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

34 Pages Posted: 20 Dec 2023

See all articles by Ming Hu

Ming Hu

University of Toronto - Rotman School of Management

Peng Luo

Sichuan University - Business School

Jiahua Wu

Imperial College Business School

Date Written: December 16, 2023

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

Suggested Citation

Hu, Ming and Luo, Peng and Wu, Jiahua, IT and Operations Miscoordination in a Supply Chain: Case of a Quick-Service Restaurant Chain (December 16, 2023). Available at SSRN: https://ssrn.com/abstract=4666841 or http://dx.doi.org/10.2139/ssrn.4666841

Ming Hu (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George st
Toronto, ON M5S 3E6
Canada
416-946-5207 (Phone)

HOME PAGE: http://ming.hu

Peng Luo

Sichuan University - Business School ( email )

China

Jiahua Wu

Imperial College Business School ( email )

Tanaka Building
South Kensington Campus
London, SW7 2AZ
United Kingdom
02075949851 (Phone)

HOME PAGE: http://www3.imperial.ac.uk/people/j.wu

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