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Retail Industry Consumer

Modern Retail industry is characterised by high degree of competition, low border and volatile demand. The industry is segmented into several classs like consumer durable goodss, vesture, drugs & A ; personal attention, food markets etc. The largest among them is the food market retailing.

Due to the life manner alterations consumers are choosing for a one halt shopping to salvage clip and minimise attempts spent at shopping. This resulted in important enlargement of the merchandise line in a retail shops and all major retail merchants are diversifying into several other merchandise section. In food market retailing, major retail merchants are come ining in the non nutrient classs like consumer durable goodss, place trappings, vesture etc. due to this a typical retail merchant carries immense figure of diversified merchandise in their shop and typically major retail merchants carries between 25000-50000 merchandises at a clip ( Euromonitor International 2007 ) .

Value consciousness and higher consciousness of the merchandise among the consumers is fuelling low monetary value competition in the retailing sector and frequently retail merchants are offering monetary value publicity to pull and retain consumers. This consequences in the volatile and unpredictable demand and creates a immense force per unit area on the supply concatenation of the retail merchants ( Euromonitor International 2007 ) .

In modern retailing supply concatenation direction plays a critical function in the fight and profitableness of a retail merchant. To run into the consumer needs retail merchants beginning their merchandise from different location around the universe. Many of these merchandises are produced in one state, packaged and processed in another state and shipped and delivered to sell in another state. This consequences in creative activity of immense interrelated and complex web of planetary supply concatenation ( BEA 2006 ) .

Even after promotion in the information engineering and acceptance of new engineering and patterns like Barcode, EDI, VMI, efficient consumer response etc. supply concatenation direction in retail industry is a dashing undertaking and retail industry is get bying with several issues like out of stock, shrinking, stock list inaccuracy, inaccurate invoicing etc which consequences in hapless client satisfaction, loss of gross revenues and high operating cost.

Harmonizing to a survey conducted by Gruen et Al ( 2002 ) the world-wide rate of out of stock is 8.3 % which consequences in an overall 4 % gross revenues loss to the retail merchants. He found that the major ground behind out of stock was hapless shop ordination, prediction and refilling. This happened due to the inaccurate informations about stock list degree, mistake in invoicing & A ; receiving, shrinking etc. Harmonizing to Beck et Al ( 2002 ) , shrinking is one of the major jobs in the retail industry. In their survey of major retail merchant and provider in the 20 European states they found merchandises tantamount to about 2.31 % -1.75 % of the gross revenues or deserving euro 13.4 billion lost due to the shrinking.

The universally used Barcode system for merchandise designation and informations aggregation in retailing is non able to work out these jobs. As it requires manual scanning of every merchandise while in the modern retail environment, retail merchants are required to hive away, administer and pull off immense sum of stock lists which requires a really cheap and mass producible manner to expeditiously label, categorise and path assets and merchandises ( Xiao et al ) .

Radio Frequency Identification Technology or RFID enables informations capturing without any human interaction and provides a manner to minimise human mistakes and labour cost every bit good as clip. In RFID system a little transponder known as tickets are stick or attached on a merchandise package which is electronically scanned by RFID readers to authenticate and track merchandises automatically without any manual intercession ( Furness 2005 ) .

A RFID system is consists of three chief constituents – ticket, Reader and a host computing machine. Tag is used to hive away data/information about the merchandise while a reader is used for automatic aggregation of data/information from the ticket, these information are so direct to host computing machine which processes the information. This information are utilised for a figure of application like merchandise hallmark, stock list trailing, following and numeration, invoicing, having, telling, calculating etc. ( Coronado et al ) .According to Furness ( 2005 ) houses utilizing RFID system is already witnessing decrease in stock list cost, addition in dependability and truth of informations and other benefits.

After the Wal-Mart authorization to its providers for labeling all merchandises at instance and palette degree, the application of RFID system in retailing all of a sudden got a major push in the big graduated table retailing. Several other retail merchants like Tesco, Metro, Gap, Sainsbury ‘s etc. around the universe announced their program to implement RFID system in their supply concatenation ( Delen et al 2007 ) .

1.2. Aim

Recently after the Wal-Mart authorization of instance and palette degree RFID tagging to its providers many administrations followed the suit and announced their ain RFID execution program. Many retail merchants around the universe are carry oning RFID test or already completed the test for RFID execution in their supply concatenation Most of the test had shown a good sum of betterment in undertaking some of the biggest challenges in retailing like out of stock, shrinking and stock list direction. Even after the successful out of the engineering merely few retail merchants had adopted the adopted the engineering while others abandoned their program for RFID acceptance due to assorted grounds and there is a large quandary about acceptance of the engineering ( Gaukar et al 2007 ) .

This survey investigates the acceptance of the RFID system in the retail supply concatenation and explores the drivers of the RFID acceptance in retail supply concatenation and the benefits and challenges of the RFID acceptance in the retail supply concatenation.

The survey is aimed to supply the retail merchants relevant information on the usage of engineering, the benefits they will acquire and the challenges of the RFID acceptance. The survey besides aims to supply penetration into the application of the RFID engineering in the retail supply concatenation and the country of the benefits. How the RFID system will be utile in work outing some of the serious job in the retail supply concatenation like out of stock, inaccurate stock list, shrinking etc and how RFID engineering will assist the retail merchants in pull offing assorted supply concatenation activities like distribution, stock list, transit expeditiously.

1.3 Chapter Plan

Chapter one provides the information about the retailing industry and the function of supply concatenation in doing it competitory and introduces the construct of RFID system for pull offing the retail supply concatenation. Chapter two gives the background information about Automatic designation engineerings, the RFID engineering, supply concatenation direction and the retailing industry and recent tendencies and development in the retailing industry. In RFID subdivision, the history, development, working and the current application of RFID engineering in the retail supply concatenation is discussed.

In chapter three academic literatures on the RFID engineering, retailing and supply concatenation direction is viewed. In this chapter literature on RFID application, execution, benefits and drawback for retail supply concatenation direction is viewed to derive an apprehension of the subject and the issues traveling on. Besides in this chapter literature on the retail industry and challenges it ‘s facing is viewed. In this chapter instance surveies related to RFID execution in retail supply concatenation is viewed and discussed.

