Information Communication Technology in Retail Logistics

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Table of Contents

Introduction
ICT’s role in Retail Logistics
Types of ICT in retail logistics
Expected technological innovations in the next 5 years
Conclusion
Reference List

Introduction

The term ICT, or Information communication technology, refers to communication devices and communication applications. These encompass mobile phones, satellite systems, radio, computers and network hardware, television, etc. ICT is currently among the most important drivers of retail logistics.

It has also become an indispensable part of contemporary homes and retail businesses (Kuppusamy and Santhapparaj, 2005). Many economists and other professionals have likened the contemporary use of ICT in development to the use of machine power and steam power during the industrial revolution (Hoek, 2001).

ICT is expected to have a profound impact on the retail logistics business. It is evident that optimum overall organizational performance is positively dependent on, and correlated with the use of ICT (Pokharel, 2005).

A number of researchers have indicated the importance of adopting technology in retail enterprises because ICT helps these enterprises to acquire and maintain a competitive edge. Retail businesses therefore depend on the use of ICT in order to survive in the contemporary age that has knowledge-based economies.

ICT’s role in Retail Logistics

The fact that ICT has a vital role in logistics is indisputable. Researchers have conducted a number of studies in a bid to establish the importance of ICT in organizations that carry out logistics operations.

The use of ICT by firms that are involved in logistics operations is necessitated by the need of these firms to integrate a number of logistical activities, the need to manage information effectively, as well as the need to come up with a holistic logistical plan.

The latter includes details like warehousing, transportation, and fleet management, and it is geared towards streamlining the product flow of clients’ products (Lai et al., 2005). Currently, there has been an occurrence of innovations in ICT, which have changed the economy, and which have affected the day-to-day activities of retail businesses.

Another important aspect of ICT is that it makes organizations to strive to find innovative ways of expanding their markets, innovative ways of getting a larger customer base through service and product customization, and opportunities for business restructuring, which gives the business a competitive edge (Gratzner and Winiwarter, 2003).

The application of ICT is vital in business organizations because it helps them to achieve their objectives. This is due to the information intensity, which is potentially high in the value chain of the firm (Hinton and Tao, 2006).

Since the activities carried out by the ICT department in an organization essentially include information processing, information creation and information communication, the use of ICT influences the value chain pervasively.

At present, the ICT employed for gaining a competitive edge by firms can be grouped into three categories. These include data acquisition technologies, identification technologies and data communication technologies.

Identification technologies used by firms are Barcoding, Radio, and Frequency Identification (RFID). The aforementioned technologies are vital in the collection and exchange of logistics information.

In order to communicate data, firms may need to use the internet, fax machines, the VAN (Value added Network), Electronic Data Interchange (EDI) (Power and Sohal, 2002). In addition to these, firms may also use POS – point of sales (Ellram et al.1999), the EOS – Electronic Ordering System (Closs and Xu, 2000).

Firms may also use enterprise information portals, logistics information systems, and computer telephone integration (Lin, 2006). The component of data acquisition is necessitated by the fact that firms deal with large volumes of goods, transactions, and data.

The fact that organizations deal with large volumes of data necessitates data collection and exchange during the control and management of logistics information. If a firm can acquire data of high quality for exchange, then the firm will be able to serve customers with their goods in a more efficient and accurate manner.

In order to meet this objective, it is vital that firms use reliable data acquisition technologies. These include optical scanners, voice recognition, logistics, electronic pen notepads, and robotics (Lin, 2006).

Types of ICT in retail logistics

Retail businesses use a number of technologies in their operations. These technologies help the retail businesses to reduce the volume of paperwork, and be more organized. The following are some of the most common technologies in retailing businesses.

Integrated POS System

The main ICT that is used in retail businesses is Point-of-Sale (POS). The POS refers to a computer system that contains all the information required to complete a transaction. Customers normally pay for goods at the POS where the transaction is posted.

Thus, the POS must have a number of modules in order to function as desired. These include a module with goods’ codes, an electronic payments system, and a receipt producing method like a printer (usually a dot matrix printer). In addition to this, the POS is mostly linked to a system for controlling stocks that tells the business management when to take stock-related actions (Copley, 1994).

Additionally, a number of retailers use the RFID technology that is critical in reducing theft, cost, and inventory. Some of the costs that the RFID technology reduces include POS labor costs, warehouse costs and distribution costs.

A Bar Code Scanner scans one item at a time, but the RFID can account many items in a second. Some of the advantages of using a POS system include less waiting time for customers and less error in price application and sales data-time.

Inventory Management System/Software

Management systems are a vital part of retail businesses because they help in cutting carrying costs. This software is quite instrumental in operations because it tracks the transportation of products from a supplier to the warehouse of the business, it tracks the movement of products within the business and also tracks the delivery of products to a retail location.

In case the business decides to deliver the products directly to the customer, the management system also tracks this delivery. Therefore, the use of a management system gives a business the following advantages under

A business can easily balance stock levels to avoid instances of deficits or surplus
A business is able to track the transportation of products between locations.
A business is able to receive goods expeditiously in a specified location like a warehouse.
A management system makes activities like picking, packing, and shipping of products from a store easy.
A business is able to know the levels of inventory and the amounts and details of goods sold.
The management system helps the business to reduce obsolescence and spoilage of items in the store.

