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RFID-enabled supply chain collaboration services in a networked retail business environment

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Since the early 1990s, there has been a growing understanding that supply chain management should be built around information sharing and collaboration among supply chain partners. The emergence of RFID technology is expected to revolutionize many of the collaborative supply chain processes and to empower new collaboration scenarios, such as anti-counterfeiting, product recall and reverse logistics, collaborative in-store promotion management and total inventory management. This paper proposes eight RFID-enabled supply chain collaboration services (e.g. dynamic pricing, smart recall, in-store promotion management, out-of-shelf response) in a networked retail business environment. The services are characterized, on a high-level, by the information shared between retailers and suppliers, the level of tagging (pallet/case/item level) and the location of the tag readers. Also, a scalable-distributed network architecture, building on the possibilities provided by web service orchestration and data stream management systems, is proposed to support these collaborative supply chain management processes. However, this paper introduces into a research-in-progress with the ultimate purpose to assess and categorize the RFID-enabled supply chain collaboration services according to four dimensions: the extent of collaboration required between retailers and suppliers, the RFID technology requirements, the transformation of existing (or the introduction of new) processes and the business performance impact of the RFID-enabled collaborative service. This research is partly funded by the European Commission (IST-2005, FP6) through the IST SMART research project with participating user companies being European grocery retailers and suppliers from the fast-moving consumer goods sector.
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99
20th Bled eConference
eMergence:
Merging and Emerging Technologies, Processes, and Institutions
June 4 - 6, 2007; Bled, Slovenia
RFID-enabled Supply Chain Collaboration Services
in a Networked Retail Business Environment
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
ELTRUN, Dept. of Management Science and Technology,
Athens University of Economics and Business, Greece
{cleobar, k.pramatari, gjd}@aueb.gr
Abstract
Since the early 1990s, there has been a growing understanding that supply chain
management should be built around information sharing and collaboration
among supply chain partners. The emergence of RFID technology is expected to
revolutionize many of the collaborative supply chain processes and to empower
new collaboration scenarios, such as anti-counterfeiting, product recall and
reverse logistics, collaborative in-store promotion management and total
inventory management.
This paper proposes eight RFID-enabled supply chain collaboration services (e.g.
dynamic pricing, smart recall, in-store promotion management, out-of-shelf
response) in a networked retail business environment. The services are
characterized, on a high-level, by the information shared between retailers and
suppliers, the level of tagging (pallet/case/item level) and the location of the tag
readers. Also, a scalable-distributed network architecture, building on the
possibilities provided by web service orchestration and data stream management
systems, is proposed to support these collaborative supply chain management
processes. However, this paper introduces into a research-in-progress with the
ultimate purpose to assess and categorize the RFID-enabled supply chain
collaboration services according to four dimensions: the extent of collaboration
required between retailers and suppliers, the RFID technology requirements, the
transformation of existing (or the introduction of new) processes and the business
performance impact of the RFID-enabled collaborative service. This research is
partly funded by the European Commission (IST-2005, FP6) through the IST
SMART research project with participating user companies being European
grocery retailers and suppliers from the fast-moving consumer goods sector.
Keywords: Supply Chain Collaboration, Services, RFID
1 Supply Chain Collaboration In Retailing
Since the early 1990s, there has been a growing understanding that supply chain
management should be built around the integration of trading partners (Barratt &
Oliveira, 2001), the sharing of information and benefits (McLaren, 2004) and the
collaboration of organizations (Patrakosol & Olson, 2006). Supply chain
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
100
collaboration as understood today has begun to take form since the mid-1990s,
when the forms of collaboration multiplied (Pramatari, 2006) and new forms of
information sharing extended their focus to include not only a passive exchange of
information between partners, but also a more proactive approach through
common planning and synchronisation of activities and business processes
(Skjoett-Larsen et al., 2003), taking advantage of innovative technologies.
Anthony (2000) suggests that supply chain collaboration occurs when two or
more companies share the responsibility of exchanging common planning,
management, execution, and performance measurement information. Bowersox et
al. (2000) state that firms collaborate in the sense of leveraging benefits to achieve
common goals.
Supply chain collaboration in retailing and Fast Moving Consumer Goods
industry (FMCG) has mainly been expressed in the form of practices such as
Vendor Managed Inventory (VMI), Continuous Replenishment Program (CRP),
and Collaborative Planning, Forecasting and Replenishment (CPFR). VMI is
probably the first trust-based business link between suppliers and customers
(Barratt & Oliveira, 2001), whereby the manufacturer (supplier) has the sole
responsibility for managing the customer’s inventory policy, including the
replenishment process, based on the variation of stock level in the customer’s
main warehouse or distribution center (Blatherwick 1998, Cooke 1998, Frantz
1999). CRP moves one step ahead of VMI and handles the inventory policy not
only with the variations of inventory levels at the customers’ main stock-holding
facility but also with sales forecasting, based on point-of-sales (POS) data from
the retailer’s stores (Andraski, 1994). Collaborative Planning, Forecasting and
Replenishment (CPFR) can be seen as an evolution from VMI and CRP,
addressing not only replenishment but also joint demand forecasting and
promotions planning, focusing on promotions and special-line items (Holmström
et al., 2002). CPFR is based on extended information sharing between retailer and
supplier, including POS data, forecasts and promotion plans. Pramatari et al.