In chapter four research methods and the utility of transporting out a peculiar methodological analysiss is discussed. In this chapter informations aggregation method and information analysis used for the research is discussed.

In chapter five cardinal findings of the survey and informations analysis is discussed. This chapter is used to show the cardinal findings and findings from old instance surveies and industry tests are presented.

In chapter six decision of the survey is presented and besides based upon the cardinal findings recommendation are suggested for the retail industry. In chapter seven restriction of the survey is presented and the impact on the survey is discussed.

2. Background Information

2.1 Retail Industry: Trends & A ; Challenges

The planetary retailing industry is extremely segmented and diversified. The largest section of the retail industry is the supermarket which is followed by house clasp goods and place furniture retail merchants. If we look at the growing rate most of the retailing sections is turning in the part of 8 % . Merely hypermarket, discount houses and cyberspace retailing is seeing a steep growing in the period 2001 to 2006 ( Euromonitor International 2007 ) .

In the planetary retailing industry due to the altering lifestyle consumers are choosing for one halt shopping to salvage clip. This is ensuing in proliferation of big one halt format hypermarkets and superstore who shops a diversified scope of merchandises from food market points to apparels to consumer durable goodss. Consumers are besides really witting about the value of the money which is resulted in the aggressive monetary value competition among the major retail merchants. Particularly in developed states where the growing of the market is slow, monetary value competition is really intense ( Euromonitor International 2007 ) .

In the below table universes top 10 retail merchants are given based on the 2005 gross revenues excepting Tax/VAT

Increasingly intense competition and decelerate growing in the developed states has prompted acquisition and consolidation in the industry. This can be seen by the acquisition of Leader Price in Poland by UK based Tesco Plc and the amalgamation of Sears, Roebuck and Co and Kmart in the United provinces. Besides big retail merchants from the developed states are increasing come ining into the international market for the growing through acquisition of bing participants ( Euromonitor International 2007 ) . Following tabular array shows the universe top internationalised retail merchants

With the lifting income degree consumers demand for premium merchandises is turning this is peculiarly more seeable in the US and European market. Besides due to the ageing population in these markets wellness attention related merchandise and services are witnessing a turning demand. Retailers in these markets are choosing for new formats and new channels, like cyberspace shopping of Tesco Direct, for growing and pulling new clients. High consciousness, media revolution and environmental consideration among consumer are fuelling the demand of ethical merchandises or Fair Trade merchandises ( Euromonitor International 2007 ) .

Making Competitive Advantage through Supply Chain

Porter ( 2007 ) defines fight as the productiveness with which a state or part uses its natural, human or capital resources the same is valid for a house. A steadfast competiveness is defined by the productiveness of its inputs or how much resources it utilise to bring forth a unit of merchandise. Competitive advantage resides into a company or in its industries and a house ‘s competiveness depends chiefly on the picks a company makes. Besides external factor like location and bunch engagement is an of import subscriber to the fight.

Harmonizing to Porter in order to vie houses execute a set of distinct activities in which competitory advantage resides. Performing an activity better than other gives competitory advantage to a house. One of the cardinal activities in a house ‘s value concatenation is supply concatenation. Which helps in the creative activity of the merchandise, bringing to the purchaser and so it supports the after gross revenues and services activities.

Harmonizing to ( Harrison & A ; Hoek ) Supply concatenation gives competitory advantage to a house by run intoing the demands of terminal consumers through providing their demand which meets their demands, at a competitory cost. Supply concatenation provides a steadfast five ways of viing in their market. These are following

  • Quality Advantage: supply concatenation provides a steadfast quality advantage over its rivals by presenting the merchandise at right clip, doing certain the handiness of the merchandise and helps in diminishing the defects in the merchandises ( Harrison & A ; Hoek ) .
  • Speed Advantage: Time taken to carry through a client order plays a critical function in client satisfaction which consequences in repetition gross revenues and trueness as with progressively busy life clients wants merchandises services immediately even they are willing to pay a premium for it. Therefore seasonableness and velocity of bringing provides a steadfast competitory advantage over their rivals. Besides with the progressively copied merchandise the processing and velocity of bringing creates a distinction among the competition as it is difficult to copy ( Harrison & A ; Hoeck ) .
  • Dependability Advantage: The chance of run intoing a deadline is step of dependableness. The higher it is the better the productiveness and public presentation of a house will be. In consumer head it creates a repute of a steadfast service degree. On clip bringing and completeness of bringing increases a steadfast productiveness ( Harrison & A ; Hoeck ) .
  • Flexibility Advantage: the ability of a supply concatenation to alter harmonizing to the market, client and merchandise demand gives houses competitory advantage over their rival in the signifier of quicker merchandise debut to run into changing consumer demands or penchants, or run intoing the fluctuation in demand by increasing or diminishing the bringing of merchandises ensuing in right sum of stock list and operating expenses.
  • Cost or Productive Advantage: Harmonizing to Hill ( 2007 ) in extremely competitory environment of today concern many merchandises compete on the footing of cost therefore a decreased cost of making a concern means a better market portion every bit good as increased border. He states that as a house ca n’t diminish the fixed cost of making the concern lessening in variable cost like cost of stuff typically varies between 50 % -70 % for different concerns plays a critical function in the profitableness of the house.

1.2. Automatic Identification ( Auto-ID ) Technologies

Harmonizing to EPCglobal, engineerings associated with the creative activity and acquisition of machine clear informations are called Automatic designation engineerings. Automatic designation engineerings help to capture informations automatically alternatively of manual entry.

Automatic designation engineerings are chiefly used for four types of applications. These are categorised as -Authentication, Tracking, Process Effectiveness and Information Management application.Due to these application these engineerings are widely used and are really critical for pull offing supply concatenation specially in retail supply concatenation deployment of them consequences in immense economy of cost and clip ( Karkkainen et al 2001 ) .

There are many automatic designation engineerings are available in the market like Bar-coding, Radio frequence Identification, Optical Character acknowledgment, Vision acknowledgment, Smart cards, Contact memory Technologies and Blue Tooth. Among these engineerings Bar-coding and RFID have more cosmopolitan application and widely used in all walks of life ( Karkkainen et al 2001 ) .

Below is the comparing of automatic designation engineerings harmonizing to their application countries.

