Adopting RFID Technology in Supermarkets

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Executive Summary

At the beginning of the 21^st century, B2B becomes one of the main tools which help companies to reach global markets and attract global consumers. The conceptual framework of the present research is focused on a number of items constituting the major interest in the supermarket area. Consequently, it is necessary to build up a cohesive structure in order to link these concepts into one integral unity and operate them more freely in the course of conducting the research. The broadest concepts being considered in the present work are supply chain (SC) and supply chain management (SCM). They occupy the central place in our framework because RFID is the tool for arrangement of successful SCM and the SC is the central issue of concern in the whole production process of any supermarket chain. Only under the condition of wise and reasonable arrangement of SC and thought-over, strategically designed SCM the supermarket chain may succeed in its activity.

Introduction

The main specifics of the RFID process are that it often requires the use of complex theoretical and applied fundamentals. These things are frequently used in the process of strategic planning and analysis as well as customer and intelligence in supermarkets. Supermarket chains have become a part of the retailing the main objective of which is managing branches and chains of stores. At present, people have to live in the circumstances of highly competitive supermarkets. Strategic Management in retailing is the process that is subjected to prepare the new generation of employee s who are willing to live and functions in the circumstances of the retailing industry. Strategic management is a part of successful supermarkets structure. In other words, strategic management is a key to conducting a series of successful supermarket operations. The analysis of the RFID in retail context offers a unique opportunity to examine the process in the area of retail industry. In retail industry, RFID technology helps to improve resource analysis. Many of the supermarket managers show the tendency to be proactive or reactive while implementing their decisions in everyday practices. Many participants of a supermarket retail process are realizing the importance of strategic management as an integral supermarket activity.

RFID: Radio Frequency Identification

Radio Frequency Identification Device uses a high frequency low power radio transmitter built into a tag much like the bar codes used for years to tag consumer products. RFID could be used to detect arriving resource vehicles, personnel, supplies, equipment, but a national standard and consensus would have to be reached (Garfinkel and Rosenberg, 2005).

The arrival of RFID technology to supermarkets has meant that, for the first time, the basic economic model of supermarket operation has changed. Computers minimize the set-up time for machines; they can alter designs almost instantly and assemble products to order. Differentiation now costs little more than standardization: we have entered the age of ‘mass-customization’ in which it is possible to tailor products to the specification of individuals. At the same time, consumer taste has diversified — more people want more individual goods — so that FMCG (Fast Moving Consumer Goods) companies, for example, have to design different products for smaller and smaller supermarkets segments. No longer, for example, is it sufficient simply to have one type of children’s spaghetti: varieties now come in the shape of Barbie dolls, Thomas the Tank Engine and many other children’s characters to suit each particular segment of the supermarkets (Dunne and Lusch, 2007; Glover and Bhatt, 2006). In supermarkets, payment security is an issue, but it is one which can be resolved: in the short term, pre-paid accounts can be set up, credit card details can be given over the telephone, customers can be invoiced. Even the security aspects of the payment system can be fixed. Indeed, many of the major banking organizations are frantically working to get their payment system accepted as the norm. Methods exist to solve the problem, although they are, as yet, not being widely or consistently applied. Fears about the security of payments are, therefore, something which, in our view, can be resolved and dealt with (Glover and Bhatt, 2006).

History of RFID

The history of RFID goes back to 1945 when it was used as espionage technology. Further, it was adopted to consumer needs and officially sold since 1983. Oficially, the patent owner is Charles Walton. The following is and industrial application of the RFID which national distributor Walmart has instituted. RFID is a smart IC chip with antenna which has been designed to be the ideal Radio Frequency IDentification solution for the following markets and applications. Unlike other RFID systems, the Coil-on-Chip™ does not have an outside antenna. The RFID coil antenna is formed directly on the surface of the chip. No soldering is required. This results in flawless usage and no breakage. The user memory of 108 bytes allows writing of numerous data (Glover and Bhatt, 2006). The data can be erased and rewritten up to 100,000 times. Coil-on-Chip is usually accompanied by Picochet, the Maxell original RFID Reader/Writer. Picochet comes in an appealing housing with a USB interface. Picochet’s Reader/Writer board can also be used without the housing and imbedded into any device or equipment. A hand-held reader/writer is also available (Gengler, 2003).

