Information data analysis of Tesco

We have chosen Tesco as the organisation we will study. Tesco is the largest supermarket company in Britain, it holds 27% of its market share, this is almost twice the market share of its nearest rivals. Tesco is a long established firm with a good reputation and customer loyalty, it was founded in 1924 by Sir Jack Cohen and together with his tea producer T. E. Stockwell the started the brand name TESCO. Since then there stores have popped up all around the UK and then around the world. They now have 729 stores in operation in Britain and 55 new stores in the process of being built. It also has stores around the world in the Republic of Ireland, Hungary, Poland, Czech and Slovak republics, Thailand and South Korea and they are currently expanding to Malaysia and Taiwan. It employ’s over 260,000 people.

Tesco are a largely automated company when it comes to data handling and processing due to the incredible amount of data they deal with. Its main competitors are J.Sainsbury’s, Safeway and ASDA and they keep Tesco striving to lower prices and provide the best possible service they can. With the motto “every little helps” they advertise through T.V, radio, newspapers and there own newsletter style leaflets which are delivered door to door on a monthly basis.

TESCO

All incoming goods are pre-labelled with a computer-readable code. The photoelectric scanner at the cash register records automatically the article number of every good passing. All cash registers have a data connection to the branch computer. Based on the article number, an invoicing program calls up name and price of the product and sends these data back to the cash register, where the invoice is printed. In parallel, the invoice program updates the inventory, deleting every sold item from the inventory accounts. When all goods the customer bought are accounted, the program sums up the individual values and prints the total invoice.

The data accruing during the invoicing process are the basis for a wide range of automatically generated evaluations and reports. The supermarket’s manager gets daily sales statistics showing gross margin, revenue, and the speed of turnover of the different item groups. Thereby, he can focus his sales promotions on critical or most profitable goods on a daily basis.

The order management is similarly automated. During the invoice process, the goods sold are subtracted from the stock inventory. The headquarters list the goods dispatched at all sites and organise the subsequent delivery of replenishment by the central store. The individual supermarket has no trouble with any disposition issues.

In the central store, all data of incoming goods are captured for the information processing to update inventory data. The received volume is added to the stock quantity in the memory, resulting in updated stock inventory numbers. The multiplication’s result ‘delivery volume x unit price’ is added to the inventory value and differences between ordered and received volumes, if any, are reported. For this purpose it is necessary to capture the article number for each item, order number, order date, ordered volume, delivery date, supplier number, and purchase price when the item was ordered.

After that, purchasing officers can print inventory listings whenever needed. Showing all stock changes, the listings are valuable for headquarter dispositions. To generate automated order advices regarding to articles and suppliers, additional information is needed, e.g., lead time, lead-time demand, expected sales, minimum stock level, etc.

Such stored data are basis for further processing by several other applications. Additional charges or surcharges can be counted automatically due to the single inventory group, for example depending on the season (rain coats are usually not the hit in a hot and dry period). The account balances can be planned and used to optimise supplier cash discounts. The payment of invoices can be done via online banking. The price-labels for the sales shelf can be printed locally at the supermarket in parallel to replenishment. It is not longer necessary to print price-labels for each single item because the article code is used at the cash register. There are many more purposes the once stored data can be used for.

The next steps in this supermarket’s development are quite clear, as the US retailer Home Depot realized it already at the end of 2002. What customers hate most are the queues at the cashier, but the end of supermarket queues is in sight. Revolutionary new technology will allow shoppers to scan, pack and pay for their own groceries. Supermarkets will offer an ‘extra fast’ lane in addition to normal and express lanes, helping shoppers avoid queues. Shoppers will take their basket or trolley of groceries to the self-checkout and scan and pack each item themselves. The grocery bill can then be paid using cards or cash. One cashier will oversee at least four of the new checkouts to answer difficulties, check signatures and watch for thieves.

Those behind the new technology insist that customers who try to cheat the system will be caught. Every item is scanned and weighed. Groceries are then put in bags that rest on scales to check that the weight matches.

Supermarkets have been trying for some time to fight the queues because they are the things customers hate the most. The self-checkouts will prove popular, but shoppers will still have the option of using manned checkouts as well.