( Beginning: Karkkainen et al 2001 )

1.3 Introduction of RFID

Radio Frequency Identification system is non a new engineering it was invented during WW-II by Scots physicist Sir Robert Alexander Watson-Watt for placing British aircraft from enemy aircrafts. This system was based on the radio detection and ranging engineering. Basically any system which uses wireless moving ridges for designation of an object, vehicle or anything, wirelessly is referred as RFID system ( RFID diary ) .

With the promotion in Radar and RF communicating engineering, RFID engineering besides bit by bit started to develop every bit good miniaturised with falling cost. In 1973 Mario W. Cardullo received the first U.S. patent for an active RFID ticket with rewritable memory. In the same twelvemonth California based enterpriser, Charles Walton, received a patent for a inactive transponder which was capable of unlocking a door without a key ( RFID diary ) . In the mid-1980s first mass commercialised application of RFID system was came into being in the signifier of machine-controlled toll payment systems. This is still widely used on roads, Bridgess and tunnels around the universe for toll aggregation ( RFID diary ) .

Initially RFID system was based on low frequence which makes informations transportation easy and requires internal power for working.These type of system were incapable of hive awaying big sum of informations. Shortly after this a USA based house Los Alamos came up with a inactive ticket which does n’t requires any power beginning and uses UHF wireless moving ridges. This device drew energy from the reader and merely reflected back a modulated signal to the reader utilizing a technique called backscatter.

Latter, the development of smaller transponder and high frequence RFID system capable of greater scope and faster informations transportation rates paved the manner for farther development of legion application of the engineering some of them are tracking of containers, vehicles, entree control, payment systems, anti-theft device for autos etc.

Auto-ID Centre at MIT, USA was established by Uniform codification council, EAN international, Procter & A ; Gamble and Gillette in 1999 for farther commercialization and standardization of the engineering. This move helped enormously in the development and commercialization of the engineering. Two research workers, David Brock and Sanjay Sarma from the MIT lab, proposed seting low cost RFID tickets on all merchandises and track them through the supply concatenation information system. They proposed to utilize lone merchandise consecutive figure on cheap inactive RFID tickets and so the informations associated with the consecutive figure on the ticket would be stored in a information base that would be accessible over the cyberspace. This development led to the decrease in the cost of the engineering and RFID engineering started to widely follow for supply concatenation direction and existent clip trailing of merchandise.

Sarma and Brock research basically changed the manner concerns think towards the engineering. Due to their work RFID turned into a networking engineering by associating objects to the Internet through the ticket. Now a house could automatically allow a concern spouse know when a cargo is go forthing the dock at a fabricating installation or warehouse, and a retail merchant could automatically allow the maker know when the goods arrived in their shop. This resulted in supply concatenation direction ensuing in on timely bringing, distribution, telling and refilling of merchandises. During 1999 and 2003, more than 100 big end-user companies, U.S. Department of Defence or DOD and many cardinal RFID sellers joined the enterprise of Auto-ID Centre. Latter Auto-ID Centre developed the Electronic Product Code ( EPC ) totaling strategy, and web architecture for looking up informations associated on an RFID ticket through the Internet. On October 2003, Auto-ID Centre closed its door and its research duties were passed to Auto-ID Labs. Some of the biggest retail merchants in the world—Gap, Mark & A ; Spencer, Metro, Tesco, Wal-Mart, Carrefour and DOD announced their program to utilize EPC engineering to track goods in their supply concatenation. The automotive, pharmaceutical, tyre, defense mechanism and other industries are besides traveling to follow the engineering.

1.4 RFID VS Bar Code

Barcode is the most universally used method for merchandise designation. In Barcode information is encoded in a series of printed bars and infinites. These can be printed on a simple paper, metals and plastics which make it really convenient to utilize. The informations are captured through an optical optical maser scanner and a decipherer converts the captured image of informations into computing machine compatible digital information. This information is validated through a voucher. As Barcodes uses simple paper and engineering for informations encoding it ‘s really inexpensive and convenient to utilize ( Karkkainen & A ; Ala- Risku ) .

In the modern retail environment, retail merchant are required to hive away immense sum of stock lists which requires a really cheap and mass producible manner to expeditiously label, categorise and path assets and merchandises. RFID enables informations capturing without any human interaction and provides a manner to minimise human mistakes and labour cost every bit good as clip ( Xiao et al ) .

In the below table comparing of RFID and Barcode is given

Bar Code


  • it needs manual optical maser scanning to read informations
  • Requires line of sight scanning
  • Contains limited informations
  • Easily damageable to H2O, soil and mishandling
  • Can read one ticket at a clip
  • Can be used merely one clip
  • Cheap
  • can be printed before production or on a merchandise
  • can be used with virtually any merchandise
  • Can be easy copied and forged
  • Can be read on or around H2O and metal with no public presentation loss
  • Automatically scans informations from a distance
  • No line of sight is required
  • Huge sum of informations can be stored
  • Immune to heat, soil, dissolver and are long lasting.
  • Multiple RFID tickets can be read at a clip
  • Very expensive
  • RFID tickets are rewritable therefore could be used many times
  • ca n’t be printed on merchandise
  • ca n’t be used with certain type of containers
  • Virtually impossible to copy
  • Liquid and metals cause read jobs.

( Beginning: Hardgrave et al 2007, Rebecca Angeles 2005 )

1.5 What is RFID?

Radio Frequency designation or RFID engineering is used for automatic designation and exchange of informations from a physical object with the usage of wireless moving ridges without any human intercession. A basic RFID system is consists of three parts

A. Tag or transponder which is consists of an aerial, Microchip for informations storage and processing and some times batteries as an internal power beginning,

B. Reader which is used for question and informations capturing from a ticket, and

C. host computing machine which processes the information received from the reader in the same manner a barcode system does ( Hodge & A ; McFarlane 2005 ) .

1.5.1How RFID Works

The ticket or transponder which is attached to a merchandise, is consists of alone merchandise codification besides known as Electronic Product codification ( EPC ) . When a ticket receives a signal from the reader it becomes active and transmits the data/EPC stored in its memory, to the reader utilizing RF moving ridges. Upon having the signal from the ticket, reader decodes it and sends the informations and location to a host computing machine. By utilizing specific endeavor information system this information can be utilised for machine-controlled dealing such as automatic entrance of reception of goods send/received, comparing of progress transportation notice, stock list direction etc ( vitamin D, hont ) .

