will make it difficult the system with other applications in the organization. The other risks include resistance from the employees to have an integrated system since it might require them to change their approach to access the system and make it more complex. The other risk is lack of knowledge at the front end about the system since they are not technically sound and might not follow the procedure of scanning items properly, which might not record the data of the product effectively.
To overcome these risks the organization should identify the requirements of the system effectively and integrate it only to the desired software, which will reduce the complexity and will enable employees to maintain the records effectively. The change management approach should be used to make the employees recognize the need for changing the system and make them understand the benefits of the system. The employees should be briefed about the system before its implementation and should be involved in the system design since they will be able to provide some effective inputs, which can be considered while designing the systems. The employees should be involved in the entire implementation process, which will make them feel more positive and confident about the effectiveness of the new system. The front-end employees should be effectively briefed about the use of the system and should educate them to identify issues and report it to the technical team, which will enable them not to continue using the system if it is showing certain error or if it is not performing an activity as desired.
Conclusion
Information system or Information technology has gained increased importance in every industry today since it enables the organization to automate certain processes and hence achieve greater efficiency and accuracy in the tasks. The processes carried out by retailers I getting more complex and they are required to constantly upgrade the technology they use to overcome the issues they face. Supply chain is a very important function for retailers, which not only impacts the internal processes but also affects the customers if the products do not reach the stores at the right time. Woolworths is facing issues with its supply chain in spite of having an effective system and often the stores have empty shelves, which has led to increasing discontent among the customers and creating a negative image of the organization in the consumer’s mind. Woolworths stores have several items which get stocked out every day, which has raised concerns over the supply chain management of the company and requires it to bring required changes in the system. An integrated POS ERP system will enable the retailer to have a better control over the stocks. This information system integrates the POS in the stores to the back end ERP system and update the stock of each product as soon as a purchase is made at the counter. This enables retailer to have real-time information of the stocks and automatically re-order the products, which are below the specified threshold value. The implementation of the proposed system will be done using the SDLC approach, which would enable to take as systematic approach to implementation of the new system. The system will be analyzed, designed and implemented and all the required documentation will be done in the implementation phase and the implemented system will be monitored effectively post implementation. The system implementation will consider the possible risks and the change will be implemented by overcoming the risks.
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