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  • 1. MGMT002: Technology and World Changes (G9) RFID: Smart Shopping for the future Prepared for: Asst Prof Ted Feichin Tschang Prepared by: Loh Tiang Yew Loy Wen Fang Chen Guancheng Cai Jianing Lowe Hangzhi
  • 2. Foreword It is Chinese New Year. You are in a supermarket after a long day at work. All you want to do is to buy a loaf of bread for tomorrow’s breakfast. You approach the checkout counters. Long stretches of customers lining up with trolleys filled with tons of rice, drinks and goodies greet you. Will you leave the queue? Well, according to a survey done by Visa in 2005, an amazing 70% will walk out of a queue if the line is too long and 10% of consumers are “seriously annoyed” the moment they step in a queue. Today’s society leads a very hectic lifestyle where time is money. Retailers understand the frustrations of shoppers and have offered a wide range of alternatives such as late-night shopping and internet shopping. Yet all these have not caught on with consumers. After all, as all women and some men would know, “physically feeling and viewing” the products is what makes shopping enjoyable. Hence, the objective of our project is to come up with a self check-out counter (Smart- shopping system) that will make shopping fast and efficient. The inspiration and motivation for this project came from two sources. Firstly, Japan has come up with smart shopping baskets that can recognize what is in it, where it is, and display personalized recommendations to customers. We find this a very nifty innovation but it appears that this it is limited to supermarkets where shoppers carry the baskets around. Secondly, we feel that the concept of the ERP (Electronic Road Pricing) system, has help ensure smooth traffic. Hence, we hope to incorporate the use of RFID (the technology which is used in the smart baskets), with the concept of ERP gantries to all areas of shopping, such as department stores like Robinsons, and hopefully cultivate better service for shoppers. 2
  • 3. Table of Content 1. Executive Summary………………………………………………………… 3 2. Key Terms…………………………………………………………………... 3 2.1. RFID………………………………………………………………….. 3 2.2. A*Star Integrated RFID Tag…………………………………………. 4 2.3. Electronic Road Pricing (ERP)…………………………………………. 4 3. Smart Shopping System…………………………………………………….. 5 3.1. Procedure……………………………………………………………. 5 3.2. Billing Machines……………………………………………………… 6 3.3. Decoding Devices……………………………………………………. 6 4. Benefits……………………………………………………………………… 7 4.1. Elimination of Queues………………………………………………… 7 4.2. Service Standards Improved………………………………………… 7 4.3. Stock-taking made Easy……………………………………………... 7 4.4. Environmental Friendly ……………………………………………… 7 4.5. Cashless Shopping…………………………………………………… 8 4.6. Security………………………………………………………………. 8 4.7. Future of RFID tags Explored………………………………………… 8 5. Constraints………………………………………………………………….. 8 5.1. Security Issues………………………………………………………... 8 5.2. Length of System…………………………………………………….. 9 5.3. Privacy Issues………………………………………………………… 9 6. Business Applications………………………………………………………. 10 6.1. No close Substitutes………………………………………………….. 10 3
  • 4. 6.2. Singapore’s Compact Environment…………………………………… 10 6.3. Translating Vision into Reality………………………………………... 10 6.4. Cost Considerations…………………………………………………… 10 7. Conclusion……………………………………………………………………. 11 I. Executive Summary The Smart Shopping System is a self-checkout counter based on the concept of RFID and the ERP system in Singapore. Using RFID tags with rewritable capabilities, they can be used by both manufacturers (who currently use passive RFID tags to keep track of inventories) and retail stores in their daily operations. With ERP-like gantries at the front of the stores, shopping will be a breeze as shoppers can exit the stores as easy as cars moving pass the ERP gantries. Payments will be made using “tap”-technology, which works like how an ez-link card is scanned on a bus. With this Smart Shopping System, retailers will be able to free staff from repetitive checkout scanning to help customers on the shop floor. Operation efficiency will be enhanced and pilferage, stocking taking and obsolete stock can be greatly decreased. Long shopping queues would be a thing of the past and we are confident that this system will change the way we shop as radically as ATMs changed banking. II. Key Terms 2.1 RFID Radio Frequency Identification (RFID) is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders. 1 They contain antennas to enable them to receive and respond to radio-frequency queries from an RFID transceiver. Basically, RFID tags can be either active or passive. Active RFID tags run on an internal power source while passive tags do not. For the purpose of this project, we will focus on passive tags as we believe they are more viable in terms of cost and other extraneous factors. 1 RFID-Wilipedia definition 4
