Management Information System (Assignment)

Tesco's Information System (IS)

Information system

         Information system can be defined as it is an organized combination of people, hardware, software, communications networks, and data resources that stores and retrieves, transforms, and disseminates information in an organization. Information system had been used by many of organization from small organization until Multinational Corporation.
There are many type of information system.

In this assignment, writer will discuss organization that used Point of Sale (POS) system. This system is under Transaction Processing System. One of organization or organization that used this system is Tesco.

Tesco's History

         Tesco is a global grocery and general merchandise retailer headquartered in CheshuntUnited Kingdom. It is the third-largest retailer in the world measured by revenues (after Wal-Mart and Carrefour) and the second-largest measured by profits (after Wal-Mart). It has stores in 14 countries across Asia, Europe and North America and is the grocery market leader in the UK (where it has a market share of around 30%), Malaysia, the Republic of Ireland and Thailand.
        The organization was founded in 1919 by Sir Jack Cohen as a group of market stalls. The Tesco name first appeared in 1924, after Cohen purchased a shipment of tea from T. E. Stockwell and combined those initials with the first two letters of his surname, and the first Tesco store opened in 1929 inBurnt OakMiddlesex. The business expanded rapidly, and by 1939 there were over 100 Tesco stores across the country. Originally a UK-focused grocery retailer, since the early 1990s Tesco has increasingly diversified geographically and into areas such as the retailing of books, clothing, electronics, furniture, petrol and software; financial servicestelecoms and internet services; DVD rental; and music downloads.

Tesco's POS

         Writer will explain adn discuss about Tesco's Information System (IS) that is installed in all of their  stores around the globe.

What does Tesco do?

         Tesco's is one of the world's largest supermarket retailers in the world. The organization buy from specially chosen suppliers, choosing only the best products to sell for the lowest prices. Although it were originally set up as a grocery supermarket, over the years Tesco have been able to expand into a non specialized retailer of all ranges of products including electronics, medication and food and drink.

        One of many reasons that make Tesco so successful in the financial world is its wide range of services to all Tesco customers. As well as buying products from suppliers, Tesco also manufactures its own brand of products, to give the customer an alternative brand you know you can trust. We guarantee all of our products are of good quality and due to reduced transport costs; they can deliver these items for cheaper than other brands.

        Tesco's other services include its own branch of pharmacies, which sells medication to those in need. Tesco Bank offers customers financial loans as well as house, life, car and travel insurance. Many Tesco stores have a petrol station nearby for customer's convenience. We also deal with telecommunication offering mobile and house phone services, as well as broadband internet.

Input, Process and Output POS system.

INPUT - The product(s) are scanned using the barcode scanner. Each products barcode is identified by the barcode scanner software. The scanner reads the barcode and transfers this into electrical pulses. The software then reads these signals and converts them into readable text. The readable text is then used to find and display the product on the customer and operator displays. This process only takes a few milliseconds to complete.

PROCESS - As the product(s) are being scanned, the computer totals up the price of the products. Once all of the product(s) have been scanned, the computer then carries out the necessary calculations, deductions, special offer deductions, etc. to the total. The computer refers to the branch server to check for the special offers which may be in effect and any products which have been lowered in price.
       Once the total has been calculated, the customer has 3 different options. These are: provide Clubcard details, pay by cash or pay be card. If the customer has a Clubcard, then this is usually what is provided at this stage. The Clubcard is linked to the transaction by swiping the magnetic stripe on the back of the Clubcard through the card reader.The card reader will pick up the magnetic signals and register the customer to the transaction. The computer will generate the amount of points that should be added to the Clubcard for the transaction.

The customer now has two different methods of payment. These are: pay by cash or pay by card.

- If a cash payment is made to a cashier checkout then the customer would hand the money to the cashier. The cashier then will input the amount handed to the computer. The computer will then carry out the calculations of the amount of change due back to the customer. Once this is done the cash drawer will open so the cashier can place the money handed to them into the drawer and give the change necessary.
- If the customer is using a self-service checkout then the customer will have to feed the money into the terminal. The computer will read how much money has been given and calculate the amount of change that is due back to the customer. If change is due back then, the coins will drop into a bowl and note output notes from the notes dispenser.

- If the customer is paying by credit/debit card then there will be a EFTPOS Pin terminal placed in a convenient location for the customer. The customer will be requested to insert their card into the terminal. Once they have done that, the card details will be checked. This is done by the terminal connecting to the required bank and checking the details. When that is complete, the terminal will request the customer to input their PIN number. Once they have done that, the terminal will once again connect to the bank to check the PIN number against the card. If it is correct then the transaction will be made. If not then the PIN code will be rejected and the customer will be asked to enter it again.

OUTPUT - Once the transaction is complete a receipt will be printed, usually using a thermal printer. The customer then takes this with them to keep as a record.
At the end of every night, the terminals will transfer the transaction records to the branch server. This will then connect to the HQ server using a VPN to transfer all of the records. The HQ staff will use this data to determine what changes are necessary in the branches. If the branch is a 24 hour store, then the server will have a set time to which it will upload the data to the HQ server or every record will be uploaded in real time. This depends on the type of store.

