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 read the universal product code (UPC) on each item at the checkout container. The UPC is a number that uniquely identifies the product on which it appears. Currently, Alliance is using the UPC information to update inventory records for each item. Although the system has greatly improved the company’s ability to replenish inventory promptly, the company still has some problems. For example, sudden changes in demand for a particular item can catch the company by surprise as it bases inventory replenishment on historical demand patterns. Further, demand patterns and preferences may vary from one store to another depending on the customers served by each, but the inventory system groups all demand information together and treats each store equally. Finally, the manufacturers that make the products stocked by Alliance Supermarkets are always 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. For example, the company could analyze the relationship between each product’s sales and weather patterns. It is even
possible to analyze an individual 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 POS system. Ideally, these ideas should help Alliance better serve its customers by ensuring that adequate quantities of each item are available, that costs 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?