Research, Presentation and Organizational Communication Coursework

This paper seeks to consider a major information technology aspect that impinges upon the retail consumer business as ours. It is seen that RFID, radio frequency identification is a major impact carrier in consumer business, especially those that lay great emphasis on supply chain logistics and management systems and invest heavily in inventories in order to cater to the needs of diversified consumer tastes, demands and preferences.

This study is based on a hypothetical research study conducted by a study group in the US, in association with management staff of the leading RFID technology users, Wal-Mart, who could be rightly said to have pioneered the RFID movement in USA.

It is widely believed that Wal-Mart has been substantially benefited in its sales and marketing efforts by all round utilization of this technology, including its strategic vendor relationships with companies like Proctor and Gamble, etc.

Therefore study using methodology of interviews and questionnaire responses by 50 management staff of Wal-Mart, leading RFID deployers, are considered in this study.

However, it is also seen that RFID is of recent origin and not much research has really emerged about its perceived benefits and advantages in terms of lowering sales costs and expenses, lowering inventory and avoiding out of stock situations.

However, in keeping with competitive market conditions and the need to take progressive steps for brand building and consumer clientele increase, it is necessary to implement RFID in a phased manner over a period of time, keeping the market challenges in mind. It is believed that over a period of time, the advantages of RFID would be realized.

Introduction

RFID is a concept that has emerged due to the limitations of Bar Coding. It is an efficient and effective system with greater advantages. While Bar Coding offers data about group of products, RFID offers information about individual data which is much more useful and relevant. Again RFID tags could be reusable, while Bar codes once scanned, cannot be rescanned.

The basic elements of an RFID are the tag, the scanner or reader and “middleware,” the hardware and software needed to transmit the RFID data to a central server and process these data. The basic elements of an RFID tag are microchip and an antenna coiled around it. RFID involves the use of reader which stores, monitors and transmits data to storehouses, for replenishment of goods upon exhaustion at the point of sale. This distribution centers are alerted when the products are needed to be replenished.

Thus it is seen that one of the most dominant benefits of RFID technology is to enable manufacturers and retailers to know location of every pallet or case of merchandise as they move about through a distribution chain, from factory, warehouses and then to storehouses.

RFID is slowly lowering these rates, since the technology allows shops to manage goods more effectively as they move from the production plant to the warehouse sites and finally to shelves in shops.

“Through RFID technology, Wal-Mart is providing value to customers, working with our suppliers to deliver collaborative benefits that allow people to save money and lead better lives,” Ford said. “We have only gotten started, and we are continuing to rollout to more stores at the same rate as the last two years.” (Walt mart continues RFID technology expansion, 2007).

Aspects of RFID

In this connection, it would be relevant to note that since Wal-Mart is a well established market leader in consumer goods, the impact of its business plans and competitive strategies, including supply chain management, could also impact smaller, newer business in this field. It could be emphasized that the bottom line of every business enterprise, small or big, is to cut down selling and marketing expenses, make optimum use of assets and augment resources. It is believed that the benefits derived from leaders like Wal-Mart, Tesco, etc. could also act as a springboard for smaller companies to introduce RFID, albeit in a smaller and circumscribed way.

It is also believed among industry experts that RFID could serve well in future, given its benefits and advantages over conventional bar coding. When asked to comment on the future of small businesses in the next decade or so,

Ms. Anita Campbell replies, “We’ll see increasing globalization, which is a good thing for small businesses. The Internet and online payment systems enable even microbusinesses to serve an international customer base. In fact, technology now gives small businesses the leverage and power to do things that were once limited solely to large corporations.”

For example, our supermarket could use RFID technology for grocery products. When a customer purchases the grocery items, in effect the RFID tags also goes along with it. This, the system would be in a position to track down the customer’s location and movements through the RFID tags.

But this could also be seen as an intrusion into the customer’s privacy. However, this problem could be solved by have the tag unreadable after opening the packets. All the customer has to do is to destroy a portion of the tag which houses the incriminating database.

It is said that “As people start to rely on RFID technology, it will become

Easy to infer information about their behavior and personal tastes, by observing their use of the technology.” (Rieback, Crispo & Tanenbaun, n.d, p.1).

How the technology works

The technology of RFID involves the use of microchips that are latched on to antennas. These antennas enable the chips to transmit data onto readers, which, in turn, “converts the radio waves reflected back from the RFID tag into digital information that can then be passed on to computers that can make use of it.“ (What is RFID, 2009)?

