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Rfid in retail(kapil)
 

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    Rfid in retail(kapil) Rfid in retail(kapil) Document Transcript

    • 2010 RFID IN RETAIL KAPIL SHARMA INTERNATIONAL SCHOOL OF MANAGEMENTEXELLENCE 2/26/2010 1
    • Contents ABSTRACT ............................................................................................................................................. 3 INTRODUCTION: RADIO FREQUENCY IDENTIFICATON (RFID) IN RETAIL INDUSTRY..... 3 RADIO FREQUENCY IDENTIFICATION: INTRODUCTION .......................................................... 4 Common uses of RFID System............................................................................................................ 5 HOW RFID WORKS IN RETAIL .......................................................................................................... 5 Improves the level of customer service .................................................................................................... 6 Increases customer's loyalty ..................................................................................................................... 7 Better inventory management ................................................................................................................. 7 Item Level Tracking ................................................................................................................................... 8 Futuristic view ........................................................................................................................................... 8 Better production management ............................................................................................................... 8 REINVENTING THE BAR CODE ........................................................................................................ 9 COST REDUCTION IN RETAILING & PRODUCTS USING RFID .............................................. 10 ITEM LEVEL TRACKING IN INVENTORY ...................................................................................... 12 WAL-MART IS ONE OF THE LEADERS, USING RFID ................................................................ 13 LIMITATIONS WITH RFID TECHNOLOGY ..................................................................................... 14 WHAT’S NEXT? ................................................................................................................................... 15 BIBILIOGRAPHY .................................................................................................................................. 15 RFID IN RETAIL
    • ABSTRACT Radio Frequency Identification (RFID) is a globally accepted technology, which has a great success in the area of supply chain management and particularly inventory management. Businesses benefit from this cost efficient opportunity to scan and track inventories. The tracking of items with RFID devices is applied in a variety of areas, such as retailing, healthcare and traffic management. The purpose of this article is to study about how RFID system is used in the retail industry. INTRODUCTION: RADIO FREQUENCY IDENTIFICATON (RFID) IN RETAIL INDUSTRY RFID is helping retailers around the world improve customer satisfaction and increase sales. The technology is transforming the retail industry by offering retailers real-time visibility into inventory and product movement to improve store productivity and loss prevention. Many of the world's largest retailers have mandated RFID tagging. This move affects more than 200,000 manufacturers and suppliers, driving the worldwide market for hardware and software to support RFID. RFID in Retail Industry is one day workshop to help explain retailers and marketers best RFID practices, reducing out-of-stocks, automating inventory management, boosting customer loyalty, customer personalization , presenting specific and proven retail applications through case studies that help participants build their business cases and calculate their return on investment. In March 2007, Aberdeen research revealed that retailers are increasingly considering RFID adoption to improve the customer experience and inventory visibility. As a follow- up, Aberdeen surveyed over 150 companies in the retail industry throughout February and March of 2008. This report analyzes those survey results and additional interviews RFID IN RETAIL
    • to explain how RFID is currently being used to deliver increased customer satisfaction and inventory accuracy, among other business improvements. Best-in-Class respondents saw customer satisfaction rise by 12% during the past two years; 78% increased inventory turns by an average of 5.4%. The study also explores which RFID technology components are dominant in the retail industry, future RFID implementation plans, general perceptions and best practices for RFID for in-store use. In this article, we’ll learn about the types of RFID tags and how these tags can be tracked through the entire Value chain. RADIO FREQUENCY IDENTIFICATION: INTRODUCTION RFID is a dedicated short range communication (DSRC) technology. The term RFID is used to describe various technologies that use radio waves to automatically identify people or objects. RFID technology is similar to the bar code Identification systems we