In a RFID system single merchandises are identified by a alone merchandise codification known as EPC, which is stored in the RFID ticket. The aerial in the RFID ticket communicates wirelessly with the RFID reader. Readers are placed on strategic location which helps it to scan all the merchandises go throughing through the location. Reader sends this scanned information to the cyberspace. The Object Naming Service or ONS helps in the designation of the merchandise through its EPC. Product Markup Language or PML shows information about the merchandise which is scanned. By utilizing cyberspace, ONS and PML information about the merchandise is automatically processed and displayed on the houses information system.This information can be utilised by the makers, providers and logistics operators or retail merchants for cognizing the location, measure, gross revenues and status of the merchandises ( Kambil & A ; Brooks2002 ) .

RFID helps in designation of an object without any human intercession which consequences in riddance of general human mistakes every bit good as salvaging of clip and labour cost. This consequence in greater truth and efficiency of a procedure and higher visibleness of the procedure involved. Further with the integrating of cyberspace and database engineerings RFID system enables users towards sharing of informations between assorted users on existent clip footing which can be utilise for assorted concern intents i.e. stock list direction, order fulfillment, stock refilling etc.

1.6 Components of RFID

A RFID system is consists of following constituents

1. Tag or Transponder

2. Reader

3. Host computing machine

1.6.1. Tag: Transponder besides called Tag is a transreceiver ( transmitter semen receiving system ) which are capable of hive awaying a certain sum of informations and receives and transmit information. Tags are different types harmonizing to the memory type and power demand.

Tag or transponders consists of three parts. One portion is an incorporate circuit for hive awaying and treating informations. The ICs are designed in a manner that they are capable of hive awaying at least a alone designation figure besides called electronic merchandise codification or EPC. Second portion is consists of an aerial for transmittal and response of RF signal. The aerial in RFID tickets are made of conductive elements. Through the aerial, tags are capable of pass oning the EPC electronically. The 3rd portion of ticket, which is optional, consists of internal power beginning in the signifier of batteries ( by and large Watch batteries ) ( Sarma et al 2003 ) .

Harmonizing to power demands tickets can be divided into three classs:

a. Passive Tag

B. Active Tags

c. Semi Active / Passive Tags

a. Passive Tags: A inactive ticket does n’t necessitate any internal power beginning and utilizes the energy of the reader ‘s signal for its operations. Passive ticket uses coiled aerial which creates a magnetic field by utilizing the energy provided by the reader ‘s signal. When a ticket receives a RF signal from the reader, the aerial within the ticket forms a magnetic field. The ticket utilizes this magnetic field for pulling power for bit operation which in bend transmits the information encoded in its memory through aerial by a technique known as backscattering.

The major disadvantage associated with inactive ticket is that due to miss of power its read distance is really short which limits its much application. The typical scope for a inactive ticket will be between a few centimeter to few metres. Besides power demand restricts memory infinite and several other applications like usage of different detectors for observing meddling or temperature demands.

One of the chief advantage of these type of ticket is that they are cheap to fabricate, hold a longer life typically between 20 to 30 old ages and smaller in size ( Some times even smaller than a grain of rice ) .passive tickets capable of EPC storage are available in the scope of $ 0.01 to $ 1.

Due to these features passive tickets have found limitless application in fast traveling consumer goods, retail supply concatenation and in other countries. In fact research workers from Auto Idaho labs recommended that theses type of ticket should be utilized for point degree tagging by seting Electronic Product codification in the tags memory and so associating the RFID system with cyberspace for farther information and information processing.

B. Active tickets: These are tickets which are fitted with an internal power beginning by and large in the signifier of ticker batteries for powering french friess and aerials. Active ticket comes in two signifiers one with replaceable batteries other with certain units.

The major advantage of active tickets is that they have long read distance ( in 100s of metres or more ) , high informations capture/transmission rate and can be reprogrammed several times, have larger memories and can hold other detectors for temperature, humidness or fiddling sensing. Besides active tickets are capable of executing independent monitoring, control and nosologies. They have high bandwidth and can be equipped with independent networking.

The major disadvantage of active tickets is that they are really expensive and they are larger in size comparison to passive tickets which limits their utilizations in many countries. Besides power outage can ensue in expensive misread and they need care.

  • Semi Passive Tags: There is 3rd sort of tickets are available in the market which run on external power beginnings every bit good as on internal power beginning and is known as Semi passive Tags. These types of tickets are similar to active tickets but they utilize internal power merely for micro chip and memory storage operation. Signal is transmitted through the aerial utilizing backscattering the RF moving ridge from the reader, similar to the inactive ticket ( Gibson & A ; Bonsor ) .

Due to this semi passive tickets have greater battery life compared to active tickets with the same functionality of an active ticket. Besides semi passive tickets have greater response clip compared to passive tickets which consequences in greater read scope and reliability.The major drawback of semi inactive tickets are that they are expensive and bigger in size compared to passive tickets which restrict their utilizations in many applications ( ( Gibson & A ; Bonsor ) ) .

1.6.2. Reader

Reader is used to interrogate a RFID ticket. It consists of a transceiver for having and conveying RF moving ridges and decipherer for decrypting the standard signal. Reader emits energy in the signifier of RF wave at a peculiar frequence. This RF moving ridge is used to power and communicate with the RFID ticket.

When a ticket receives a reader ‘s signal it become activate and transmits the information in its memory to the reader. Readers receive the transmittal back from a ticket and decrypt the informations and direct it to a host computing machine for farther processing. A reader emits the RF moving ridges in the scope of few centimeters to 100s of metres depending on the demand and physique.

Depending upon the application, cost of a reader varies from $ 20- $ 5000 and some times even more. Readers can be handheld or fixed mounted.Below is some figures of different types of readers.

1.6.3. Host Computer

When a reader collects informations from the tickets it decodes it and once more go through it to a host computing machine ( It may be an full networked system ) . Host computing machine processes these informations for farther operation depending on the demand and can be shared among assorted users through cyberspace.

