Background to the study
Currently, UK retail industry has become challenging. This results from an increment in the intensity of completion. An example of a firm that operates within this industry is Tesco. The firm deals with a wide range of consumer goods, financial services and groceries. Over the past years, the firm has managed to develop a highly competitive advantage. As a result, it has become the market leader within UK retail industry (Tesco, 2009, para.4). The firm has established 1700 stores within Asia and Europe. Considering the competitive nature of the retail industry, firms need to formulate effective operational strategies. One of how this can be achieved is by incorporating emerging information system technologies. Information System (IS) entails a combination of a set of Information Technologies and the individuals who utilize the particular technology in supporting the various operations of the firm (Williamson, Harrison, & Jordan, 2004, pp.376). In its operation, Tesco has integrated innovative utilization of technology in its expansion strategy. In conducting the study on how Tesco has integrated Information System, interview was used in obtaining information. Interview information was sourced from the firm’s information communication department manager. The discussion of this paper entails a report on Tesco’s Information System.
The report is aimed at gaining a comprehensive understanding of how Tesco has integrated Information systems in its operation. In addition, the report aims at evaluating the role played by commercial IS in its operation.
The report is organized into a number of sections. These include business situation which gives the current demand for the firm. The nature and type of information system within the firm are highlighted and discussed. Order Management System is identified as the key information system within the firm. An analysis of how the system produces the required information is illustrated. The hardware and software used in implementing OMS are identified. The report also gives the benefits associated with implementing OMS within the firm.
To succeed in the market, the firm was required to be effective in serving its customers. In order to attain this, the firm needed to increase its efficiency in processing its customer’s orders from its multiple channels. In addition, the firm had to limit its maintenance cost.
Nature and type of Information System
According to Stapleton and Murphy (2003, p.1), information systems have become an important part of business operation. This is due to the fact that it enhances the firm’s supply chain. In addition, Information System enables a firm to integrate the entire firm into a single unit. Due to the high rate of technological innovation, Information Systems (IS) are undergoing a rampant growth. As a result, various types of IS have emerged. Some of the keys IS systems that have been developed include Transaction Processing Systems (TPS), Decision Support System (DSS), Expert Information System (EIS), Management Information System (MIS) and Office Automation Systems (OAS).
In an effort to enhance its competitiveness, Tesco has incorporated Transaction Processing System (TPS) within its supply chain (Friedlos, 2007, para. 3). This has been achieved through development of a new product referred to as Tesco Direct (Tesco, 2009, para.4). The service enables the customers to order diverse non-food products that the firm deals with and have the products delivered to them in their homes. Effectiveness in operation of this service is enhanced by the internet technology through the firm’s website( Amatya, 2005, p. 5).Through Tesco Direct products, consumers have been able to attain convenience in their consumption process. In implementing the service, the firm was faced with a challenge of ensuring that Tesco Direct meets the expectations of the customers. This arises from the fact that the firm had managed to attain reliability and quality in supplying its products to the customers through its Tesco.com service. In addition, it was the firm’s objective to ensure that the new product enhances the firms’ retail operations.
Order Management System
To address these challenges, the firm developed an order processing system. The system was meant to increase the efficiency with which the firm processes customers’ orders. Demand for an efficient order processing system arose from an increment in the firm’s customer base. The firm was time conscious in developing the information system. As a result, the system was developed within 6 months. The order processing system was developed in-house by a team of 10 engineers. However, the firm outsourced consultants from Microsoft Gold Certified and IVIS groups. The result was creation of an Order Management System (OMS) (Tesco, 2009, para.8).
How the system produces the required information
The system was designed to ensure online processing of tasks through the Web Interface. All the orders are put into a row so that they can be processed by the OMS. The effect is an increment in flexibility with which the firm can remove the system for maintenance and replacing it online. For the system to be operational, it has to receive orders from several channels both online and offline. OMS is utilized by different warehouses within Tesco. As a result, the system gives the firm’s employees capacity to manage and monitor workflow processes.