Information Produce

What information does the IS distribute?
       The EPOS system processes the input data that is derived from human inputs and data already stored in the relational database into usable information. The information is used internally and for customers. The information that is distributed by the system is:
  • Transaction Details
  • Product Description
  • Pricing Details
  • Stock Holding Details
  • Clubcard Details
  • Payment Details
        All of the information that is produced can be made into reports for the organisation and the customer. He most common customer report is the receipt. Dependant on the level of security, members of staff can interrogate the system for specific information to assist them in their strategic roles.

Who uses the information that is produced?
         The people that use the information are everybody that has any relation to us. We use the information for records, market research, financially and more and customers use the information by keeping records of how much they spent, what they spent it on and more. So everybody who has any contact with us or the system will use the information in one way or another.

The technologies used within Tesco point of sale (POS) systems
  • POS terminals - Cashier Operated
    • Computer
    • Customer and Operator displays
    • Barcode scanner
    • Printer
    • Cash drawer
    • Scales
    • Card readers
    • Electronic Funds Transfer POS (EFTPOS) Pin Pads
  • POS Terminals - Self-Service
    • Computer
    • Touch screen displays
    • Barcode scanner
    • Printer
    • Scales
    • Card readers
    • EFTPOS Pin Pads
  • Servers
    • In branch
    • Head Quarters (HQ)
  • Networks
  • Internet connections
  • Phone lines
  • Virtual Private Networks (VPNs)

The importance Point Of Sale (POS) System

       Tesco's POS information system was implemented to help the organisation gather, use, store, protect and keep track of its sales and financial records. As with any system, it would be impossible without a Human Activity System (HAS). A Human Activity System is a group of people that the information system supports. The Human Activity System performs an action that uses the information system.
       The HAS of the Tesco POS system are the staff of Tesco Stores. All the members of staff on the till will be using the information system. Any product in the store is incorporated into the information system. This means that whenever a product is scanned, all the relevant information is returned immediately for the staff member to use. In this way the Information System helps speed up floor retailing by being able to return product information at speed. The HAS also aids in statistic gathering, strategic management and report production. All records of sales are kept in the system. Managerial members of staff can look at the data that the information system gathers with each sale and can determine if a product is successful in producing income for the organisation. The information can also be used to produce regular reports on the financial stability of the store.

TESCO’s Management Information System and Technologies.
            Technology is a major macro-environmental variable which has influenced the development of many of the Tesco products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available, services can become more personalised and shopping more convenient.The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains (Datamonitor Report, 2003). Tesco stores utilise the following technologies:
  • Wireless devices
  • Intelligent scale
  • Electronic shelf labelling
  • Self check-out machine
  • Radio Frequency Identification (RFID).
            The adoption of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved the efficiency of distribution and stocking activities, with needs being communicated almost in real time to the supplier (Finch, 2004).
IT Integration 
            Today companies act in an increasingly dynamic and complex environment, giving more difficulties making forecasts and adapting themselves to the continuous changes. In order to be able to compete in this kind of world, it is necessary to innovate at an extraordinary speed, continuously improving the products, services and processes. For Tesco operations have become necessities rather than luxuries. Systems that control stock, keep all the stock and deliveries records and analyse business transactions are the lifelines of the company. It can also be said that IT has risen beyond its traditional support role and taken up a central role in business strategy formulation.
            Extranet system employed by the company, enables Tesco to use the Internet to create proprietary and customised information flows between the company and its business partners. The system connects business partners online behind virtual firewalls, bringing more flexibility, scalability, extensibility and integration across the distribution channels. Extranet also helps to extend the key information on business partners throughout the supply chain and facilitate collaborative relationships with partners. Market exchanges hold the promise of extending Tesco's reach, delivering buyers to their virtual doorstep from around the world. Other examples of the most efficient technological advances that support daily business operations of Tesco are wireless devices, intelligent scale, electronic shelf labelling, self check-out machine and radio frequency identification (RFID) systems. This technology is an effort to maintain Tesco's ability to handle an increase in product/service volume while controlling costs; it also enables to be innovative and market oriented.

Interesting Facts, Stats and Figures
  • Tesco's was founded in 1919 by Sir John Cohen.
  • The first Tesco's store was in North London
  • As of 2009, there were and still are over 4,300 Tesco stores worldwide.
  • As of 2009, Tesco employs over 470,000 people.
  • Last year, the Organisation made a net profit of three billion GBP despite the economic recession.

  1. Tesco - Wikipedia, the free encyclopedia
  2. Performance centre - Tesco PLC
  3. Information Produced by the IS
  4. Electronic Point of Sale System - Technologies - Tesco
  5. Tesco 2009 Annual Report
  6. Tesco PLC History

MATRIC NO         : KK0870069