It is seen from the above that the utility of RFID technology is second highest at 15% in the case of SCM, after security/access control deployment. This signifies, in no small measure the impact of RFID technology upon trade and shipments

Research Methodology: Since this research is concerned about sales of consumer products, it was decided to conduct research studies with sales managers of Wal-Mart, who have installed RFID in more than 1000 retail outlets. The methodology was in the form of personal interviews and questionnaires distributed to 50 management staff of Wal-Mart who were responsible for operationalizing and maintenance of RFID technology at the shop floor.

The interviews for determining deployment of RFID technology was carried out at premises of Wal-Mart stores, on 20.12.2008, at 10.00 AM. The respondents were individually and personally interviewed by the study group and had to answer the questions posed in the questionnaire. (The detailed questionnaire has been listed in Appendix 1)

In order to ensure unbiased and objectivity of the study, the respondents were selected by drawing lots. The interviews were taped with their specific permission and later transcribed. The conduct of the meetings was chaired by the CEO of Wal-Mart along with senior directors of the marketing survey team who had been entrusted with carrying out this research.

Gathering of information for research

This was done through the questionnaire and personal interviews held with the respondent groups. From the interviews that were held, it seemed evident that the respondents found that deployment of RFID significantly enhanced overall supply chain and resource mobilization, besides lowering costs and ensuring against losses, pilferages and out of stock conditions of products. The responses to the various questions made by the majority are being studied below:

Research findings

• Ques. 1: Nearly 75% of the respondents were aware of the technical aspects of RFID and the procedure following its installation in containers, cases and crates being shipped out. The general feeling that emerges after the interviews was that RFID found favor with the shop level managers and supervisors because of many advantages.
• Ques. 2: Nearly 87% of the responses believed that it could not replace the Bar Code at least in the near future; however, it would offer stiff competition to bar coding systems.
• Ques.3: Nearly 86% of the respondents believed that although RFID is beneficial to large organizations, it is not cost effective to smaller ones, in that the cost of one tag could be anything between 0.50 cents (passive) to $10 (active). Add to this, they also felt that that readers need to be installed at several strategic points, and are cost absorbing. Over 77% of the respondents felt that a small or medium size unit needs to consider is whether they could go in for a tagging system which in some ways may be more expensive than the cost of inventories carried.
• Ques.4: Over 51% of the interviewees felt that initial benefits of RFID could be seen in terms of the fact that shipping controls are effected over containers in transit, status monitored using GPS satellite tracking and overall control over various logistics of supply chain, and including stock replenishment levels are ordained, at the click of a mouse. In other words, inventories systems get a permanent facelift and losses and cost effectiveness are visible.
• Ques 5: The respondents’ were not very sure about the storage of RFID tags since different tags had various storage capacities.. However, over a majority felt that basic data, which needs around 2GB could be stored in tags.
• Ques.6: Around 84% of the interviewees believed that passive tags required no batteries and depended upon readers for power supplies. Its reading output was also limited. However, according to 86% of respondents, active tags powered by batteries could read unto around 50- 100 feet and readers of active tags could update and upload critical stock and supply information on regular basis.
• Ques.7 According to 88% of respondents, privacy aspect emerges once the goods are sold and the tags are in the goods bought. However, it is possible that since all tagged products can be identified as such, it could be deactivated before the consumer leaves the store. It is a matter of consumer discretion whether to have the tags or not after purchase.
• Ques.8 In terms of costs, active tags are definitely higher. However, it is believed, according to 67% of respondents that costs for a significant barrier for RFID, especially since a large number of tags would be needed for monitoring goods. However, it is believed that over a period of time, costs may reduce and more companies would be able to benefit from RFID. “RFID is expensive, but backers say it offers long-term benefits that could dwarf the impact of the bar code on inventory control and distribution.” (Wal Mart plays catalyst to RFID update, 2003). As it stands today, 86% of the interviewees felt that smaller and operators on low margins may not be able to benefit largely from RFID, since inventory costs would significantly hike with utilization of RFID.
• Ques.9: To the first part of the question whether only manufacturers and others in the supply chain benefit from RFID, 81% of respondents believed that large, professionally managed operators were truly benefited by RFID. To the second part, nearly 89% felt that cost lowering and efficiencies were inbuilt in this system, including elimination of defectives and spurious products, which in the long run, would do more harm than good. Moreover, as 65% claimed, RFID does not promise instant benefits and it would accrue over a period of time.
• Ques. 10: Nearly 90% of the respondents were of the view, more than size of operations, the type of industry and the inventory, stock movements and consumption and overall issues connected with SCM and inventories need to be seen. A small exporter of say, jewelers, diamonds or precious stones needs RFID urgently for” testing a system that uses active tags to track high-value items in real time”, as compared to a larger shipper of items that may be voluminous in bulk but valued lesser. (Indian jeweler seeks 100 percent security from RFID, 2009).