see in retail stores everyday; however one big difference between RFID and bar code technology is that RFID does not rely on the line-of-sight reading that bar code scanning requires to work. With RFID, the electromagnetic or electrostatic coupling in the RF radio frequency) portion of the electromagnetic spectrum is used to transmit signals. An RFID system consists of an antenna and a transceiver, which read the radio frequency and transfers the information to a processing device (reader) and a transponder RF tag which contains the RF circuitry and information to be transmitted. The antenna provides the means for the integrated circuit to transmit its information to the reader that converts the radio waves reflected back from the RFID tag into digital information that can then be passed on to computers that can analyze the data. In RFID systems, the tags that hold the data are broken down into two different types. Passive tags use the radio frequency from the reader to transmit their signal. Passive tags will generally have their data permanently burned into the tag when it is made, although some can be rewritten. RFID IN RETAIL
    • Active tags are much more sophisticated and have on-board battery for power to transmit their data signal over a greater distance and power random access memory (RAM) giving them the ability to store up to 32,000 bytes of data. Common uses of RFID System RFID systems can be used just about anywhere, from clothing tags to missiles to pet tags to food - anywhere that a unique identification system is needed. The tag can carry information as simple as a pet owners name and address or the cleaning instruction on a sweater to as complex as instructions on how to assemble a car. Here are a few examples of how RFID technology is being used in everyday places:  RFID systems are being used in some hospitals to track a patient's location, and to provide real-time tracking of the location of doctors and nurses in the hospital. In addition, the system can be used to track the whereabouts of expensive and critical equipment, and even to control access to drugs, pediatrics, and other areas of the hospital that are considered "restricted access" areas.  RFID chips for animals are extremely small devices injected via syringe under skin. Under a government initiative to control rabies, all Portuguese dogs must be RFID tagged by 2007. When scanned the tag can provide information relevant to the dog's history and its owner's information.  RFID in retail stores offer real-time inventory tracking that allows companies to monitor and control inventory supply at all times.  The Orlando/Orange County Expressway Authority (OOCEA) is using an RFID based traffic-monitoring system, which uses roadside RFID readers to collect signals from transponders that are installed in about 1 million E-Pass and SunPass customer vehicles. HOW RFID WORKS IN RETAIL Long checkout lines at the grocery store are one of the biggest complaints about the shopping experience. Soon, these lines could disappear when the ubiquitous Universal Product Code (UPC) bar code is replaced by smart labels, also called radio frequency identification (RFID) tags. RFID tags are intelligent bar codes that can talk to a networked system to track every product that you put in your shopping cart. Imagine going to the grocery store, filling up your cart and walking right out the door. No longer will you have to wait as someone rings up each item in your cart one at a time. RFID IN RETAIL
    • Instead, these RFID tags will communicate with an electronic reader that will detect every item in the cart and ring each up almost instantly. The reader will be connected to a large network that will send information on your products to the retailer and product manufacturers. Your bank will then be notified and the amount of the bill will be deducted from your account. No lines, no waiting. RFID tags, a technology once limited to tracking cattle, are tracking consumer products worldwide. Many manufacturers use the tags to track the location of each product they make from the time it's made until it's pulled off the shelf and tossed in a shopping cart. Outside the realm of retail merchandise, RFID tags are tracking vehicles, airline passengers, Alzheimer's patients and pets. Soon, they may even track your preference for chunky or creamy peanut butter. Some critics say RFID technology is becoming too much a part of our lives -- that is, if we're even aware of all the parts of our lives that it affects. RFID in retail industry has solved major problems related to customer services. Improved customer service would ultimately lead to increased sales. With the help of RFID, it becomes easy for the sales staff to locate a particular item in the store and check its availability in less time. It gives accessibility to the products from store to store and also to the entire database. Here are some key points that why retailers implement RFID in there system Improves the level of customer service The overall time spent by the customer in shopping is reduced as the desired item is found in less time making shopping a better experience. Also while scanning of a particular product is done this technology provides access to the information about the product. It calculates the prices of the products kept in the shopping bag simultaneously, so the shopper is aware of how much he/she is spending. As the total of the shopping done is already calculated the customer has to just pay, thus waiting time for billing is reduced. RFID IN RETAIL