Application of RFID in Retailing

( Beginning: Delen & A ; Hardgrave et al 2006 )

Inventory Management

Harmonizing to Karkkainnen & A ; Holmstrom ( 2002 ) by utilizing RFID system across a retail supply concatenation stock list inaccuracy can be minimized due to the riddance of manual scanning and informations entry in the assorted phases of the supply concatenation which consequence in the better order fulfillment and Replenishment, and decrease in out of stock.

In a RFID enabled environment when a retail merchant sells a merchandise the RFID ticket attached to the merchandise is automatically scanned and the information about the merchandise sale is automatically updated on the information system of the retail merchant. The IT system of the retail merchant uses this information for stock reorder to supplier, if the merchandise stock list is running low. On having the order from the retail merchant ‘s IT system provider will look into the stock handiness in its stock list and accordingly fulfils the order ( Leong et al ) .

Merchandise and Asset Tracking

A merchandise or plus which is attached with a RFID ticket, allows uninterrupted designation through out the supply concatenation which consequences in better use and trailing of the plus. The information about the use of the plus can be easy used for better direction of the plus i.e. if plus is non often in usage it can be removed from the operation or engaged in other activities ( Boushka et al 2002 ) .

In a RFID enabled environment when a merchandise or assets passes through a strategically located reader, information about the merchandise or plus is recorded automatically. This record is passed to the plus and merchandise trailing system which is used for the monitoring of the cargo. A conveyance director can use this information for the on clip bringing of merchandise ( Boushka et al 2002 ) .

Harmonizing to Chappell et Al ( 2002 ) using the above information an plus can be tracked expeditiously and assets that are under used can be removed from the operation. Besides this information can be used for turn uping losing assets and framing loss bar policy.

Putaway and Replenishment: In a RFID enabled DC or ware house, putaway drivers will be automatically guided to the correct pick up location and the demand for scanning which is done in barcode system will be eliminated. Besides location stock list measure will be automatically updated. If the merchandise is stocked at the incorrect location an qui vives will be created. Due to this during refilling, operator will non hold to look for tonss at incorrect location and burden can be removed without scanning the merchandise and if a operator stocks a merchandise at a incorrect topographic point an qui vives will be created ( Chappell et al 2002 ) .

1. Out of Stock ( OOS )

Harmonizing to Gruen et Al ( 2002 ) world-wide norm of out of stock in supermarkets is 8.3 % . Harmonizing to them the major cause of Out of Stock ( OOS ) is hapless shop ordination ( 30 % ) , shop prediction ( 18 ) shelf refilling ( 22 % ) and remainder are related to upstream procedures. This consequences in 3-4 % one-year gross revenues loss to retail merchants in add-on to hapless client satisfaction and keeping.

The chief ground behind this is the hapless information visibleness. RFID provides accurate informations quality as it automatically detects and updates information system about the reaching and going of merchandises from a shop or ware house which gives better information visibleness to a retail merchant about the location and position and measure of merchandise ensuing in better ordination, prediction and refilling and decreased OOS state of affairss ( Theisse & A ; Michahelles 2006 ) .

3. Trailing and Tracing of Product

This is a critical map in the supply concatenation as merchandise trailing and tracing is required for pull offing internal procedures of a retail merchant every bit good as due to regulative traceability demand of nutrient merchandises. If a RFID system strategically implemented across a supply concatenation it provides accurate informations about the motions of a good in a supply concatenation ( Tellkamp et al 2005 ) .

Receiving and Check-in

Harmonizing to Chappell et Al ( 2002 ) if instances and palettes tagged with RFID is brought in a distribution Centre, RFID reader will read the tickets automatically and updates the stock list measure which eliminates the present labour intensive measure cheque in procedure which is extremely prone to mistakes. Besides many of the clerical maps like publishing receiving, informations entry, purchase order confirmation is done automatically by the RFID system.

For more information see Alexander subject on produc handiness in car Idaho booklet in new articles -seen for ref

Order Filling

Harmonizing to Chappell et Al ( 2002 ) , RFID system makes order make fulling operations error free by directing the choosers to the right location of the merchandise and verifies the right measure of the order and automatically updates the current stock list and shop order information.


The bing confirmation system for merchandise cargo consumes tonss of clip and resources and is prone to mistakes. In a typical distribution environment merely 40 % to 60 % cargos that are free of harm and contains the right measure of merchandises delivered at right clip. The mistake in transporting operation additions client claims, inaccuracy in stock list degrees and returns which consequences in extremely disgruntled clients ( Alexander & A ; Gilliam et Al 2002 ) .

RFID makes transportation operation efficient by extinguishing the demand for manual scanning of loads/products. Besides due to high read rate the conveyors transporting the merchandises will run at high velocity ensuing in clip salvaging. RFID will besides bring forth mistake free transportation papers ( Chappell 2002 ) .

2. Shrinking:

Harmonizing to Tellkamp et Al ( 2005 ) the major ground behind stock list inaccuracy is shrinking which occurs due to employee larceny, shrinkage, supplier fraud, disposal mistake etc. through the usage of RFID a retail merchant can place the location of the escape in the supply concatenation and follow some preventative steps ( BEA ) .

Demand Planning and Replenishment

Harmonizing to Kambil & A ; Brooks ( ) RFID enormously helps demand planning and Replenishment. It does so by supplying accurate information about the gross revenues, shrinking and the stock list degree which helps in demand planning, telling and supply of merchandise. This consequences in better shelf refilling and less out of stock state of affairs.

Supply Chain Management

Harmonizing to Cooper and Ellram ‘’SCM is an integrative attack to pull off the entire flow of merchandise in a distribution channel from the provider to the ultimate user ” ( Fawcett, Ellram & A ; Ogden, 2007 ) .

The aim of any SCM is to provider clients with satisfactory merchandise and services at competitory monetary values in a fixed clip frame ( Fawcett, Ellram & A ; Ogden, 2007 ) .

The historical and Modern position of SCM

Buying and Supply concatenation:

Buying or procurance is the procedure of geting natural stuffs, constituents, merchandises, services and other resources from provider in order to put to death the operation ( Chopra & A ; Meindl, 2007 ) .

Sourcing is the full set of concern procedures required to buy goods and services. Sourcing procedures includes the choice of provider, design contract, merchandise design coaction, procurance of stuffs and services and rating of provider public presentation ( Chopra & A ; Meindl, 2007 ) .