So, as suggested by these respondents, RFID needs to be employed on a need basis and where real cost benefits accrue.

• Ques. 11: The question of whether major cost benefits inure, according to 78% of the respondents, were in terms of what benefits were needed and how these could be achieved. It would be seen more in terms of how RFID is being employed in industry, or trade, rather than what RFID stands for. Different industries need to employ RFID differently, and its benefits would accrue on how well the system is used rather than the system itself. Nearly 83% of the interviewers felt that, given that the clear picture of RFID is yet to emerge, and cost and privacy being major issues, it would need some more time for the RFID to achieve real results.
• Ques. 12: According to 69% of the respondents, inventories are significant factors in profitability; also, with the trend of global marketing and internet selling becoming the order of the day, with concomitant risks and challenges, scientific and planned business systems, involving RFID would be very much in the cards in future global business. Around 87% also felt that it would take another 5-6 years before the technology really provides excellent services for global business communities.

Analysis of results

After analyzing the results from the survey and the responses received from the interviewers, the management of this company felt that although the initial framework for deployment may be considered, after the approval of the Board of directors and majority stakeholders, the final decision would be considered after a careful evaluation of the RFID in the context of this company.

A consultant needs to be employed to study the main issues regarding the business, how RFID needs to be employed, and the perceived areas of its benefits and advantages. It is also necessary to draw up a project for RFID whose final report and recommendations need to be placed before the Board of Directors for their study.

Interpretations and Recommendations

The management feels that, RFID technology being in its early stages, with not too much data or information available, especially in the retail markets like ours, a detailed evaluative report and appraisal by independent Supply Chain Consultants needs to be made before a final decision is taken.

“Consumers see no benefit in RFID and perhaps some loss of privacy. Retailers feel RFID may discourage theft, but its cost effectiveness has not yet been proved.” (Anderson, 2007). However, it needs to be said with all fairness to RFID that “indeed, most of the fears that consumers have about RFID are founded on incomplete or inaccurate information; campaigns based on real facts would help alleviate most of these misconceptions.” (Radio frequency identification: Position paper, 2006).

Therefore, it is necessary that, in keeping with competitive markets, a pilot RFID may be given approval and tested in a smaller market in the US, before a large scale deployment is made. This is because “Many retailers are getting more comfortable with RFID and are moving into pilot-project mode in the coming year as standards and technology get worked out.” (Sullivan, 2005).

Conclusion

This study needs to consider whether the RFID technology may be used by this Company. It is believed from the survey conducted with Wal-mart, one of the leading consumer product stores in the US, that RFID may be used where large cost savings are possible and where logistics and distribution are major areas of management concern. “Radio frequency identification now belongs to the masses, and it lets you control all sorts of things.” (Amal, 2006).

It is also seen that RFID technology is of recent origin and enterprises wishing to switch to RFID need to assess and evaluate things more objectively before a final consensus can be evolved.

Thus, it is proposed that a Pilot study be made that could draw up the final application of RFID technology in the context of this company.

Questionnaires (posed to respondents)

1. What is RFID? :
2. Will it replace present Bar Code? :
3. If RFID are so popular why is it that it has not yet taken off in a big way?
4. What are the initial benefits of RFID?
5. How much information could a typical tag store?
6. How do you distinguish between active and passive tags?
7. It is believed that RFID compromises on privacy. How you deal with this aspect?
8. What about its cost factors?
9. Are only manufacturers benefited by RFID? Do some gains/benefits accrue to consumers too?
10. Would you recommend RFID Technology for smaller traders, or retail business?
11. Do its benefits justify its costs, and to what extent?
12. What, according to you, would be the future of RFID technology?