    • Increases customer's loyalty The RFID tags attached to the items has the ability to provide feeling of a 'virtual personalized shopper' to the customer. It also facilitates in tracking down the shopping preferences and habit of the customers and thus helps in introducing right rewards connected to it. The information about customer's shopping style, their shopping history, past purchases, etc can be tracked down, thus value added services could be provided to them giving the customer the feel of personalized treatment. Even decision regarding purchase of a product could be made in fitting room, as the RFID readers in fitting rooms that are connected to the computer, provides all information regarding the garment. Also the information related to the item is confidential and not to be unveiled to the customer, can be protected by your IT department. Thus security is also ensured from seller point of view also. These added benefits lead to better shopping experience for the customer which ultimately leads to customer loyalty towards your shopping hub. Better inventory management Scanning of bar code has become mandatory in inventory processing, but it has certain drawbacks compared to RFID technology. The bar code stickers show human errors as it has the capacity to encode limited and stagnant information. Bar code is unable to read or write multiple codes. RFID's capacity to track the items efficiently and encode multiple codes, resulting improved inventory management. It provides better safety in terms of fast recall of the stock and minimizes the theft also. It helps the supplier in maintaining the stock of goods and keeping the shelf filled with goods whenever needed. So the customers would never face storage of a product thus avoiding loss of sales and profit. The RFID IN RETAIL
    • key element in today's market is to maintain appropriate in-stocks and not having too much additional inventory. To manage inventory is a costly affair for the retailer. The information accessed through RFID helps in keeping a check on the inventory and its supply. Thus, maintaining the right percentage of inventory. The ratio of demand and supply can be well maintained as the items which has increased sales is tracked down and the stock is uploaded likewise. Item Level Tracking Item level tracking is the most important objective of RFID system. This tracking gives a personalized ID to every unit of inventory. This results in better tracking of the items. As it saves time, the re-ordering of the items becomes easy and can be done in lesser time. The percentage of shrinkage is reduced due to proper and timely shipments of the items. Futuristic view Advanced technologies are being developed in the field of RFID tags that are more advanced technologically and are of reduced costs. Generally the cost of RFID tags range from twenty cents to one dollar which is not so reasonable cost. Therefore in order to make it cheaper, the prices are required to fall to five cents instead of twenty cents. RFID tags are a part of RFID system so in order to increase its usage, and required to be cost effective. The future of RFID is very bright in retail sector as right from inventory management to product manufacturing, this system provides more efficient and advanced retail experience to both customer and the seller. Better production management Manufacturers can especially benefit from RFID because the technology can make internal processes more efficient and improve supply chain responsiveness for example; early RFID adopters in the consumer goods industry reduced supply chain costs between 3 and 5 percent and grew revenue between 2 and 7 percent because of the added visibility RFID provided, according to a study by AMR Research. RFID IN RETAIL
    • REINVENTING THE BAR CODE Almost everything that you buy from retailers has a UPC code printed on it. These bar codes help manufacturers and retailers keep track of inventory. They also give valuable information about the quantity of products being bought and, to some extent, by whom the products are being bought. These codes serve as product finger prints made of machine-readable parallel bars that store binary code. Created in the early 1970s to speed up the check out process, bar codes have a few disadvantages:  In order to keep up with inventories, companies must scan each bar code on every box of a particular product.  Going through the checkout line Barcodes, like this one found on a soda involves the same process of can, are found on almost everything we scanning each bar code on each buy. item.  Bar code is a read-only technology, meaning that it cannot send out any information. RFID tags are an improvement over bar codes because the tags have read and write capabilities. Data stored on RFID tags can be changed, updated and locked. Some stores that have begun using RFID tags have found that the technology offers a better way to track merchandise for stocking and marketing purposes. Through RFID tags, stores can see how quickly the products leave the shelves and who's buying them. In addition to retail merchandise, RFID tags have also been added to transportation devices like highway toll pass cards and subway pass. Because of their ability to store data so efficiently, RFID tags can tabulate the cost of tolls and fares and deduct the cost electronically from the amount of money that the user places on the card. Rather than waiting to pay a toll at a tollbooth or shelling out coins at a token counter, passengers use RFID chip-embedded passes like debit cards. But would you entrust your medical history to an RFID tag? How about your home address or your baby's safety? Let's look at two types of RFID tags and how they store and transmit data before we move past grocery store purchase s to human lives. RFID IN RETAIL
