Information and Communications Technology and Supermarket Chains - Part 2

The assertions I made in my previous post on the role of ICT in the supermarket supply chain management include: stock management, supply chain management and distributed systems management across Australia.  Communications within the retailer’s franchise and with customers and suppliers, from Point of Sale to Automation, Warehousing and to higher levels of organisational management and reporting.

One article I have referenced is “Analysing trust as a means of improving the effectiveness of the virtual supply chain”¹ which treats the organisation of the supply chain from the supplier through to the retailer as a Virtual Organisation. “. Traditional relationships between retailer, manufacturer, distributor and farmer have begun to change, with moves towards partnerships and alliances that have a greater emphasis on supply chain management”² (Thompson, 2001).

One of the primary problems that faces the Virtual Organisation is the lack of daily face-to-face contact instead relying on electronic means such as “mobile phones, e-mail, the internet, fax machines and other electronic devices, acts as a communication and coordination mechanism among partners”¹  (Paterson and Maguire et al., 2008, pp. 325-348).

“The Australian horticulture industry supply chain is moving towards more electronic identification of pallets, cartons, trays, and individual pieces of fruit and vegetables. Woolworths’ supermarkets required all their supply chain partners in the fruit and vegetable sector in 2005 to place GS1 barcodes on all pallets”¹

The GS1 barcoding allows communication of shipping weights, product information and scanning to process from Supplier to Customer throughout the retail chain – it’s in international standard for communicating what goods are being shipped in specific quantities.

Regarding the distribution of management of an organisation of this magnitude, (Matopoulos and Vlachopoulou et al., 2007, pp. 177-186) mention:

“Concerning industry's macro-factors, globalization extends the business scope and activities of a company, to other regions. At the same time, the government of activities that are now dispersed in a greater geographical range becomes more difficult, increasing the need for collaboration … Collaboration in the form of increased information exchanges is needed in order to achieve transparency across the supply chain.”³

Warehousing, especially with regards to distribution centres have are migrating to automated pickers and other systems to improve efficiencies and reliability of information and supply chain management. “An effective traceability system brings many benefits, such as increasing the security and confidence of customers, and limiting withdrawal of commodities”⁴  (Ino and Montrucchio et al., 2009, pp. 2357-2365).

“An effective traceability system is fundamental for avoiding a large waste of resources. Automation is regarded as the key to realize an effective internal traceability system.”⁴

As shown by the references, the warehousing, supply chain management and organisational management in Supermarket retail is highly driven by ICT currently, and looking forward to the future.

References:

1.      Paterson, I., Maguire, H. and Al-Hakim, L. (2008) Analysing trust as a means of improving the effectiveness of the virtual supply chain. International Journal of Networking and Virtual Organisations, 5 (3), pp. 325-348.

2.      Thompson, G. (2001) Supply Chain Management: Building Partnerships and Alliances in International Food and Agribusiness, Rural Industries Research and Development Corporation, Canberra.

3.      Matopoulos, A., Vlachopoulou, M., Manthou, V. and Manos, B. (2007) A conceptual framework for supply chain collaboration: empirical evidence from the agri-food industry. Supply Chain Management: an international journal, 12 (3), pp. 177-186.

4.      G, Ino, F., Montrucchio, B., Rebaudengo, M. and Sanchez, E. R. (2009) On improving automation by integrating RFID in the traceability management of the agri-food sector. Industrial Electronics, IEEE Transactions on, 56 (7), pp. 2357-2365.

Information and Communications Technology and Supermarket Chains

The role of Information and Communications Technology (ICT) in modern supermarket chains is fundamental to management and performance of the business.  An example of such a chain would be Woolworths, Coles or the IGA chains.

Each supermarket chain is highly distributed across Australia, with multiple stores servicing medium to large townships, to many in cities.  Each neighbourhood has a varying degree of affluence, culture and social diversity that means that although there is many similarities, each locale can have different requirements.  Each store, stock level and need is independently managed, but then integrated into the supply chain management of the buying group as a whole.

From there, reorders, purchasing decisions, and other communications need to be committed in an effective, and timely manner.  Stocking systems, and information technology, with Point of Sale (POS) and other devices automate the purchase history for the location and govern reporting on the store level for ordering levels and stock management.

Simple communications like email, phone, and fax are also basics for management of distributed locations and for the buyers to talk to suppliers to the chains.

That is the tip of the iceberg, however, of what is seen of a chain – there is also a huge supply chain system underneath that uses systems like GS1’s barcode management to manage cartons, pallet and stock movement through high-frequency scanning Distribution Centres, for supply to the chain.  Automated picking of supply lines to fulfil a truck’s manifest for delivery to an area, pallet rack management of warehousing and high turnover, low expiry date goods management.

Then there is the requirement of reporting the financials and management of many hundreds of sites across a country – through multiple regions, areas, states, departments and companies.  There needs to be a cohesive, efficient base of a system of reporting, a system that allows reporting on a simple store level and then can wrap up reporting to each level up the management chain, and be correct, decisive, and communicated properly.

Information and communications are the backbone of business, and only a cohesive and effective system would continue to allow prosperous management for such an organisation.

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