RFID has also been proven a very viable resource with major retail stores requiring vendors to RFID tag all new products. RFID tags could be personalized and placed on personal equipment worn by the individual so as to make it a part of the uniform per say. RFID allows the individual to be identified and scanned as they enter the scene move from assignment to assignment and logged out as they are dismissed from the screen. This will reduce the ability of terrorist to compromise the system so as to gain access to special events. Software has to be one of the most important aspects of this system, by using a database called SuperBASE 95 the applications ware was produced (Hollensen, 2007). The model, used in the production of the database, emulated the structures and setup of the manual command boards. There were several exceptions: The buttons and action keys on the forms were programmed to log actions to a database along with performing the action designated by the button (Glover and Bhatt, 2006).

Advantages and Disadvantages of using RFID in Supermarkets

Adoption of RFID has advantages and disadvantages for supermarkets. In such supermarkets as Safeway or Wall Mart RFID is used for self-service checkout and security of theft. In these supermarkets, all the hardware, equipment and software referenced in this report are available and can easily be interfaced. The Software was developed and is now awaiting national approval and acceptance. A new set of standards need to be created by the NFPA, FCC, DHS for interface of information by different components of the system and actual systems that are developed based on this model (Kotler and Armstrong, 2007). Most of the communication between databases should not present problems, because the software supermarket chains have addressed these problems previously. Finally, the last piece of the puzzle is the unification of the RFID Management system which has been introduced (Glover and Bhatt, 2006).

This system can have an unlimited scale of operational capabilities that support the integration of Laptop computers, Personal Data Assistants, larger scale municipal wide data networks and smart building alarm systems. These systems can better serve the public as more advancement are made in human tracking and interface capabilities. It is important to remember that the public safety sector does not have the expertise to introduce a system like this into practice, and that a heavy reliance on the national standards of making organizations will be required to ensure that these objectives are met in such a way that they can be used simply and safely (Shepard, 2004). There is also a serious concern that some type of system needs to be established and standards need to be agreed upon so that all personnel, using the system, can have access to the data that is needed to bring the incident to a safe conclusion (Sevier, 2005).

The study supports the projects research and has been proven to work in a limited scope. It is impossible to simulate large-scale situations without incurring tremendous cost. So, each part of the system, from the use of rugged laptops in data collections to the use of PDA’s to track personnel accountability to the interface of entire city infrastructures to accommodate transfers of large amounts of data to the scene as need, can and are being tested on a regional basis. Upon the acceptance of this report and project as completed it is the intension to submit this plan to the respective agencies for approval and final testing. The software is in final stages of development and improvement that will bring it common use with the minor changes made to the RFID System (Shepard, 2004).

The main disadvantages of RFID supermarkets are high cost, incompatibility with some materials and software product. In some RFID technologies used in supermarkets such as Safeway or Wall Mart, the Fields on the screen to dealt with time or timers were automatically updated every minute by system routines running in the back ground rather than each time a screen was updated by movement from one screen to another. The system can be enhanced at a later date to include a network that will actually learn from previous operations and common actions take an each operation and begin to make recommendations as to resource usage and movement. Otherwise the screen layouts represent the operations boards used by the manager (Shepard, 2004). Advertising in this way will undoubtedly increase the number of visits that your site achieves. Instead of being buried in a list, your site will be displayed prominently at the top with whatever words or graphics you choose to show..

Cost implications

High costs of RFID are explained by innovative solutions, privacy issues and high standards developed by the supermarket chains. Eventually, a standard should be developed stating the requirements for information update that can be provided by such items as Personal Accountability Systems (Pas device) currently acting as a warning device that activates when a manager remains motionless for more that 1 minute. Breathing apparatus will eventually be equipped with some type of telemetry system that relays vitals, atmospheric conditions, temperatures, and indications of problems (Shepard, 2004).

