Running head: EFFECTIVENESS OF TECHNOLOGY
Effectiveness of Technology
BIS 318
1
EFFECTIVENESS OF TECHNOLOGY
2
Effectiveness of Technology
Modern consumers have many locations from which to purchase the items they want and
need. Managers of retail organizations scramble to find new and imaginative ways of attracting
consumers to their businesses and increasing revenue while reducing costs. The recent
advancements in technology have helped retail management better control inventory as well as
aid in supply chain management, loss prevention, and customer satisfaction (Green, 2002). This
paper examines the role of technology in retail, and how technology has improved or may
improve retail management effectiveness, and how technology may have changed the role of
retail managers.
Before there were computer databases or data warehouses for most retail managers,
business intelligence meant making gut decisions, copying the actions of their closest
competitors, making no decision at all, or possibly using outdated data. The current business
climate, however, means technology such as data warehouses allows managers to make decisions
based on current and relevant, organized information. Technology reduces the chances of making
poor decisions (Berman & Evans, 2007). When information is gathered, stored and analyzed on a
regular and continuous basis, it allows for fewer risks in the management decision-making
process. As an example, after implementing a real-time analysis tool, management at Staples
now identifies consumer trends and makes better merchandising decisions (Berman & Evans,
2007).
In the days before point of sale (POS) systems, retail managers and their accountants
relied heavily on manual calculator-style machines to tally the receipts of the day, to figure out
the taxes, and for inputting inventory levels. Today, POS systems automate receipts, track
EFFECTIVENESS OF TECHNOLOGY
3
inventory levels and automatically process orders for inventory replenishment. Performance
indicators such as voids, multiple credit transactions and price overrides are stored and can be
retrieved from the POS to improve on loss prevention efforts. Traditionally, many retailers incur
losses during the warehousing process (Davis, 2006). Inventory management software allow
managers to track inventory turns, stock to sales ratios and the movement of a product from the
moment the retailer takes possession of the product. Being more informed allows managers to
more quickly respond to changes in demand which in turn lowers costs related to inventory
levels.
Improving retail management is just one facet of the importance of technology.
Technology has also helped retail businesses develop better marketing strategies, and aiding in
providing better consumer experiences. Office supply giant, Staples, uses multi-variable testing
(MVT) to test and measure changes in operations, procedures and services simultaneously. This
style of tracking pinpoints which styles and promotions provide the best returns to benefit the
company as well as their customers. Such stringent marketing research assures each customer
receives a more personalized shopping experience in the store and when shopping online. Other
software such as electronic data interchange (EDI) provides organizations with a platform for
information to flow regularly between retailers and suppliers which improve communication and
planning between management and vendors. For instance, retailers may receive more timely and
accurate information from multiple suppliers of a new product, or there may be a release of
updated training material, or important price changes and their effective date(s). This free flow of
information and effective communication allows all parties involved to react faster to everchanging demand (Berman & Evans, 2007).
EFFECTIVENESS OF TECHNOLOGY
4
The ever-expanding retail industry and its many managers have experienced many
benefits of the technology designed to improve the many aspects of that industry. Deploying new
technology has its benefits but it also has its risks and drawbacks. Implementing new technology
presents learning curves for managers, for staff, and for team members, and introduces new areas
of risk (Davis, 2007). There are those who are resistant to change which may cause retailers to
lose time and money by delaying the full implementation of the new technology. Delays may
also occur because some managers may not fully understand the reporting and/or access
capabilities the new system has. An example might be a loss report that was either not accessed
or improperly interpreted during the learning curve resulting in a loss to the organization.
Another example might be access to sensitive information may inadvertently be given to
someone who should not have access privileges. Both of these examples could leave the
organization open to incur some kid of loss or fraud activity that may not have happened before
the change.
The retail business or upper-level management is ultimately responsible for maintaining
margins, reducing costs, and improving the overall customer experience, modern technology can
help managers make more informed and better decisions. Retail managers today, and into the
future, will make decisions that are rife with risks. It’s just the nature of the business. The
successful manager will make those risky decisions but support his or her decisions with
accurate, real-time data which were provided by modern technology for the retail industry.
EFFECTIVENESS OF TECHNOLOGY
5
References
Berman, B., Evans, J. R. (2007). Retail management: A strategic approach (10th ed.). Upper
Saddle River. NJ: Prentice Hall.
Davis, J. (2006). RETAIL Risk and High Technology. Risk Management (00355593), 53(6), 1619. Retrieved from International Security & Counter Terrorism Reference Center
database.
Green, J., (2002). Technology advances in retail. Retrieved April 18, 2011, from
www.arubanetworks.com