Ordering by stores now relies heavily on IT, using Sales Based Ordering. Data is received by the distribution centre from the Head Office mainframe system, and then passed to the warehouse systems described above.

These mainframe computers are among the largest in Britain. The mainframes are either IBM or compatible (Amdahl), running IBM operating systems. There are mainframes situated in two separate locations.

The loss of a whole mainframe would have serious effects, and for this reason company has two mainframes to provide backup capacity. In the event of a disaster which involved the complete destruction of one of the computer centres, the other could re-establish these vital systems within 48 hours. The backup procedure is tested regularly each year.

The backup systems for the distribution depots include specialist routines that allow depots to switch between computer sites, and are at the leading edge of data processing technology. If a complete computer centre were lost, IT communication with all affected depots would be re-established within six hours at the most.

Goods are now ordered from suppliers using a system called Electronic Data Interchange (EDI). Orders for goods are transferred to the suppliers electronically using a service called INS-TRADANET. The use of EDI keeps suppliers precisely informed of Tesco requirements for company’s stores. It allows Tesco to run the business more effectively and efficiently because of its speed and accuracy. It is both quicker and more cost-effective than telephone, post or fax, and eliminates errors due to loss, or to wrongly printed orders.

EDI is also used for:

· sending sales forecasts so that suppliers can anticipate demand and reduce lead-times for stock to reach the stores

· securing the best payment terms and discounts for Tesco

· simplifying the invoicing process, so that invoices are generated automatically and postage and paperwork are eliminated

· working internationally, to eliminate time and language differences.

ICT systems used in Management.

Management Information is data stored electronically for use by business executives at all levels to support their decision making. This type of information is typically historical, and needs human interpretation before a decision is made. Tesco is planning to introduce a new system, called Data Warehouse, which will give much greater analysis and flexibility, and will further enhance the ability of managers to make informed decisions.

The sections below describe Tesco’s current Management Information environment, and the planned Data Warehouse, broken down into four topics: Business use, Technology, Data and Analytical tools.

A) Business use

Current Management Information

· Access to summarised data at pre-defined levels

· Most decisions made at a macro (e.g. regional level)

Planned Data Warehouse

· Access to in-depth information for informed decisions

· Decision made at micro level, e.g. in store

· Use of balanced score carding for suppliers, stores, etc. with supporting details

· Use shopper behaviour to influence new lines, promotions, and product ranging.

B) Technology

Current Management Information

· Mainframe, text-based reporting and analysis

· Downloaded to local PCs for in-depth analysis and graphics

Planned Data Warehouse

· Specialised hardware and software to manage data (the 'Information Warehouse')

· Information from the Information Warehouse to be accessible from anywhere within Tesco and available also to designated outside users, e.g. suppliers, agencies

· Cost of computer hardware and software is "scaleable", i.e. Tesco can add processing power and storage capacity at reasonable cost and in manageable chunks to keep pace with the information needs

· Dedicated NCR machine and peripherals.

C) Data