Case study about Metro Group

Metro group is a cash and carry retailer founded in Germany. This supermarket chains depends on effective supply chain management (SCM) and adopts new technology to improve its cash operations and security issues. For Metro supermarkets, RFID would help to improve their supply chain and reduce time and costs usually spend on delivery. Every supermarket is confronted with making a choice from amongst a variety of alternative channels. Although generalized solutions to all distribution channel decisions cannot be formulated. At Metro, heterogeneous sources of supply are sorted out, and then can be accumulated for sale to interested customers, as is done by industrial-supply firms or retail stores. Through dispersion, the Metro’s products are allocated and customers can achieve the assortment of heterogeneous products that they require to satisfy them. The channel functions, concentration and dispersion, are related to the homogeneity and heterogeneity of supply, and the appropriate sorting process must be provided. Successive channel stages should be attempted to overcome any discrepancy between product assortment and supermarkets requirements. Customer requirements of one or two units are at variance with supplier requirements of mass production. From a micro point of view, a firm’s distribution decisions are designed to combine, supplement, or modify those of other firms, in order to form channels of distribution that the most effective. Since markets are dynamic, the opportunity for new combinations is continuously available. Channels are thus used by companies to overcome barriers. These barriers include the separation of time and space between producers and markets, the costs of moving goods, the communications barriers between producers and users of products, and the separation of demand.

Adoption of RFID

In order to adopt the RFID, the supermarket should buy sufficient number of readers and chips for each product. The finding of this study supports the hypothesis that the current RFID system that currently operates on a paper system can be refined and updated to reflect a more accurate computerized system (Metro Home Page, 2010). This system will provide better access to previously stored data, information and access to building systems not available under the current system. It is believed that the data acquired during the operation and the advancements in Networks will bring more advancement in the future. However, it is not enough to decide to go global.

RFID would help the METRO supermarket to follow and identify the location of all products in the supply chain. The card’s unique ID will be scanned and the inserted in the database. The main types of information gathering are background data and test-related data. in this case, RFID is becoming recognized as an important weapon. As well as traditional data processing applications designed to increase supermarket efficiency through cost-reduction, RFID is being used to improve effectiveness, for example, through improved information for decision-making and faster speed of response to the customer. More radically, RFID can be a key component in doing retailing in new ways and even transforming a sector. It is clear that while developing RFID systems is a necessary condition for success in such cases, it is by no means sufficient. The question, therefore, is how new products, services, processes, and ways of working involving RFID can be managed to obtain supermarkets benefits. For supermarkets, the availability and cost of RFID are not the major constraints on its effective application in supermarkets. The potential applications of RFID which can be cost-justified and are technically feasible far exceed the capability of organizations to exploit these opportunities. Metro believes that RFID plays a significant role in the supermarket SCM for which they are responsible, but lack the time and the knowledge required to formulate a specific vision for each supermarket. Using analytical techniques help to analyze supermarket potential and share. It is expected that there could be technical hurdles to overcome when integrating banking operations (Shepard, 2004I).

The adoption of RFID implies that the most critical area is converting supermarket needs into functional specifications of information systems requirements, for example, a production manager specifying the information needs to analyze plant performance. Here past experience of a project champion was useful in some of the projects–though they were regarded as tough customers to please by the information systems function. Where this was not the case someone had to fulfill this role–typically either someone from the supermarket area being moved into information systems in mid-career, or an information systems professional with a long working relationship in the supermarkets area. So, in the early stages of a project the quality of the staff in the development team is truly cross-functional rather than being essentially from the information systems area.

The first stage of adoption is development of the project plan. The second stage is introduction of RFID and application of RFID technology to the supply chain of Metro. The third stage is measuring efficiency and possible errors in TFID allocation. At Metro, RFID function is able to co-ordinate the project and guide it towards relevant SCM goals. This increase the chances of success for two reasons: (i) by influencing the SCM design of the system to make it meet user and supermarket needs more closely; and (ii) by providing impetus for the implementation of the project. In the event of problems during the development of the RFID project, a SCM is able to gather support for the project if it is viable. However good the technology or strategy methodology, it is actually supermarkets commitment to change which has the greatest influence on supermarket success or failure (Crawford, 2006; Metro Home Page, 2010).

