Radio frequency identification implementation in the supermarket industry

Résumé du document

This paper discusses the implementation of Radio Frequency Identification (RFID) in the supermarket industry. RFID is based on the transmission of radio frequency waves by RFID tags to RFID readers. The RFID tags are attached to products or pallets and can be embedded with a wide variety of information ranging from product characteristics to supplier details. There are two kinds of tags: active and passive. Active tags can send out radio frequency waves by themselves whereas passive tags need an incoming signal, sent by a reader, to generate an outgoing wave. This radio frequency wave contains the information that is embedded in the tag. A reader then picks up the wave and the information is sent to the company's information system. The Electronic Product Code (EPC) is the technology standard. The key question of this paper is whether the RFID implementation is able to create or maintain a competitive advantage.

Extraits

[...] “RFID and Corporate Responsibility: Hidden Costs in RFID implementation” by Barut M., Brown R., Freund N., May J. and Reinhart; p information gives you competitive advantage” by Porter M. and Millar V., Exhibit V s Figure Determinants of industry attractiveness Threat of new entrants Bargaining power of suppliers Rivalry amongst existing competitors Bargaining power of buyers Threat of substitute, product or services Source: information gives you competitive advantage” by Porter M. and Millar V.; Exhibit V1 The bargaining power of suppliers is bound to increase after RFID implementation. [...]

[...] Finally, the costs of RFID implementation are dealt with The impact of RFID on the Value Chain In this section, Porter's value chain model1 is applied to the supermarket industry. Table 1 shows that RFID does not change the core business of the industry, namely retailing, but it improves the overall efficiency of the business in almost every aspect of the value chain. Below, the impact of RFID on the primary and secondary activities of the supermarket industry is being analysed “RFID and Corporate Responsibility: Hidden Costs in RFID implementation” by Barut M., Brown R., Freund N., May J. [...]

[...] The department can then advertise these products for a quick stock clearance. On the level of services, such as after-sale services, one of the future possibilities of RFID is to let the customer check out and pay automatically without having to queue for the cashier6. The support activities An analysis of the firm's infrastructure reveals that RFID has a major influence on a supermarket's inventory control. As the exact location of every item and the exact number of every product in stock is known, manual stock control is redundant. [...]

[...] By the time that the costs of RFID will have decreased, primarily the unit price of the tags, they might be 9 To A Good Start With The Feds” by Gatty B. “European Commission to launch public enquiry into RFID” by Sayer P “Grocery Distribution: from the DC to the table” by Schnorbach P. s bankrupt. So many of these smaller firms, such as Piggly Wiggly11, may be forced to adopt RFID. The threat of new entrants remains almost the same at the moment, i.e. very low due to the industry's small margins. Additionally this threat is even likely to diminish later on. [...]

[...] Hence caution is needed when implementing the technology. Therefore many companies start off with a small project and gradually implement the technology throughout the entire company. Additionally, a firm must take the impact of the implementation on its brand equity into consideration, as a bad reputation can liquidate all the advantages. Though there are high risks involved in implementing RFID, not implementing RFID would mean bankruptcy in the long run. Because of the highly competitive nature of the industry, the creation or enlargement of a competitive advantage of one firm could put its competitors out of business. [...]