  • 5. Specifically, the RFID chips which we are going to use in our Smart Shopping system are the prototype tags developed by the Institute of Microelectronics (IME), which is a Research Institute of A*Star. II.2 A*Star’s Integrated RFID Tag This integrated RFID tag with an on-chip antenna (OCA) has read/write capabilities with passive RF power and also includes an anti-collision function. The dimensions of the IME’s RFID chip is less than 1mm² (which is about the size of a speck of pepper!), and offers both read-and-write memory capabilities with a non-volatile memory of 128 bits and frequency of 2.45GHz.2 The usage of the IME’s RIFD chips would eliminate the need for a second chip as retail information can be added in to the existing chips upon arrival. Unlike previous RFID chips which are non-rewritable, this chip works like a CD-RW where data can be erased and edited. Lastly, the anti-collision feature is an equally important function as well. If you recall, we mentioned the use of smart shopping baskets in Japan. It worked because items are placed into the trolley/basket one at a time. This prevents collision. However, if we want to develop a viable system for usage in normal department stores, this anti-collision function is necessary to prevent error-readings. 2.3 Electronic Road Pricing (ERP) The ERP system adopts the concept of RFID technology. The system consists of four main components: the RFID based In-vehicle unit (IU), the Cash Card with stored-in value, the gantries located on the roads and the central computer system which is managed by the Land Transport Authority (LTA). The setup of the system is mainly composed of two antennas, a gantry camera and a line sensor. All components are controlled by the fiber sensor controller. When a vehicle passes the ERP entry, the antenna within the reader at the gantry will detect it by directing infrared light. The signal is subsequently transmitted to the control centre. Thereafter, the computer in the control centre communicates with the IU of that car, through the exchange of radio waves between both antennae within the vehicle’s IU and the gantry. 2 Annex A, IMM Develops the World’s First Integrated Read/Write RFID tag with On-chip antenna and passive RF Power 5
  • 6. The information of the vehicle would be processed and the rate of charges for the different kinds of vehicles will be determined. Thereafter, the vehicle passes the region under the line sensor which would confirm that the transaction has been completed. The second antenna at the gantry should also receive signal from the vehicle to indicate that there is a deduction of payment of the Cash Card. III. Smart Shopping System For the automatic payment system, the two technologies, RFID and ERP would be fused to provide this system with its unique operating system. Visual concept and walk through process of automated payment scheme. Step 1: RFID Scanner: Detects RFID tags and calculate total price Step 2: Billing machine: Displays total cost and accepts card payment Step 3: Gantry doors: Opens only after payment Step 4: Decoding device: After doors open, RFID tags are decoded 3.1 Procedure  Tagged in factories Passive RFID tags will be coded and individually and specifically to each product. The tags would then be placed onto each and every product. Each frequency will be linked to a specific price. For example, a bottle of water may have a coded frequency of 1234 and a can of drink may have a coded frequency of 4321 each linking to a specific price code of $1.20 and $0.80 respectively. All products are tagged in factories where they are produced to reduce the amount of labor hours in the retail outlets. They are also currently used by manufacturers to keep 6
  • 7. track and take stock of their inventories during shipments. Even though each frequency is linked to a specific price, this code can be changed by the individual retail outlets.  Displayed in stores In the retail outlets, the products are displayed as per normal. The only difference being the reduction of man power in the stores. With the implementation of the Smart Shopping system, there is no need for a cashier. Paper bags will be placed around the stores for customers to pick up and hold their purchases as they continue to shop.  Gantries At the end of the customers’ shopping experience, they would proceed directly to the exit where a number of gantries are placed. Exits will be divided into separate lanes where only one customer can walk through at a time. • RFID readers RFID readers are one of the three devices placed at the gantries. The reader would detect the specific frequencies of each product carried by the customer and automatically calculate the total price of the products. The calculated amount will then be electronically transferred to the billing machines placed at that specific lane. 3.2 Billing machines Two different types of billing machines would be available – one for credit card payment and the other for NETS, cash card and other miscellaneous forms of cashless payment The special feature of this credit card payment machine is that it can read RFID credit cards. American Express has begun issuing such cards in June 2005. By simply tapping against or waving within a few inches of the reader, the transaction can be completed. Data regarding the purchase is reflected on the customer’s credit card statement at the end of the month 3.3 Decoding device A decoding device is used to deactivate the RFID tags. This device would only be activated when the items have been paid for using the billing machines. 7