Method (a supply chain method, marketing and advertising)

RFID allow supermarkets to accept effective supply chain decisions and develops promotion campaigns. A product can have various combinations of packages, brands, labels, tastes, and appearances; it can come in various shapes, colors, sizes, and materials, and be offered with numerous services and privileges. Channels help these companies promote products through various channels, to be sold at varying prices, discounts, and markups. These decisions integrate physical handling, transportation storing, sorting, and distribution of goods in a systematic and effective manner (Brown, 2006). The overall function of distribution channels is the concentration and dispersion of products in relation to supermarket needs. In supermarkets, distribution channels concern the kinds and number of middlemen required to get products and services to the supermarkets. The challenge to management is to construct systematic links amongst institutions in order to achieve a coherent pipeline capable of moving goods and their title to markets (Brown, 2006).

It is enough to recollect the way supermarkets affairs used to be conducted several decades ago – R&D departments could become adequate rivals with the national intelligence offices in their effort to keep the whole supermarket process, peculiarities of production, management, marketing, product formula and other ingredients of success top secret. Every supermarket chain’s being isolated and mysterious for its competitors was number one priority, thus denying any opportunity for sharing or learning experience. Nowadays the change in perception has come and advantages of joint action on improvement are evident. RFID is one of the first steps on the way to continuous innovation with wise and comprehensive consideration of weak and strong sides of one’s own supermarkets and their combination with experience taken from competitors on a reciprocal basis. Nevertheless, every supermarket chain undertaking RFID analysis should pay particular attention to the choice of the RFID model appropriate for its particular case. As it is seen from the present study, there is a number of different RFID models satisfying various characteristics and the final success of RFID research heavily depends on the research framework a particular RFID model offers. It is often more efficient to integrate several RFID models to fulfill as many tasks as possible and to accomplish the analysis in the most favorable way for the benchmarked supermarket chain. However, a supermarket chain requires additional attention in other spheres of its activity and has to fix gaps detected in its RFID analysis, e.g. lack of attention to the supermarkets processes and innovation reviews in the course of conducting RFID analysis, narrow consideration of the supermarket chain’s supply chain (excluding such variables as customer satisfaction, supplier satisfaction etc.) and lack of standardization and conformity with one consolidated RFID schedule These conclusions have been made according to the usage of the integrated RFID model created in the course of the present research. It includes a greater range of RFID indicators and enables us to think that its application in the course of RFID analysis will yield much more detailed, credible and efficient results. These results will be further applicable in the course of implementing improvement measures at a supermarket chain hence justifying the necessity and a potential advantage of its usage (Garfinkel and Rosenberg, 2005).

Future of using RFID in Supermarkets

The following concept building up our framework is RFID as a tool of assessing the current situation in a supermarket on the basis of comparative analysis on a set of key indicators important for the supermarket chain’s functioning. RFID is the central issue of the present research as it is the prime tool of analysis, evaluation and processing. In the context of discussing RFID researchers provide a detailed description of RFID, define it and enumerate its elements, also dealing with challenges and successes of RFID, including the most common pitfalls a supermarket should take into consideration and not repeat; This book offers a huge amount of useful information necessary to facilitate the reader’s understanding of the RFID concept, since it constitutes central importance in the present work (Garfinkel and Rosenberg, 2005).

The first stage necessary to go through in the process of integrating the RFID models is to understand the generic RFID process underlying the formation of any RFID model in SCM. There are the main objectives that a RFID model should satisfy in order to become sufficient and effective in the course of completion of its goals. First of all, the objectives of the RFID process should be clearly formulated (it can be competitive, process, functional or generic RFID) and RFID activities should be carefully planned (the aspects to be considered are the activity level, intra-firm processes, inter-firm processes, out-of-industry RFID) (Garfinkel and Rosenberg, 2005).