    • COST REDUCTION IN RETAILING & PRODUCTS USING RFID Consumers usually welcome price reduction. For that to be enduring, the supplier and retailer must reduce costs. RFID on trucks, pallets and cases is achieving this in many ways but the tagging of individual items is revealing yet richer rewards, even though it is at a much earlier stage. This article explains where we and retailers see RFID reducing costs in retailing and on products. Automation is the key, reducing excess stocks and work in progress and reducing the time taken from raw materials to finished item on the retailer's shelf ("time to market") and other benefits that directly impact costs. Most retailers involved in RFID see reducing stock outs on high- stock outs items such as DVDs and fashion apparel as the "quick win". Studies cited by DET show that out-of-stocks are worth between 3 and 4 per cent of total store sales, climbing to 11 per cent of the top 2,000 items. A study of over 600 store locations conducted by IRI and Procter & Gamble found that over 2 per cent of high-volume stock keeping units (SKUs) are out-of-stock on the shelf at any given time, contributing to revenue losses of 25 per cent and more in some promoted categories. Furthermore, the study concluded that 15 per cent of the time, when consumers encounter an out-of-stock in their chosen item, the sale is lost altogether, and 50 per cent of the time consumers purchase a competing brand. Retailers already reaping benefits for consumers RFID IN RETAIL
    • Customer service is increased when store associates have better knowledge of product whereabouts. With item level RFID, staff knows instantly if a particular item is in the store, and can track it down immediately. When an item becomes out of stock, the staff member can simply scan the EPC tag on the shelf, access the planogram, and calculate the next best item to place in that open spot. With "smart shelves" where the electronics in the shelf scans the RFID tags on the items it supports, even that can be automated. Security, environmental monitoring, traffic pattern monitoring, consumer behaviour, even ingredient-level tracking are all potential in-store uses for RFID. Most players agree it is not the ability to do these things that is revolutionary but rather the efficiency with which these tasks can be performed that makes RFID technology pay back rapidly. MANAGING AN ENTIRE RETAIL SUPPLY CHAIN RFID tracking systems are finding their way into cross-dock and warehousing applications first. But as they stretch further throughout a retail supply chain, they will require close cooperation between suppliers and retailers. As RFID systems are adopted, manufacturers will tag goods during production so everyone along the way, from supplier to manufacturer to logistics teams and end customers, benefits from the increased information that RFID systems provide. For this to happen, however, the cost of the system must drop to the point that its cost can be justified by the savings a company will reap from improved inventory management. Once that is the case, large global retailers will begin to demand that suppliers provide RFID-tagged packaging at the overpack/case level. That likely will happen first at the inventory control and pallet tracking level, followed next by high-ticket item goods such as electronics, then by other product groups as total system costs come down. RFID IN RETAIL
    • Examples of adoption into other areas of the supply chain provide a preview of RFID’s potential to impact retail systems. CHEP, the global leader in pallet and container pooling services, and Georgia- Pacific, one of the world’s leading manufacturers and distributors of tissue, pulp, paper, packaging, building products and related chemicals, are using Intermec’s Intellitag® RFID technology on recyclable plastic containers (RPCs). RPCs are used to package and transport produce. A grower packs and ships fruits and vegetables in RPCs for travel through distribution to a store’s produce department. There, store associates simply lift the container onto the shelf for an instant display. That means no more manual unloading of cartons or disposal of used or soiled packaging. When the produce container is empty, it is returned for cleaning and reuse. The RFID tag is used not only to keep track of the location of the RPC, but also to document its cleaning history, from the date and temperature of the washing to the chemicals used. Each RPC’s RFID tag incorporates a unique identification that can be read from 3 to 5 meters (9.8 – 16.4 feet) away as the RPC moves along high speed conveyors, passes through doorways, rests in fields, is loaded on a truck or is stacked on a pallet, even in groups of 100 or more. By adding tag interrogators, a grower