Annotated bibliography

• Amal, Graaftha. (2006). About the book. ID Theft Smart. Web.
  • According to this article, RFID technology is now a useful technology for people and business enterprises, and it helps to make day-to -day living more secure and convenient. This is through providing better control, providing access and safety to many aspects of living. It also helps protect valuable assets like vehicles, jewelry, electronic gadgets, against losses or pilferages.
• Anderson, Howard. (2007). Wal Mart and the three great RFID Lies. Network World. Web. Indian jeweler seeks 100 percent security from RFID. (2009). RFID Journal. Web.
  • This article speaks about how a jeweler retailer in Mumbai has designed a RFID system to improve its inventory Surveillance and stores security. This system, placed at strategic locations, is designed to take stock of both active inventory of items in active tags and also low valued passive tag inventory count.
• Jechlitschek, Christoph. (2006). A survey paper on radio frequency identification (RFID) trends. Web.
  • According to this paper, The actual power of RFID comes in unison with a backend that stores extra information such as descriptions for products, and when and where a particular tag was scanned. Broadly speaking, RFID system has a structure as depicted in this figure. RFID readers examine tags, and then forward the information to the backend. Generally, backend consists of a database and a well defined application interface. When backend receives new information, it is merged into stored information in database and if needed performs some computation on related fields. The application retrieves data from the backend as and when required.
• Liard & Reinhardt. (2003). Global shipments of RFID hardware by primary application. Media Research. Web.
  • The chart depicts the Estimates of the breakdown in expenditures for RFID hardware among general categories of RFID applications in 2003. It is seen that the largest category is for Security/access control at 24%, followed by SCM at 15%.
• Radio frequency identification: Position paper. (2006). Euro Commerce. Web.
  • The EU and national governments are working out strategies in order to put forth a more effective and useful deployment of RFID, through the strategy of mounting information place of actions. These plans of action would aim at informing consumers regard how RFID could help provide food safety, convenient living and other areas where deployment could be made to benefit society.
• Rieback, Melanie. R., Crispo, Bruno. & Tanenbaun, Andrew. S. (n.d.). RFID Guardian: A Battery Powered Mobile Device for RFID Privacy Management. Web.
  • It is feared that RFID technology could intrude on privacy of buyers through tags attached to products. This is aggravated by the fact that RFID transponders are may not be able to regulate information flow between RFID tags and RFID readers which may lead to adverse situations. A fallout may be in terms of the fact that invaders may try to collect data illegally either by actively questioning tags or inactively eavesdropping on present tag-reader communication systems.
• Score: 2008: Expert Answers: Anita Campbell. Web.
  • Radio frequency identification, or RFID, is a broad based term for technologies that use radio waves to make out individuals or substances. There are several techniques of placing objects or people, but the most proper is to store a serial number that recognizes individuals, substances or data on a microchip that is attached to an antenna – I.e., chip, antenna together are called an RFID transponder or an RFID tag).
• Sullivan, Laurie. (2005). RFID: The plot thickness. Information Week: Defining the Business Value of Technology. Web.
  • This article examines both the challenges and benefits that could arise from RFID technology in terms of who should take up responsibility for tagging devices and how RFID could be made more useful and beneficial for users in the supply chain management structure.
• Wal Mart plays catalyst to RFID update. (2003). ZDNet. Web.
  • It is seen from this article that Wal-Mart has invested heavily in RFID technology and is reaping the harvest of a good bargain. The cost savings could be substantial for Wal-Mart, the world’s biggest retailer with sales of about $218bn (£131bn) in 2002. It is seen that selling expenses works out to around £13Bn; keeping track of logistics for Wal-Mart could work out to around £1.3 bn to 1.5 bn.
• Wal mart continues RFID technology expansion. (2007). Wal Mart. Web.
  • This article discusses the support provided to RFID by Wal mart. It is believed, According to this article, the Company plans to invest in an additional 400 Wal Mart stores by the end of 2007. The company official also discussed the technology’s current and future benefits to both business and consumers including broad benefits for improving sustainability.
• What is RFID? (2009). RFID Journal. Web.
  • This article, from the official RFID Journal, considers the main aspects that go into usage of this technology. Radio frequency identification, or RFID, is a concept for technologies that use radio waves to identify people or objects. There are different methods of identification, but the most common is to store a serial number that identifies aindividual , object or data on a microchip that is latched onto an antenna (chip and antenna together are called an RFID transponder or an RFID tag). It presents fundamental information on use of this technology.