Physical Distribution Management

Physical distribution direction is the direction of motion and storage of merchandise from provider to the terminal client ( Chopra & A ; Meindl, 2007 ) . It focuses on the outbound transit and storage of finished goods/products from maker to the terminal client ( Chopra & A ; Meindl, 2007 ) .

Material motion or physical distribution is a major driver of an organisational profitableness and fight because it contributes straight to the cost of making concern every bit good as the experience of the terminal client ( Chopra & A ; Meindl, 2007 ) .


It ‘s an extension of physical distribution.logistics refers to the direction of stuff flow and information flow. Inbound logistics trades with the flow of stuffs and information to operations from its providers while outbound logistics refers to the motion of stuffs and information from operations to its clients ( Harrison & A ; Hoek, 2005 ) .

We can estimate the importance of logistics by the fact that two of the universe ‘s most successful organisations, Wal-Mart and Seven-Eleven have built their full concern around their outstanding logistic web and operations ( Chopra & A ; Meindl, 2007 ) .

Broadly activities of logistics can be divided into three classs

  • Order fulfillment
  • Transportation direction
  • Distribution direction

1. Order fulfillment

Main activity of logistics is order fulfillment. Below figure shows the cardinal activity that consists of an order fulfillment ( Fawcett, Ellram & A ; Ogden, 2007 ) .

2 Transportation Management

Transportation system is one of the of import and most seeable activities of logistics. Cost of transit and handiness and dependability plays a step function in the logistics system.Transportation influences the pick of stock list direction, design of merchandise and packaging and client services schemes ( Fawcett, Ellram & A ; Ogden, 2007 ) .

3 Distribution Management

Distribution direction concerned with the distribution and storage of the merchandise. Inventory is stored in ware houses located in the fabrication installation or in distribution Centre ( Fawcett, Ellram & A ; Ogden, 2007 ) . Warehouses and DC ‘s perform following critical activities

  • Supplying and having goods
  • Material handling
  • Order processing
  • Consolidation and distribution of supplies
  • Transportation direction by path function, following and monitoring of goods
  • Packaging and labelling
  • Scrap and disposal

( Fawcett, Ellram & A ; Ogden, 2007 ) .

As maintaining stock list costs concerns and halter their hard currency motion efficient distribution direction provides concern cost advantage by speedy order processing and better stock list direction ( Fawcett, Ellram & A ; Ogden, 2007 ) .

Therefore by planing a good distribution web concern can acquire the advantage of good client service fast response clip, decrease in waste and overall it can diminish operation cost ( Fawcett, Ellram & A ; Ogden, 2007 ) .

SCM Drivers

As the end of the supply concatenation is to accomplish the competitory scheme of the company it needs to construction its logistical and functional drivers to acquire the needed efficiency and reactivity ( Chopra & A ; Meindl, 2007 ) .

The below figure shows the supply concatenation determination devising model

Supply Chain Operations Reference Model ( SCOR )

SCOR or supply concatenation operations mention theoretical account is developed by supply concatenation council for measuring of the public presentation of the supply concatenation of a house and countries of betterment. The theoretical account is based on the five direction procedures: program, beginning, do, present and return. SCOR is used as a benchmarking tool for the public presentation of the supply concatenation ( Harrison & A ; Hoek, 2005 ) .

Turning good concern program into client value requires coordinated direction of buying, production, logistics and order fulfillment. SCM provides concerns an chance to be cost effectual and antiphonal to the client every bit good as concern demands ( Chopra & A ; Meindl, 2007 ) .

Literature Review

The chief purpose of this subdivision is to research the academic work to familiarize with the current development and issues in the retailing, RFID engineering, the application and execution of RFID in the retail supply concatenation, challenges of following the engineering, what sort of procedure efficiency it provides to retail merchants. Besides instance survey on the execution of the RFID engineering in retail industry is viewed to derive an penetration on the existent public presentation of the engineering in twenty-four hours to twenty-four hours activities of the retail supply concatenation.

Parter et Al ( 2005 ) in his research found that even after passing million of dollars on new engineerings such as Auto Replenishment plan, food market retail merchants were unable to diminish their stock list cost due to

  • Forward purchasing
  • high figure of merchandise stored in a supermarket
  • Inclination of employees to short-circuit scanning of each similar merchandise

This Resulting in

  • High stock list degrees and other related costs.
  • Lack of shelf infinite
  • Product inaccessibility or out of stock

In their research they found that RFID can be used to cut down stock list degree by associating the full RFID system with the shops chief computing machine. Sridharan et Al ( 2005 ) states that hapless execution of supply concatenation direction solution can destruct the value of a house and this consequence in break in supply concatenation every bit good as immense losingss for the house.

Gruen and Corsten et Al ( 2002 ) found that out of stocks or OOS presents a serious job for retail merchants as consumer switch trade names when they did n’t happen the merchandises they want to purchase. The response of the consumer is shown in the below figure

( Beginning: Gruen and Corsten et al 2002 )

Harmonizing to them this job arises due to hapless information direction. In their survey they found following ground for OOS

Further they said these mistakes resulted in 50 % gross revenues loss of intended purchase and overall 4 % gross revenues loss to the retail merchant. Harmonizing to their survey OOS can ensue in following things

1. Consumer loss

2. Gross saless loss

3. Loss of client to maker

4. Gross saless loss to maker

Gruen and Corsten et Al ( 2002 ) suggested that by using better engineering these job can be solved but they did n’t order any technological solution in their survey. Their survey is important in the manner that it clearly shows the deduction of hapless stock list direction particularly out of stock and its causes and ensuing fiscal loss.

This survey is rather dependable as they studied more than 52 OOS across 661 retail mercantile establishments in 29 states and taken history of 32 FMCG merchandise classs around the Earth and surveyed 71000 clients and they are non aligned to any engineering supplier or anteroom.

Another survey done in this country by Howgego ( 2002 ) besides arrived at the same decision. He besides suggests that retail merchants have to incorporate their supply concatenation from maker to stop client for fight which will ensue in decreased cost and higher client satisfaction.

A major survey conducted to turn to the extent, nature and impact of stock loss or shrinking in Fast traveling consumer goods sector in Europe Beck ( 2004 ) collected informations from retail merchants in 18 European states with a combined turnover of euro 137.2 billion.