The chance of implementation in the Middle East

In the Middle East, retail chains take the lead in developing services, marketing information, products, packages, brands, advertising, and sales-promotion activities, they achieve greater degrees of channel control. In some instances, however, retailers perform most of these functions and control the channels of distribution. This occurs most often in industries with small supermarkets who lack marketing know-how and financial resources, and may be highly specialized. The clothing industry is a case in point. The main difference is that in the former “no channel members have much control over the other members”. In vertical marketing systems, “one channel member owns the other” (p. 340). Multi-channel systems serve a pivotal and conflicting role (Brown, 2006). They are both selling and purchasing institutions, they have common and conflicting interests with other channel members, they are both independent and dependent, and they want to sell a particular product line and yet offer adequate assortments to customers Channel conflicts are evidenced by the reactions of independent retailers to chains, more traditional retailers to discount houses, and wholesalers with their own private brands to retailers. This should not be misconstrued to mean that cooperation does not exist in channels. Indeed, a set of mutual expectations exists in channels amongst supermarket chains. Supermarkets expect middlemen to furnish sales and promotional efforts, adequate product inventory and exposure, and required services and information. Middlemen expect product lines that are competitive, salable, and profitable, as well as territorial protection, merchandising assistance, and fair treatment. A major problem, is that of balance. RFID balance, which is difficult to achieve, must be realized at various levels (Boone and Kurtz, 2002). For example, supermarket chains desire an adequate number of distributors to blanket markets and would prefer even greater numbers. Continuing channel contacts and formal contracts help stabilize markets, encourage automation, and result in lower costs.

It is necessary as every segment has its own peculiarities of SC, different RFID principles and metrics that bring about varied managerial implications. Drawing a conclusion from everything that have been laid out in the present section it is important to note that the creation of an integrated RFID model is possible only with consideration of all issues the five discussed models cover. Only under these conditions the researcher will be able to investigate all spheres of the supermarket chain’s functioning and enumerate the aspects seeking change as well as the most efficient and constructive ways to implement this change and ensure its success on a long-term basis. The present research shed light on many strong and weak aspects of the RFID process in the retail sector, giving a broader and more detailed outlook at the peculiarities, hidden challenges and potential return of the RFID research. RFID surely occupies an important place in the process of any supermarket chain’s functioning, be it a service supermarket chain or a supermarket chain. The innovativeness of approach can be seen in erasing boundaries and daring to accept other specialists’ opinion in the same sphere, which is clearly a breakthrough (Boone and Kurtz, 2002).

Conclusion

This study is conclusive and is now ready for final acceptance at the national level. The relative practices of the RFID are now final. They have been in flux for 20 years with a national consensus finally being reached this year. The systems development is left on an open architecture standard with emphasis on the requirements to stay within the bounds of the RFID. All other requirements as far as software interoperability have been meet with the adaptation of the operating system standard. The efficiency of the RFID is measured in terms of cost of inputs as they relate to outputs. If the costs cannot be reduced further without reducing the level of service, then obviously the system is highly efficient. It should be noted that various functional centers, such as inventory, traffic, and warehousing can be efficient, they can keep their individual costs low, while the total costs and total service are inefficient. Different functions have different and sometimes competing and objectives. Thus, IT managers might like to reduce inventory costs even if this increases transportation costs, while the traffic manager prefers the reverse. Ideally, a systems approach should be adopted that balances costs and benefits of RFID from the perspective of the whole supermarket. Intermediaries are diverse, and one ideal form of supermarket does not exist. Logistical decisions and the design of a supermarket chain’s movement-and-storage system result from cost- supermarkets requirement analysis of alternatives. Its policies must be flexible and reviewed frequently to achieve a balance between the goals of servicing the markets and reducing RFID costs.

List of References

Bearden, W. O., Ingram, Th. N., LaForge, L.W. 2004. Marketing, Prentice Hall,

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Brown, D. 2006. RFID Implementation. McGraw-Hill Osborne Media; McGraw-Hill Professional; 1 edition.

Crawford C. Merle. 2006. New Products Management. Irwin-McGraw Hill. 7th edition

Dunne, P. M., Lusch, R. F. 2007. Retailing. South-Western College Pub; 6 edition.

Garfinkel, S., Rosenberg, B. 2005. RFID: Applications, Security, and Privacy. Addison-Wesley Professional.

Glover, B., Bhatt, H. 2006. RFID Essentials (Theory in Practice (O’Reilly)) O’Reilly Media; 1 edition

Gengler, B. 2003 ‘Privacy problems for RFID, The Australian.

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Metro Home Page (2010). Web.

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Sevier, R.A. 2005. How to Build Support for brand Marketing. Marketing. June.

Shepard, S. 2004. RFID: Radio Frequency Identification (McGraw-Hill Networking

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