CHAPTER 2 REVIEW OF RELATED LITERATURE IN THE FIELD OF
2.4 Business information system technology in the retail sector both globally and
2.4 Business Information System Technology in the Retail Sector both globally
take advantage of economies of scale, increase product range and guarantee higher levels of consistency, but also reduces their dependence on supplier reliability.
Shoprite Checkers make use of a (WMS) World-class warehouse management system, namely, the EXE 2000 System. This system is designed to optimise operations productivity within the distribution centre. For example, “The system makes decisions relating to slotting, productivity, service levels and accuracy. It integrates easily with stock ordering and buying systems and store replenishment systems” (Shoprite Holdings, 2009, online, Anon, paras 10 and 13). The Spar Group Limited have introduced a Virtual Private Network (VPN) which enables a high speed link with increased capacity between its distribution centres and retail stores. (Hook, 2009, online, paras 1 and 2).
In addition, enterprise resource planning (ERP) systems developed around managing business operations at an enterprise-wide level have infiltrated the retail sector. “Enterprise Resource Planning (ERP) systems, have developed from MRPII applications and now allow integration of businesses, such as suppliers and customers, through an integrated database environment” (Williamson et al, 2004, p377). The predominant enterprise resource planning systems in the retail sector are SAP R/3 and ORACLE. Below we will discuss the basic structures of these systems.
2.4.1 SAP R/3 in Business
SAP (pronounced S-A-P) launched SAP R/1 in 1972. SAP R/1’s focus rested entirely in processing real-time information in the field of financial accounting. In the late 1970s, SAP R/2 replaced SAP R/1 with its mainframe based business application software suite, extending its real-time information processing capabilities to functional areas in business such as Materials Resource Planning, Production Planning and Human Resource Management. The SAP software was very successful in the 1980s and 1990s. In 1991, distributed client-server computing took hold of the business applications market, thus leading SAP to the development and rollout of SAP R/3. The distributed client-server computing model interconnects programs that are distributed across diverse locations. It is explained as the “distributed interactions in terms of one program requesting and obtaining a service from a
second, possibly remote, application” (Adler, 2008, online, para 1). SAP therefore facilitates and co-ordinates information exchanges and interactions between distributed applications (Adler, 2008, online, para 1). On the 6th of July in 1992, SAP AG launched SAP R/3 which could be managed on multiple platforms and operating systems, for example, Microsoft Windows or (UNIX from 1999). This opened SAP up to a whole new customer-base rendering them the dominant leader in ERP systems (SAP Our Company, 2010, online, para 4).
SAP/R 3 is comprised of defined functional modules that can be categorized into three areas. (Lin-ya Hong, 2008, p8-9)
1) Logistics
• Sales and Distribution (SD)
• Material Management (MM)
• Warehouse Management (WM)
• Production Planning (PP)
• General Logistics (LO)
• Quality Management (QM) 2) Financial
• Financial Accounting (FI)
• Controlling (CO)
• Enterprise Controlling (EC)
• Investment Management (IM)
• Treasury (TR) 3) Human Resources
• Personnel Administration (PA)
• Personnel Development (PD)
SAP R/3 is a client/server based application that employs a 3-tiered model, comprising presentation, application and database layers. The presentation layer interfaces with the users, the application layer houses all the business specific logic, and the database layer records and stores all the information about the system (Lin- ya Hong, 2008, p9)
SAP R/3 is built on its own proprietary language which is called ABAP (Advanced Business Application Programming). It is a fourth generation language geared towards simple, yet powerful programs. SAP R/3 is a flexible system which caters for the modifying of existing SAP code and existing functionality around a specific business environment (SAP ABAP Programming Reports, 2009, online, para 1).
Even though SAP R/3 has dominated the large business applications market, they are not without competition. One of SAP’s chief competitors is Oracle.
2.4.2 Oracle in Business
“For almost 30 years, Oracle has been helping customers manage their business systems and information with reliable, secure, and integrated technologies” (Oracle, 2008, online, para 1). Oracle offers a host of applications that support both core and peripheral business processes. With Oracle’s newly adopted service-orientated architecture, Oracle offers online support to their customer base via on demand solutions, customer feedback channels, and customer forums. Oracle’s customers have access to Oracle’s knowledge base of more than 400 000 solutions which comprises a collection of best practices to help organisations resolve issues and maximize their Oracle software investment. “We embed supportability into our products, and we have built over 250 support tools to help you diagnose and resolve issues before they become critical” (Oracle, 2008, online, para 7).
“OracleMetaLink gives Oracle customers 24/7 access to Oracle Support Services and technical information via the Web. It is your portal to our global knowledgebase, complete with answers to common problems and frequently asked questions. It includes product alerts, product lifecycle information, step-by-step installation instructions, white papers, product documentation, search engines, service request (SR) management, and bug queries. The SR management capabilities are used to facilitate and track communications between you and Oracle support engineers. You can initiate requests for help (by opening an SR), track progress on those requests, read recommendations from the support engineer working on a request, and run reports on SR activity” (Oracle, 2008 online, para 6-9).
Oracle customers are requested to complete surveys to guide Oracle’s planning and decision-making process, to ensure improvement across all businesses.
Furthermore, Oracle has established customer forums in order to open communication between Oracle’s executive management, product development teams and their customers. In response to specific needs in the retail market place, Oracle has developed the ‘Oracle Retail Practice suite’.
Retailers internationally and locally have adopted BIS/E-Business technologies. E- Business has narrowed geographical boundaries while enabling expansion into global markets. Retailers are now able to forecast demand with higher levels of accuracy, improve product and process flows through improved communication, and service their market more effectively through business intelligence solutions. These advancements, however, do present a number of challenges.
2.5 Challenges faced by the South African retail sector and Business Information