The determination of the survey reveals that the loss due to shrinkages costs European maker, providers and retail merchants a humongous euro 24.17 billion yearly or euro 465 million hebdomadal and it is 2.41 % of the overall market turnover ( Beck 2004 ) . In the below tabular array cost to different parties is shown

Beck ( 2004 ) observed that unknowingness about the causes of the loss is a major job among the makers, providers and retail merchants due which they were unable to place the extent, location and answerability of the employees. Following figure shows the per centum of loss which is known and unknown.

On the footing of the informations collected from the known loss, four major causes were found which is shown in the below figure. The major ground behind the stock loss emerged as the procedure failure which was followed by external, internal larceny and inter -company fraud ( Beck 2004 ) .

Harmonizing to Beck ( 2004 ) European retail merchants had spend euro 2.92 billion to salvage stock loss worth euro 18.2 billion in 2005.

On retail offense like shrinking and shoplifting Bamfield ( 2004 ) besides arrived at the same decision and founds that larceny by client and employees and supplier larceny and internal erros where the chief cause of the shrinking nevertheless the determination estimation were different.

Kelepouris et al suggested that the chief demand of traceability of merchandise can be addressed by the RFID. In their survey they outlined information informations mention theoretical account and system architecture for easy and executable deployment of RFID system across a supply concatenation. Further they suggest that through RFID traceability information can be obtained at a decreased labor cost. Harmonizing to them RFID combined with an appropriate IT substructure can enable terminal to stop traceability in supply concatenation at little costs even low-cost by SMEs. but they did non uncover the manner and the extent of cost of the engineering version and execution in their survey.

Fleisch and Tellkamp ( 2003 ) in their fake survey on cause of stock list inaccuracy and impact in retail supply concatenation public presentation found that riddance of stock list inaccuracy can cut down the supply concatenation costs every bit good as the out of stock degree. In their survey they examined the direct effects of the factors that causes the stock list inaccuracy on each of the supply concatenation steps which is shown in the below figure

( Beginning: Fleisch and Tellkamp 2003 )

Further they suggested technological step to extinguish stock list inaccuracy and out of stock. They suggested that RFID due to its high ticket cost can be merely utilized for high value points but their fake survey indicates that the RFID can be utilised for higher procedure efficiency and decrease in shrinking.

Liu et Al ( 2008 ) , states that RFID enabled automatic informations capturing enhances the merchandise point visibleness in the retail nutrient supply concatenation ensuing in greater concern transparence and better direction of perishable nutrient in supermarket supply concatenation. further he propose that in supermarkets, complexness of monitoring and control of the perishable nutrient can be managed by application of RFID engineering, which enables non contact, existent clip informations aggregation and by utilizing this information supermarkets can cognize the status, location, measure and expiry day of the month of the merchandises. Besides point of sale informations obtained through RFID can be utilised for demand prediction and order fulfillment ensuing in better stock list direction and dynamic monetary value accommodation to run into the demand and maximization of net income.

White et Al ( 2008 ) studied the factors act uponing the successful RFID acceptance attempts. They found that early operational deployment was influenced by the authorization from cardinal retail merchants necessitating the engineering usage and retail merchants insisted on the engineering deployment in expectancy of faster gross revenues rhythm and enhanced system integrating. In contrast to this the major benefits were found in the industrial goods and logistics industries where authorization were less common. They besides found that perceived organisational innovativeness has a positive impact on the expected ROI from RFID. Besides they found that the system integrating played a critical function in deducing benefits from the RFID.

Angeles ( 2005 ) studied assorted RFID version instances and set guidelines for RFID acceptance and suggested proactive acceptance of the engineering. In her survey she found that the RFID offers both procedure freedom and better information visibleness throughout the supply concatenation in different industries. She besides states that WAL-Mart, Department of Defence ( USA ) authorization and inaugural by industry organic structure EPCglobal will assist in the proliferation of the engineering.

Harmonizing to Boeck and Wamba ( 2008 ) relationship between a provider and purchaser are important for successful RFID execution and substructure. In their survey they found eight cardinal issues such as communicating, information sharing, co-operation, trust, committedness, relationship value, power instability, and mutuality, version and struggle declaration necessary to decide for successful execution of RFID system. As the engineering involves immense investing in IT and substructure and immediate benefits to providers are negligible comparison to the retail merchant.

Harmonizing to Barrat and Oliveira SCM should be built around the integrating of all concern spouses so that houses should be able to benefits from the common ends of all its concern spouses. In retail supply concatenation this consequences in the uninterrupted refilling of goods, seller managed stock list or VMI and collaborative planning, prediction and refilling ( Pramatari 2007 ) .

Kim ( 2006 ) found that efficient supply concatenation integrating plays a critical function in public presentation betterment in a little graduated table house while in big steadfast public presentation betterment is obtained from the close inter-relationship between the SCM procedures and competition capableness.

Tellkamp et Al ( 2005 ) found that even with equal usage of informations capturing and informations transmittal engineering, informations quality is hapless in the retail supply concatenation. He advocated the usage of RFID and provinces that RFID system helps in make fulling the spread between existent and practical universe. And after RFID execution cost of informations capturing becomes low and quality becomes better. they cites this ground behind the engineering version by major retail merchants.

In their research they found that RFID helps in better information acquisition, merchandise handiness, stock list and shelf direction in supermarkets but they did n’t research the cost and complexness issues related with the engineering.

Koh et Al in their survey explores the impact of RFID in the retail industry they identified four major benefits of RFID in retailing they are 1.Better inventory direction 2. Efficient shop operation, 3.Incresed retail rhythm and integrating of operations. In add-on they besides identified three major hazard factor in the signifier of 1.Complexity of engineering 2. Lack of proficient expertness and 3.uncertainty of engineering. This is basically resulted due to the freshness of engineering in retailing. Besides as the determination were based on the single sentiment of executives involved in retailing and the sample size was little its non considered dependable.

McFarlane et Al ( 2002 ) in their paper explores the impact of RFID on simple and complex merchandise supply concatenation. They states that the connectivity of merchandise through RFID and so matching it with houses information system will supply accurate informations about merchandise location and measure which will extinguish the mismatch between the stuff and information flow. This will ensue in better order fulfillment, stock list direction. In their research they find that RFID can vastly alter the manner supply concatenation are managed and uncertainness about merchandise and resource handiness will be eliminated.