  • 8. The decoding works by having a reader scan and then send out a signal. When the RFID tags with the specific serial number sends a signal back, the kill command is given. The anti-theft gates are only able to detect RFID tags which are still activated. 3.4 Gates of the gantry As a precaution, the anti theft gates of the gantry will not open if for whatever reason, the customer fails to make the correct payment. This is because the reader does not receive the command to deactivate the tags and thus does not send out any signals. Since the anti-theft gates are only able to detect RFID tags that are still activated, the alarms would sound. This would prevent shoplifting. IV. Benefits 4.1 Elimination of long queue times The Visa survey has also revealed that shoppers spend on average 283 days of their lives in queues. With a touch and go system that is highly efficient as the Smart Shopping system, queue times at the counters are sure to be drastically reduced. As staff is not needed to man the counters, more self-service checkouts can be set up without extra staff costs. 4.2 Improve service standards The removal of the cashiers can mean that there are now more service crew around in the shop to tend to our needs. Stores can choose to set up a packing counter where they can provide customer service such as gift-wrapping etc. Also, instead of having to face unfriendly and bad tempered cashiers at the counters, we can have automated machines that would never be rude or affected by their personal moods. As such, we believe that our service standards can be improved tremendously. 4.3 Stock taking made easy There will be no need for manual stock checking as RFID will give an instantaneous report of stocks available and the staff will be able to replenish goods on the shelves more efficiently. With this system, the staff would never have to spend extra time to take stock manually. This could translate to lesser overtime pay for the retail stores. Also, with less staff contact with cash and inventories, fraud cost can be reduced. Losses due to such ‘shrinkage’ can knock up to 10 per cent of annual turnover for larger retail stores like Carrefour and Robinsons. The Smart Shopping System will be able to instantaneously monitor sales, identify and report anomalies or unusual activity in stock, takings, product lines and invoicing transactions. 8
  • 9. 4.4 Environmental friendly shopping experience We hope to promote a more environmental shopping environment where shoppers are encouraged to bring their own shopping bags. This idea stemmed from the European supermarkets whereby customers pack their own groceries and thus are encouraged to bring their own bags. Savings from carrier-bag costs can be translated into cheaper prices for customers. 4.5 Cashless Shopping The implementation of our Smart Shopping system could also signify the becoming of the “cashless” phenomena. With just cards in our wallets, consumers can now leave home cashless! Convenience is emphasized in today’s society, where consumers favor a smoother and faster shopping experience. 4.6 Security The Smart Shopping System is clever enough to ‘learn’ about new products, sizes, weights and packaging. This makes cheating very difficult. Moreover, with the presence of the gantries at all exit points in the store, there is no way anyone can get past the gantries if they had not paid. For extra security measures, video cameras can be built in so that a central operator can oversee multiple check-out counters. As the cost of shoplifting is ultimately passed on to the end consumer, this Smart Shopping System will again reduce these overheads and can directly benefit customers through cheaper prices. 4.7 Future of RFID tags explored Having the Smart Shopping system implemented could indicate the opening of the flood gates to this form of technology. With the wide spread use of RFID tags, more inventions can be based on such tags. An example would be the Smart Fridge, whereby RFID readers can be installed on fridges and used to indicate the usage levels of the groceries in the fridge. This could aid the user in buying groceries by telling them what groceries have been used up and thus, what to buy for the next shopping trip. V. Constraints and Limitation As with all new technologies, our Smart Shopping System has its limitations as well. Firstly, we will talk about the security issue of the blue credit cards mentioned earlier. 5.1 Security issue (of the blue credit cards) Although credit card issuers typically exempt cardholders from any liability, fraudulent purchases could become increasingly worrisome to both card issuers and cardholders. Criminals may build strong readers to read their credit cards when they are not in the 9
