Text: Vonderembse, M. A., & White, G. P. (2013). Operations management. San Diego, CA: Bridgepoint Education, Inc.
Alliance Supermarkets has been using a point-of-sale (POS) system for some time to track its inventory. The system uses a laser scanner to readthe universal product code (UPC) on each item at the checkout container. The UPC is a number that uniquely identifies the product on which itappears. Currently, Alliance is using the UPC information to update inventory records for each item. Although the system has greatly improvedthe company’s ability to replenish inventory promptly, the company still has some problems. For example, sudden changes in demand for aparticular item can catch the company by surprise as it bases inventory replenishment on historical demand patterns. Further, demand patternsand preferences may vary from one store to another depending on the customers served by each, but the inventory system groups all demandinformation together and treats each store equally. Finally, the manufacturers that make the products stocked by Alliance Supermarkets arealways pressuring Alliance to help them target appropriate customers for special promotions and sales.
The chief information officer (CIO) of Alliance realizes that much more could probably be done with the data collected from its POS system. Forexample, the company could analyze the relationship between each product’s sales and weather patterns. It is even possible to analyze anindividual customer’s buying habits and identify instances when a customer may be persuaded to try a different brand of a certain product.
Suppose you have been asked to study this situation and suggest possible new and innovative uses for the information generated by the POSsystem. Ideally, these ideas should help Alliance better serve its customers by ensuring that adequate quantities of each item are available, thatcosts are kept low, and that customers are made aware of new products that may interest them.
- What information may help Alliance reduce costs while providing better service?
- If purchase information can be obtained on individual customers, what new approach could be used by Alliance?