E-commerce and Tesco’s: Tesco.com

Tesco.com is Tesco’s electronic commerce system. Tesco’s is one of the most profitable online grocers in the whole world and the only UK supermarket to offer a nationwide online service (covering 95% of the population). It allows shoppers to identify and purchase goods via their own computer.

Tesco.com’s success is largely due to the fact that it fore fills not one, but all of the possible perspectives of E-commerce:

Communication Perspective: Tesco.com allows the delivery of new information, such as product and service marketing to customers, and payments. Information flows toward Tesco’s as well. As buying behaviour, and highly demanded goods can be predicted using the online information.

Service Perspective: Purchases can be made even when the actual shop as shut, and without travelling to a store. The goods being delivered, usually, the next day. This is obviously beneficial to both consumers who have little time, and the brand name due to the quality of service.

Business Process Perspective: Transactions, customer orders and stock levels, can all be automated as a result of the use of the website. This allows an increase in efficiency and further reduction of direct costs.

Online Perspective: Most obviously is the selling of goods. By being online, Tesco’s can increase their market share, even to areas where there is not a store nearby. For customers, it also allows online comparison of products drawing attention to goods that maybe less inexpensive in Tesco’s rather than a competitor.

Benefits to Tescos due to E-commerce:

Expansion

The online capability of Tesco’s allows the supermarket to increase its national market. Consumers who do not live near to a store, or are only located near a smaller store, can purchase Tesco’s entire range of goods. This not only increases Tesco’s large market share (by selling to more people), but also allows them to sell more of their non-grocery goods (videos, clothes etc.) to those who would not normally consider using Tesco’s for these products. It also supports reengineering of the company in the future; depending on the direction the company takes. The online capability allows changes in processes to occur quickly, thus making the company more adaptable.

Reduction of overheads

Due to Tesco.com’s large coverage of the nation, fewer stores need be produced. As a result the direct costs for such stores would not be necessary. Fewer staff can supply more people via the online service than in store. This means that there is fewer staff to customers, making it more economically viable to the company. Price labels, till receipt/audit rolls, and promotional labels, are all examples of paper used in store to facilitate purchases. The use of Tesco.com allows all of these to be updated electronically and therefore there is less paper wastage, this helps to reduce to cost to the company. This also has the added advantage of being economically friendly, keeping in line with Tesco’s environmental policy.

Information

The data gathered by Tesco.com can be quickly and efficiently used to determine which goods are likely to be bought in stores. This information can be used for purchasing analysis and policy. ‘Best-sellers’ can be identified and well stocked within stores. Online purchasing allows for consumer demographic purchasing behaviour, as registering is necessary on Tesco.com. The resulting information can be used target key consumer groups with new/existing products. This data is not available with in store without studies, therefore the online service is inexpensive market research.

Conclusion

Supermarket chains such as Tesco are ever desperate to outdo one another and improve efficiencies with the underlying aim of boosting profit figures.

Use of barcodes as mentioned, allows data to be used at the checkout to then be processed into information about the product being scanned. The product names and prices are taken from the barcode and applied to the invoice and subsequently added up and stored. Management, in performance analyses and reorder of goods then uses this information. A manager can print off inventory listings in order to show these automated reorder patterns. As well as allowing increased efficiencies, performance analysis and stock reorder, barcodes have been seen as a small way of security procedure by deterring employee till thieves.

Having established Tesco’s as one of the most profitable online grocers in the whole world and the only UK supermarket to offer a nationwide online service (covering 95% of the population) it is important to understand what has made this medium of sales so effective for Tesco. The fact that Tesco.com not only meets, but exceeds, the four perspectives of E-commerce is paramount to their success.

Tesco.com’s success has benefits to the company as a whole. On line shopping allows customers who would otherwise be unable to shop at Tesco to do so thus increasing Tescos consumer base and market share. This allows a two-pronged approach whereby as well as increasing volume of consumers, costs of supply are decreased.

With the advent of Bluetooth like technologies, the use of supermarket stores may become more and more redundant. Supply of groceries would be direct from the warehouse to the home. Such technology may result in the reduction of stores that Tescos own may diminish, but their need for information will increase.

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