  • 10. shopping centers. For instance, while in a crowded MRT, a criminal may point the reader at unsuspecting people at “make transactions” on their cards. What our team propose is that we could add a switch to credit card, much like how photographers turn a switch on their SD cards to prevent accidentally deleting photos. This measure would ensure that payments be made only when the switch is on, actively requiring the cardholder to authorize each purchase. However, we understand that although the user has to authorize the transaction, it still does not prevent theft of the card and the subsequent misuse of it. Hence, a possible solution could be to introduce biometrics as a form of payment mode. For instance, thumbprints could be used as the activator for purchases, and the amount will be deducted from their bank accounts. However, we have to understand that the current biometrics system still has many flaws which need to be ironed out before it can be widely used. For instance, we will need to have a database of all Singaporeans and tourists may have problems making purchases due to data overload. 5.2 Length of the Smart Shopping System The estimated length of the system is about 1.5-2m long. This may be impractical in smaller retail shops like Charles and Keith where retail space is precious and limited. What we could do is to eliminate the need for the de-activation counter that kills the tags. The point of having that counter is to prevent the tags from being read by other people in future. Criminals may use readers to see what their potential targets have. Hence, what our team propose is to use cryptography to prevent tag cloning. These tags readers at counters use a form of “rolling code” scheme, wherein the tag identifier information changes after each scan, thus greatly reducing the usefulness of observed responses. Eg. Serial number 12345 is scrambled to 54321 in future. However, as with the switch for the credit card, all these tags have dramatically higher cost and power requirements. It is simple logic, more security features will incur more costs, and these costs ultimately will be bore by consumers. 5.3 Privacy Issue ( Whether to kill the tag) “How would you like it if, for instance one day you realized your underwear was reporting on your whereabouts?” -California State Senator Debra Bowen, at a 2003 hearing The introduction of RFID chips in the retail industry has brought about a variety of responses from the public in general. While those in favor laud its technological superiority over the conventional bar codes, others are concerned regarding the potential privacy invasion of consumers. 10
  • 11. Earlier this year, Benetton announced that they were planning to use RFID tags in their operations. A US based privacy group known as the Consumers Against Supermarket Privacy Invasion and Numbering called for a worldwide boycott of the clothing producer. Although Benetton later clarified that they were merely evaluating the possibility of using RFID tags inventory tracking, the public outcry over the use of RFID tags has highlighted the importance of privacy rights to the consumers. Privacy activists believe that the RFID tags would make it technically possible for anyone to collect personal information without their consent. The usage of RFID tags would cause consumers to leave a trail of their whereabouts and shopping habits for law enforcement officials, investigators, lawyers or marketers to collect. Apart from this, they fear that, anyone, with the appropriate tools, could attempt to use hand held RFID readers to detect the items in an unknowing person’s bag or purse. It is true that with the help of an electronic product code (EPC), a one-of-a-kind serial number, RFID tags can indeed store a wealth of information. These information can range from what item was purchased, where it was bought to who paid for it. However, this is highly unrealistic because in order for so much information to be stored in an RFID tag, the costs of such tags would escalate. In our ideal situation where all products are equipped with an RFID tag, it would be highly cost ineffective. Most companies are only interested in storing serial numbers in RFID tags, which are worthless without a detailed database. There are in fact many types of RFID tags, with