can track loads of produce to a specific retailer to help speed payment, or a retailer can make sure the first produce into the system is the first to go on the shelves. ITEM LEVEL TRACKING IN INVENTORY The ultimate goal in retail is to create RFID systems that provide the benefits of the technology at a cost that supports item-level tracking. Such item-level tracking would provide each unit of inventory with a unique ID. When this occurs, the inventory accuracy and improved goods tracking will rise exponentially. Physical inventories and product re-ordering will be done in a fraction of time it now takes and retailers will be able to take inventory much more frequently. Truly automated checkout will become viable as RF interrogators list the contents of a shopping cart without moving any of the items. And truly accurate and timely reconciliation of shipments will cut down on shrinkage. New manufacturing technologies already promise automated, high-speed RFID tag production that will reduce tag costs, a major step in making these benefits possible. Although tags are only one part of a complete RFID system, industry experts now predict tag prices that may reach five cents per tag or less in the next few years. As item-level RFID systems move from inventory tracking to item manufacturing, perhaps spurred by large retailer demands for tagged merchandise, companies will begin to experience more of the efficiencies of a well-integrated RFID technology system. RFID IN RETAIL
    • WAL-MART IS ONE OF THE LEADERS, USING RFID Wal-Mart, the world’s largest mass-market retailer, announced in June 2003 that it would require its top 100 suppliers to RFID-tag all cases and pallets shipped to three major distribution centers in Texas by January 1, 2005. Each tag would transmit a unique electronic product code (EPC) containing identifying information, including the manufacturer and specific product identifier, such as to facilitate receiving and processing of inbound goods. Wal-Mart receives roughly one billion cases per year from its top 100 suppliers, which include companies such as Proctor & Gamble, Johnson & Johnson, Kimberly-Clark and Kraft Foods. In addition to the top 100 suppliers, 37 more suppliers signed on to participate in the initial program. Wal-Mart subsequently announced that all shipments from all suppliers must be RFID-enabled by the end of 2006, making it conceivable to track the more than 100,000 products that pass through a typical Wal-Mart retail outlet. Wal-Mart's president and CEO Lee Scott said: "We expect we will reduce mark downs, drive down inventory and improve stock turn as it helps to track product through the supply chain." Indeed, by improving supply chain traceability, it would take $1bn out of Wal-Mart's inventory," he predicted. The analysts go further, suggesting that RFID could slash 15% or $6.7bn from Wal- Mart's labour costs because the need for employees to scan barcodes on pallets and cases in the supply chain would be eliminated. Indeed, Erwin De Spielgelere of EAN estimates this as $8.35 billion yearly, broken down as shown RFID IN RETAIL
    • The estimated savings of Wal-Mart Source: EAN Simon Langford, manager of RFID Strategy at Wal-Mart says," Given that it costs the company five cents every time a member of staff scans a barcode on a pallet in one of our warehouses, automating that process will save millions before we even begin counting benefits". LIMITATIONS WITH RFID TECHNOLOGY Limitations with RFID technology are:  No RFID standard has been set yet. (The Auto-ID center has worked with standard bodies Uniform Code Council and EAN International to come up with electronic product code, but it is not yet considered a standard).  The demand should also drive down the price. (Wal-Mart says that a need for one billion RFID tags should drive down the price to five cents each.) The other major limitations are:  The smart tag technology is yet to be perfected , today on an average 20% of the tags do not function properly  Physical limitations like reading through liquid or metals still exist  Accurate read rates on some items can be very low  Nylon conveyor belts and other RFs can disrupt the tag transmissions in warehouses  Increase in expenses - the suppliers will have to equip their warehouses and transport vehicles with readers. These readers have to be connected to the computer networks for exchange of information. All these mean additional costs related to hiring technical consultants and additional hardware.  Wal-Mart inventory networks are burdened with the task of handling data of billions of their products. The company has to hence invest in extremely sophisticated system to process the data properly. RFID IN RETAIL
    • WHAT’S NEXT? An effective and efficient distribution system is the key to retailer success. Major retailers and consumer goods companies already are conducting RFID pilot projects. Now is the time to learn more. Companies remain reluctant to publicly discuss ROI, but as roll out of inventory and pallet tracking applications continue, the efficiencies will become clear and implementation of an RFID system will become a competitive advantage. BIBILIOGRAPHY http://standards.ieee.org http://www.technovelgy.com http://electronics.howstuffworks.com http://www.aberdeen.com http://www.idtechex.com http://www.youtube.com. http://rtvs.wordpress.com RFID IN RETAIL