IT and Operations Miscoordination in a Supply Chain: Case of a Quick-Service Restaurant Chain

Abstract

While information integration is widely recognized as a key strategy for enhancing supply chain performance, our study uncovers a scenario where it results in unexpected repercussions. Using data from an independent purchasing cooperative that supplies a leading quick-service restaurant chain in the U.S., we delve into the effects of a Point of Sale (POS) system upgrade implemented across the chain. Counterintuitively, we observe a dip in customer satisfaction immediately following the new POS system upgrade. Concurrently, there is a noticeable uptick in order quantities placed by store managers. This dual phenomenon---rising orders and falling customer satisfaction---points to a potential misalignment between the POS upgrade and the ingredient procurement strategy. Our hypothesis finds support from three evident data patterns: (1) A decline in customer satisfaction concerning food quality following the POS upgrade. (2) An amplified decline in customer satisfaction when the POS system is adopted by a larger cluster of stores at once. (3) A short-lived duration of the negative effects resulting from the POS system upgrade. Furthermore, our analysis reveals that the surge in order quantities after the POS upgrade can be attributed to reduced uncertainties in demand forecasting affecting the newsvendor quantity. Our study highlights the nuanced implications of integrating advanced technologies into existing operational frameworks and calls for close collaboration between IT and operations business units.

Keywords: supply chain management, information system, coordination, empirical