different ranges of frequency. The longer the range of the RFID tag, the more expensive it will be. As such, it still boils down to one important aspect in the realistic utilization of the tags – price. RFID tags only give out signals when prompted by an ordinary reader within close range. So, the potential dangerous situation where a criminal is able to know exactly the items in a person bag is not very possible. However, it should also be noted that using a very high-gain reader, an RFID tag can possibly be read from long distances. Nonetheless, companies are coming up with solutions to eliminate such fears. Philips has produced RFID tags with a kill command. The tags can be deactivated by simply programming a reader to send a kill command. Apart from this, other companies have also developed products such as tag blockers or jammers. These portable handheld devices can be bought by consumers and used on a personal level. The blockers work by disrupting the transmission of information to scanning devices and thwarting the collection of data by readers, within a pre-determined distance. In the near future, these blockers may even be integrated into our watches, hand phones and PDAs. 11
  • 12. VI. Business Applications 6.1 No close substitutes We believe our product is revolutionary. The closest substitute we can think of is Japan’s smart basket but they have limited application uses outside of supermarkets. Online shopping may be a fast way of shopping too, but you lose that important aspect of touching the products. For example, clothes cannot be tried on and realistically speaking, online shopping is not picking up in Singapore. Thus, we believe that we can market our Smart Shopping System with success. This is in line with A*Star’s pledge to invest 10m to translate its RFID tags into commercially viable applications. 6.2 Singapore’s compact environment More over, in an article written by James McQuive, a former vice president at Forrester Research and current professor in the Communications Research Center at Boston University, he specifically identified Singapore as the perfect test bed for a consumer demand management implementation. “The higher computer literacy of the population will likely translate into consumer willingness to participate. The country’s relatively compact size and existing high-speed network capacity makes the installation of a sufficiently comprehensive infrastructure cost effective. Singapore’s government has a long-demonstrated commitment to pushing industries in is boundaries to pursue new technologies.” 6.3 Translating the vision into reality In 2004, Wal-Mart set a mandate that all its suppliers have to have their goods RFID- tagged. As Wal-Mart is such a huge consumer of their products, suppliers are forced to comply with this ruling. In Singapore, this may be harder to implement as there is no dominant retailer like how Wal-Mart is in the United States. As Singapore is more of an oligopolistic industry with several big retailers like Ikea, NTUC FairPrice, Carrefour and Robinsons, we suggest that they, together in unison, set a mandate like what Wal-Mart did. 6.4 Cost Considerations 12
  • 13. The A*Star Integrated Tag, is estimated to be around S$0.25. However mass production in millions could bring it down to S$0.07, just a little short of the industry’s holy grail of $0.05. We are confident that with continuing technology advancement, the price can be met. As for the set-up, in a large department store like BiG at Harbor Front which occupies 80,000sq ft of retail space, rolling out such a system storewide will cost some $1.8 million to $2 million for the one-time infrastructure cost, and a further $50,000 annually for the tags. We believe that with the cost savings made from the Smart Shopping System (reduced pilferage, increased sales etc), this investment will be worthwhile and highly profitable in the long run. VII. Conclusion The implementation of the Smart Shopping System countrywide in Singapore may seem like an impossible task. However, we believe that our Smart Shopping System can be a very viable reality in the near future. After all, when the ERP system was first suggested in the early 90s, it was met with much skepticism regarding its feasibility. All the cars had to be fitted with IU units, set-up costs were extremely high and yet since its implementation, it has revolutionize road travels and parking payments. Other countries like Britain have praised the Singapore system and have implemented a similar system in London as well. Likewise, we feel that the Smart Shopping System can change the way we shop and make life easier for today’s increasing time-challenged customers. Retail stores of tomorrow will have significantly shorter checkout queues, increasing self-service and more staff on hand to help customers. 13

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