Operations Management Alliance Supermarket Case Study Point

Operations Management

Alliance Supermarket Case Study

Point of sale (PoS) systems that is able to accurately track sales using universal product codes (UPC) has the potential to improve service and reduce costs. If the system was further adjusted, there would also be the potential to collect information on individual customers which would allow Alliance Supermarket to adopt some new, and potentially valuable, strategies.

Reducing Costs and Improving Service

The PoS system allows Alliance Supermarket to gather detailed information on sales patterns, looking not only at what level of goods are sold, but also when. This can be very useful for inventory control, as it may help the firm to gain information which may be used to better manage inventory, especially in terms of forecasting for future inventory needs.

Accurate forecasting may help to reduce the wastage in the supermarket, especially for perishable items, such as fresh fruit and vegetables, dairy goods, fish and meat. If a firm knows which days of the week they sell the most, and which days they sell the least, as well as using longer term data, they may manage the inventory more effectively to reduce waste. For example, the firm may sell more milk on a Monday than a Tuesday, so when ordering the milk they will make sure there is a lower inventory on the Tuesday, this may reduce the level of wastage. This can be repeated throughout the store. Data gathered from the system may also be used to assess the influences of other variables such as seasons and the weather, such as the degree to which candy sales increase before Valentines Day and Halloween, or the degree to which soup sales increase in cold weather and ice-cream sales increase in hot weather. Other influences that may be assessed can include assessment such as the influences of price changes (and the calculation of elasticity), the influence promotions, positioning of the item on the shelves, and even events such as school holidays (Karimi-Nasaba and Konstantaras, 2013; Kotler and Keller, 2011).

These latter examples also demonstrate the way that using the forecasting based on previous sales levels, as well as other influencing information, there is not only the ability to ensure there is less waste, but also the ability to manage the inventory more efficiently so there is always sufficient stock to meet the customers' demands, and that the stock is as fresh as possible. These latter aspects will also improve the customer levels of satisfaction, as they perceive the supermarket as providing a better service.

The PoS systems may also help to identify goods which are often bought together, and the firm may use this to improve service. For example, it may be fund that during the weeks up to Thanksgiving, those buying frozen turkeys may also buy jars of cranberry sauce and stuffing. To increase convenience and sales, these may be placed in a visible location close by.