Warehousing Management System

Businesses use ICT-based systems in their stores with the aim of providing a collection of computer-based procedures that dictate how goods are received into a warehouse.

The use of such a system is also aimed at managing how goods are physically stored within the warehouse, how products are managed in the store with regard to receipts and issues, and enabling smooth processing of customer orders in terms of the logistics of issues and delivery.

Cloud Computing in retail

Retail Express has employed the use of cloud computing in its stores. This implies that its stores are operated by a centrally placed database that contains the information about every individual store. This system is internet-based, and thus it requires uninterruptible internet connection.

This arrangement has a number of advantages, including the fact that running costs are reduced, there is no need to purchase software, and its data is of high integrity. Additionally, delays are reduced and the system is redundant and thus it is more secure (Retail Express, 2012).

Expected technological innovations in the next 5 years

The advent of globalization has had a profound impact on the use of ICT in businesses. The advancement of ICT use in businesses is perhaps the most important factor in determining how the retail industry will be in the future.

The industry has therefore realized profits and growth thanks to ICT. Forms of technology that have helped to realize this growth include mobile telephony, tablets, automation machines, virtual services, POS, credit cards, and use of radio frequency identification.

An upcoming innovation in the retail sector is the use of Mobile Point-of-sale (POS) system. Retailers will replace their checkouts, which are normally centralized, with portable computers that will be used by their clerks in completing transactions. Apple stores, have particularly eliminated the use of conventional POS, which is normally fixed at the POS terminal.

The stores have employed the use of handheld devices to carry out their functions, which include stock checks, answering the questions of customers, and finalizing sales. Despite widespread concerns that wireless technology is not adequately secure, merchants and consumers will benefit from the availability and use of mobile POS.

Companies in the retail industry that use this technology are likely to reduce their labor-related costs by making their personnel more productive. In addition to this, the technology reduces instances of errors because of the elimination of written orders. The use of the technology will also ensure that services are offered more promptly, and that receipts are more detailed (Kelly, 2010).

Another prominent innovation is the use of NFC (Near-field communication) technology in smart phones. By synchronizing the cellular device equipped with NFC technology and POS, payments can be made instantly.

The result of this is that POS queues will be reduced, and customers will have an easier time because they will be able to find customer care personnel with much ease. This will definitely help retailers in serving customers more efficiently, and thus customer retention will increase. The two, better customer service and customer retention will result in more profits (Green, 2011).

Conclusion

Customers value convenience and the state of being informed about their favorite products. Technology enables this and more. Major retailers have accepted and embraced ICT, and thus they are seeking new and exciting technology to have competitive advantage. The use of technology in retail businesses can potentially revolutionize the industry.

This is because the use of technology improves customer experience, improves the operations of the retailer, and gives the management the required information to make decisions geared towards improving the business. The retailer therefore gets invaluable benefits from the use of technology in his/her retail business.

Reference List

Closs, D. and Xu, K. (2000). Logistics Information Technology Practice in Manufacturing and Merchandising Firms – An International Benchmarking Study Versus World Class Logistics Firms, International Journal of Physical Distribution & Logistics Management, 30 (10), 869-886.

Copley, S 1994, Retail (Selling) Systems, IGCSE. Web.

Dawe, Richard L. (1994). An investigation of the pace and determination of information technology use in the manufacturing materials logistics system, Journal of Business Logistics, 15 (1), 229-250.

Ellram, L; La Londe, B., and Weber, M. (1999). Retail logistics, International Journal of Physical Distribution & Logistics Management. Bradford, 29, 7/8; 477-490.

Gratzer, M and Winiwarter, W. (2003). Proceedings of the 10th International Conference on Information Technology and Travel & Tourism, Berlin, Springer – Verlag.

Green, T 2011, UK operators to launch NFC payments service, Mobile Entertainment (ME). Web.

Hinton, C. M. and Tao, Y. (2006). Exploring sources of Competitive Advantage: E-business applications within the Chinese real estate industry. Journal of Technology Management in China, 1 (1), pp. 92-106.

Hoek, van R. (2001) E-supply chains-virtually non-existing, Supply Chain Management: An International Journal, Vol. 6, no. 1, pp. 21-28.

Kelly, J 2010, How are point-of-sale systems going mobile? Web.

Kuppusamy, M & Santhapparaj, S 2005, Investment in Information and Communication technologies and its Payoff in Malaysia: Perspectives on Global Development and Technology, Vol 4, no2, pp. 147-168.

Lai, Kee-Hung; Ngai, E and Cheng, T. (2005). Information Technology Adoption in Hong Kong’s Logistics Industry, Transportation Journal, 44 (4), 1-10.

Lin, Chieh-Yu. (2006). Influencing Factors on the Innovation in Logistics Technologies for Logistics Service Providers in Taiwan, Journal of American Academy of Business, 9 (2), 257-264.

Nedelko, Z 2009, The role of information and communication technology in supply chain. Web.

Pokharel, S. (2005) Perception on information and communication technology perspectives in logistics – a study of transportation and warehouses sectors in Singapore, The Journal of Enterprise Information Management, Vol. 18, no. 2, pp. 136-149.

Power, D. and Sohal, A. (2002). Implementation and usage of electronic commerce in managing the supply chain, Benchmarking, 9 (2), 190-209.

Retail Express, 2012, New Generation Model. Web.

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