Hardgrave et Al ( 2007 ) surveies the concern value of RFID system for providers and retail merchants. In their survey they identified many public presentation matrices that can be derived from RFID deployment. They suggested ways for bettering logistical public presentation supply concatenation operations of distribution Centre and retail shop.

Hardgrave et Al ( 2008 ) conducted a survey on impact of RFID on stock list truth which was commissioned by Wal-Mart. They found that RFID reduces the stock list inaccuracy even if it was non to the full deployed and integrated with the house ‘s information systems. The RFID contributed in a better prediction, Ordering and Replenishment ensuing in decrease in out of stock state of affairss. This determination supported the earlier survey conducted by Hardgrave, Waller et Al in 2006, on influence of RFID system on out of stock by gross revenues speed analysis and supported the instance for RFID execution as RFID information information provided better supply concatenation visibleness ensuing in better determination devising.

A really interesting survey done in the execution of RFID and mechanization is carried out by the Corsten and Gallen ( 2005 ) . In their probe of the failure of the Sainsbury ‘s ?700 million inspection and repair of its supply concatenation, they found that although the thought was the brilliant, the undertaking failed due to hapless execution and deficiency of expertness. They outlined following ground for the failure of the undertaking

  • Shortening of clip period of undertaking from 7 old ages to 3 old ages
  • Lack of co-ordination between engineering suppliers and Sainsbury ‘s executives
  • Lack of expertness on execution of new engineering

Corsten and Gallen ( 2005 )

Further they noticed that if mechanization system does non work decently even manual intercession go really clip consuming and dearly-won.

In their probe on usage of RFID in UK retail sector Jones et Al ( 2004 ) found several benefits of the engineering. They argues that the chances and challenges for RFID tickets for retail merchant are important but the extent of acceptance will depend on the cost and benefits analysis and besides the perceptual experience and credence of the consumer.

McFarlane and Wong studied the impact of RFID on the shelf refilling in fake stock list control theoretical account. They analysed the impact of RFID information on current shelf refilling policies in a shop and identified information relevant for bettering the procedures. They compared the old Barcode, EDI, ASN, EPOS system with the new RFID, EDI, ASN, EPOS system. They found some betterment in RFID enabled environment. The consequence is shown in the below figure

In their survey McFarlane and Wong observed that for maximal RFID impact shelf refilling patterns should be modified and benefits will change among different categories of merchandises.

Karkkainen ( 2003 ) conducted a survey on short shelf life merchandise in the retailing and found that due to high figure of merchandise discrepancies, rigorous traceability demands, temperature control and big volume of goods, supply concatenation direction of these merchandises is a large challenge. In this survey he examines the RFID tests conducted at Sainsbury ‘s for short shelf life merchandises and explores the benefits for short life merchandise retail merchants and makers.

McFarlane ( 2002 ) suggests that to maximize the benefits from RFID acceptance reconsideration of operational and concern determinations doing procedure, which he referred as control system, is indispensable. In his research he found several possible benefits of developing a control system based on the RFID informations and demonstrated the demand of developing a control system.

McFarlane ( 2002 ) further divided the RFID acceptance and information processing in two parts and referred them as unfastened cringle and closed cringle. Harmonizing to him unfastened cringle trades with the substructure edifice and storage of RFID informations while close loop trades with the determination devising and actions based on the RFID informations.

Harmonizing to McFarlane ( 2002 ) unfastened cringle provides benefits in the signifier of increased truth, quality and seasonableness of informations while closed cringle activities will alter the determination devising procedures due to the handiness of accurate and timely information. The application of the unfastened cringle and closed cringle RFID is shown in the below figure

Hingley et Al ( 2007 ) studied the deduction of RFID labeling on providers to the UK food market retail market. They found that due to the high cost of the engineering providers were unwilling to follow the engineering as they see small benefits for them self compared to the retail merchant. They conclude that in order to maintain the cost of the application lower limit, retail merchants and providers should develop a standardized and flexible system. Besides they suggests that for successful RFID execution supply concatenation power instability must be addressed and the cost of should be equally distributed between the providers and the retail merchants.

Attaran ( 2007 ) in his survey finds that RFID execution can ensue in better supply concatenation coaction and visibleness. In his survey he found that if RFID is implemented decently it will increase the concern ROI with major betterment in retail supply concatenation communicating. Further he suggests that outside technological issue like Marketing, High outlook, false promises, privateness and security issues are the chief stumbling block in the full commercialization of the engineering

Muir ( 2007 ) raised the issue of privateness and security of consumer informations and said that due to built-in nature of the RFID system anyone with a background in electronics can cognize the merchandise, a individual is transporting by utilizing a good quality reader. Further he suggests that before implementing the RFID on point flat proper policy about privateness and security should be constituted.

Sarma et Al ( 2003 ) states that as the RFID ticket will come in into our day-to-day lives, privateness and privateness issue will play a major function in the version of the engineering farther he suggested that in retail merchant environment inactive tickets should be used at point degree labeling which has a really short read scope and besides he suggested incorporation of new characteristics like ego putting to death ticket, signal hallmark etc for safety of informations.

Luckett ( 2004 ) pointed out the issue of privateness and province that issue of privateness and security of informations comes in consumer head because they did n’t see any direct benefits from the RFID. In his article he says that even mobile phone falls in the same class as a RFID enabled merchandise and can be used for tracking and surveillance but people still carry it because they can clearly see the convenience and benefits of a nomadic phone.

Alexander et Al ( 2002 ) states that investing in RFID engineering is immense and requires batch of dedication and co-operation between the concerned parties and the wagess may non be instant. Besides he pointed out that as RFID is a new engineering there is batch of uncertainnesss exist about the cost of execution and public presentation. In his study he suggested the usage of RFID on instance degree and given the illustration of successful execution in assorted major retail merchant like Wal-Mart, Tesco, Metro etc. besides they suggested that instance degree tagging will assist companies to derive experience to implement point degree labeling in future when the engineering will maturate.

4.1Research Methodology

Harmonizing to Ghauri & A ; Gronhaug ( 2005 ) research de

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