Just about everyone involved with supply chain management or manufacturing has copied the Toyota operations model of just-in-time (JIT) manufacturing. Indeed, it has become a business textbook or case study staple. The point of this operational procedure was to have your supplier carry your inventory or, more importantly, get inventory off your books. Of course, this technique, along with other factors, catapulted Toyota to the number one car manufacturer in 2009, finally surpassing General Motors. Unfortunately, this victory was short-lived and uncovered the weakness of JIT—supplier inability to keep pace with growth, to maintain quality, and to retain margins and profitability. Apparently JIT has its limitations.

Or perhaps not, as JIT now manifests itself in a very different venue. It seems that the same economic deflection point—read, Great Recession—that caused Toyota to stumble may have awakened an “ah-ha” moment in consumers. “I had eight boxes of lasagna in there (kitchen pantry) and a year’s worth of paper towels,” said Rebecca Seabern, a mother of two and an accountant. She added, “I’ve stopped purchasing things just to have them on hand.” These statements sum up a change in American consumerism.

For decades American consumers were convinced that they should buy big and stock-up, so large-volume purchases represented the best value for their money. It was this consumer philosophy that fostered the rise of such warehouse chains as Costco, Sam’s Club, and BJ’s Wholesale Stores. However, the sentiments expressed by Ms. Seabern may augur a change in merchandising and subsequently fortunes.
This change in consumer attitude is changing the way retailers and manufacturers respond. “Consumers are saying, ‘I’m going to buy what I need for a specific period of time,’ rather than loading up and buying two or three extra units just because they can get a good price on it,” said Del Monte CEO, Richard Wolford.

The manner in which products are made, packaged, priced, and delivered is changing. IT, information technology, is and will be the beneficiary of this “sea change.” It was not enough to simply make smaller sizes, which manufacturers preferred because it meant higher profit margins; attempting to anticipate and reformulate “correct” product mix, size, and delivery schedules became essential and problematic. Product purchase cycles were disrupted by this JIT approach. Rather than “track” product purchase cycles from retailers, it became essential to “track” the shoppers or consumers.

IT was required to generate algorithms to monitor two purchasing patterns: the retailer anticipating the consumer, and the consumer adjusting purchasing patterns based on personal needs and retailer stocking patterns.
Where do IT people for food manufacturers and food retailers get the information to feed into these algorithms? This information already exists for other types of retailers. They have been tracking shoppers for over a decade. Shopper tracking is a business. Shopper Trak Inc. has been using mall cameras to monitor shopper traffic patterns for years and shares this information with its retail clients. For example in 2010, U.S.
shoppers made 695 million individual shopper visits to malls over the Thanksgiving weekend (one three-day weekend). 

Thompson Reuters, another consumer “tracking” firm, goes one step further and uses satellite imagery of mall parking lots to calculate shopper car traffic. These data are provided by Remote Sensing Metrics to retail and marketing clients.
The satellite systems that were launched to monitor crop production and to oversee the use of genetically modified seeds around the world or to monitor missile silos are now ready to count cars in parking lots.
What the clothing retailers use routinely is now “new territory” for the food retailers.
Is it time to count cars in the supermarket parking lot?.....

QUESTIONS

1. What information systems approaches seem applicable to this change in consumer behavior?

2. How might an organization make its information system even better in the future?

3. What are the strengths and weaknesses of tracking consumers as suggested in this case?