ICT and e-Business Impact in the Retail Industry - empirica

e-Business in the Retail Sectorand to consumer. SCM systems help to coordinate and integrate these flows both withinand among companies. One of the key objectives of any effective SCM system is toreduce inventory (with the assumption that products are available when needed).In the retail sector, enterprises representing close to 20% of employment say that theyhave such an SCM system (see Exhibit 3.3-5). The use of SCM systems is clearly adomain of the large retailers: while only about 10%-20% of small and medium-sizedretailers said they had adopted a SCM system, about 35% of large firms did so. Thepotential of these advanced and quite costly systems is obviously much higher for largeretail companies and chains with their complex supply chains. In fact, a comparison withresults for the same question in 2003 shows that SCM systems have seen a dynamicdiffusion among large retailers (from 7% to 35%), but also among medium-sized oneswhere adoption has doubled from 9% to 18%.Exhibit 3.3-5: Percentage of companies using SCM software (2003 / 2007)Adoption in 2007(by segment and size-band)Diffusion dynamics 2003 – 20070 10 20 30 40 50Retail (EU-7) 19Non-food storesFood storesOther retailing201716Micro (1-9) 5Small (10-49) 9Medium (50-249) 18Large (250+)355040302010019186 6 5 5 9 9 7Retail(total)2003 2007Micro(1-9)Small(10-49)Medium(50-249)35Large(250)USA35Base (100%) = retailers using computers from 7 EU countries (2007) / 5 EU countries (2003).N (2007) = 1151, N (2003) = 504. In % of firms.Source: e-Business Surveys 2003 / 2007 by the SeBWThe management of retail supply chains requires understanding and balancing of threemain dimensions: availability, inventory and cost (Accenture 2004). SCM can be regardedas a tool to manage the trade-offs between these dimensions in the most efficient andeffective way. Any retail format can act as an example to illustrate this: ideally, all goodsshould be available to customers at all times (no empty shelves) while at the same timethe volume of goods on stock should be as small as possible (to reduce warehousecosts). However, the two goals need to be balanced: the smaller the inventory, the morelikely the occurrence of out-of-stock; similarly reduced costs versus forgone revenues anddissatisfied customers need to be taken into consideration. SCM systems promise retailcompanies to achieve the optimal balance. They typically have modules which supportfunctions including 37 :Strategic network design (support for selecting locations for order and distributionmanagement)37See websites of providers of SCM solutions for retailers, for instance Infor SCM for Retail(http://www.infor.de/loesungen/scm/branchen/retail/)45