Hardware and software in use
In implementing Tesco Direct through development of OMS, the firm used BizTalk Server 2006 software. This software enables a firm to combine a number of systems culminating in an effective business process (Chappel, 2005, p.3). The software enhances communication between parties where wide ranges of software are involved. This results from the interoperability capabilities of the software. For example, through this software, the firm can communicate using its previous Tesco.com which utilized Microsoft SQL Server version 2005. In addition, the software supports different data formats. This improves the effectiveness with which the firm conducts order processing.
The firm’s OMS system also utilizes the Health and Activity Tracking system. This system improves monitoring and debugging of the applications and processes that are being orchestrated. The system keeps performance statistics on all the system’s elements. In addition, HAT identifies and resolves inefficiencies that may arise in the procurement process. As a result, reliability of the system is improved. In addition, the OMS is also made possible by the BizTalk Server. The server enhances Tesco’s communication with the different warehouse applications that are used by the organization’s suppliers (internal and external). The OMS is incorporated within Tesco’s Direct service. To ensure operation of the implemented OMS, 4 computer servers that utilize Windows Server 2003 as the operating system are used. On the other hand, SQL Server version 2005 manages the databases.
Through the ordering system, Tesco’s retail operations have been greatly improved. Below are some of the benefits that the firm has attained through the OMS.
Improvement in order processing capacity
Through the OMS, the capacity with which Tesco performs its order processing has been increased. Currently, reliability of conducting order processing has been increased to 5,000 orders per hour. This has been enhanced by integration of BizTalk Server 2006 which is more effective compared to Tesco.com which was mainframe-based.
Reduced hardware cost
OMS has greatly reduced hardware costs involved in the firm’s supply chain. This arises from the fact that the OMS can conduct order processing by utilizing a small proportion of the server (approximately 20-25 percent). As a result, Tesco is currently able to serve a large number of customers more reliably. In the event of the firm increasing its customer base, there will be no additional cost with regard to hardware (that is server). In addition, there is a high probability of the firm enhancing its order processing. This arises from the fact that Window Server 2003 enhances distributed processing.
Maintenance of supplier relationship
Flexibility with which firms can replace their suppliers within the supply chain is paramount. This is because the firm’s operations are not affected. The BizTalk Server used in supporting the OMS accommodates diverse business processes that have been implemented by its business partners. The resultant effect is an improvement in the effectiveness and efficiency with which the firm communicates with its business partners.
The reliability with which the firm conducts order processing is improved by integration of BizTalk Server within its Information System. Considering the interoperability characteristic of the server and its loose coupling with the internet, it is possible to remove the OMS for maintenance without affecting the customer’s purchasing process.
Despite the benefits associated with OMS, a significant cost is required to ensure effectiveness in its operation. These costs relate to purchasing and implementation of the system. For instance, the firm is required to conduct comprehensive research on the system before its implementation. As a result, the firm will be required to consult and outsource professionals. In addition, the firm is required to conduct maintenance of the system from time to time.
The incorporation of Information systems can contribute towards a firm attaining a high competitive advantage. This arises from the fact that its activities related to supply chain management are improved. The current incorporation of OMS by Tesco has enhanced its market position. In addition, the firm has improved its relationship with its customers and suppliers.
To attain efficiency in utilizing the OMS, Tesco should consider the following.
- Conduct continuous market research to determine the effectiveness with which the firm’s OMS is efficient in its operation.
- Evaluate whether the OMS is resulting in a reduction in the cost of operation.
Amatya, L.2005. Information systems of Nepal telecom for customer service. Nepal: Elsevier Limited.
Chappell, D. 2005. Understanding BizTalk Server 2006. New York: Microsoft Incorporation.
Friedlos, D.2007. Tesco upgrades supply chain systems. Web.
Stapleton, L. & Murphy, C.2003.Revisiting the nature of information systems: the urgent need for a crisis in IS theoretical discourse. Transaction of international information systems. Vol. 1, issue 4, pp. 1-14.Ireland: Waterford Institute of Technology. Web.
Tesco. 2009. Tesco develops online ordering system that processes 5000 orders per hour. Microsoft BizTalk Server. London: Tesco Incorporation.
Williamson, E., Harrison, D. & Jordan, M.2004. Information system development within supply chain management. International journal of information management. Vol. 24, Issue 5, pp. 375-385. New York: Elsevier Limited