(2002) further suggest a new form of CPFR, named Process of Collaborative
Store Ordering (PCSO), addressing the daily store replenishment process. This
process is supported by special IT infrastructure (a web collaborative platform)
allowing: the daily online sharing of store-level information (e.g. POS data, store
assortments, stock level in the store, promotion activities, out-of-shelf alerts, etc),
the sales forecasting and order generation, the online collaboration of the trading
partners, and finally the order exchange and order status tracking. Based on these
short descriptions, VMI and CRP are more about efficient replenishment and
supply, whereas CPFR puts more emphasis on the demand side.
There is a clear evolution path in the capabilities and sophistication of the
Information Technology (IT) infrastructure supporting all these collaboration
practices, in the amount of information exchanged between the trading partners
and in the process(es) enabled by this information sharing supporting former
versus later forms of collaboration. Compared to the traditional ordering process,
VMI/CRP and CPFR highly increase the total volume of information transmitted
between retailers and suppliers on a daily basis. The volume of information
exchanged and the intensity of interaction are expected to further increase
dramatically when the advanced data capture capabilities of Radio Frequency
Identification (RFID) technology coupled with unique product identification and
real-time information gathering are employed. The emergence of RFID is
RFID-enabled Supply Chain Collaboration Services in a Networked Retail...
101
expected to revolutionize many of the supply chain processes, especially those
involving collaborating partners (Prater et al., 2005). A recent industry report
(GCI, 2005) refers to new supply chain collaboration scenarios that will be
empowered through the use of RFID and information sharing between trading
partners (supply chain collaboration services), such as anti-counterfeiting, product
recall and reverse logistics, collaborative in-store promotion management and
total inventory management. Figure 1 (Pramatari, 2006) below summarizes the
evolving path of supply chain collaboration practices in retail and the underlying
information technologies that have enabled this collaboration over time.
1990
1995
2000
2005
CRP/VMI
CPFR
RFID-enabled
collaboration
Classical EDI
web-based
interaction
XML
RFID-
EPC Gen1
RFID-
EPC Gen2
Technological
evolution
Evolution of
supply-chain
collaboration
practices
Category
Management
Internet EDI
Store-level
CPFR
EPC Network...
GDSN
Figure 1: Evolution of supply chain collaboration practices and enabling
technologies in retail industry
In this context, this paper proposes eight RFID-enabled supply chain collaboration
services (e.g. dynamic pricing, smart recall, in-store promotion management, out-
of-shelf response) in a networked retail business environment. The services are
characterized, on a high-level, by the information shared between retailers and
suppliers, the level of tagging (pallet/case/item level) and the location of the tag
readers. Also, a scalable-distributed network architecture, building on the
possibilities provided by web service orchestration and data stream management
systems, is proposed to support these collaborative supply chain management
processes. However, this paper presents the first findings of a research-in-progress
with the ultimate purpose to assess and categorize the RFID-enabled supply chain
collaboration scenarios according to four dimensions: the extent of collaboration
required between retailers and suppliers, the RFID technology requirements, the
transformation of existing (or the introduction of new) processes and the business
performance impact of the RFID-enabled collaborative service. This research is
partly funded by the European Commission (IST-2005, FP6) through the IST
SMART research project with participating user companies being European
grocery retailers and suppliers from the fast-moving consumer goods sector.
The paper begins with an overview of supply chain collaboration practices in
retailing. The following section looks closely into the technology of RFID and the
way it is employed in supply chain management. Section three describes the
proposed architecture that supports RFID-enabled collaboration and decision-
making. The eight RFID-enabled supply chain collaboration scenarios are
described, in detail, in section four. The final section presents the conclusions
along with suggestions for future research.
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
102
2 Adopting RFID in Supply Chain Management
Radio Frequency Identification (RFID) is a generic technology concept that refers
to the use of radio waves to identify objects (Auto-ID Center, 2002). The core of
RFID technology is the RFID transponder (tag) a tiny computer chip with an
antenna. Consumer good suppliers attach these tags to logistic units (palettes,
cases, cartons and hanger-good shipments) and, in some cases, to individual
items. Logistic units and individual items are identified by the Electronic Product
Code (EPC). An RFID reader is used to identify the EPC stored on the RFID tag
(Loebbecke, 2007). The antenna enables the microchip to transmit the object
information to the reader, which transforms it to a format understandable by
computers (Angelles, 2005). Finkenzeller (1999) provides a general overview of
RFID technology while Sarma (2002) describes the specific technology for supply
chain management.
Nowadays, many in the retail sector are already looking to the business case of
RFID as the “next generation of barcode” through its capabilities to uniquely
identify, track and trace consumer products along the entire supply chain requiring
neither direct human contact nor line of sight, to store much more information and
to enable a broad spectrum of supply chain applications ranging from upstream
warehouse and distribution management down to retail-outlet operations,
including efficient inventory management, shelf management, promotions
management and innovative consumer services, as well as applications spanning
the whole supply chain, such as product traceability (Ghisi & da Silva 2001,
Kambil & Brooks 2002, Wong et al. 2002, Sarma et al. 2002, Penttilä et al. 2004,
Loebbecke 2007). Although RFID technology is still emerging, RFID adoption is
pushed by major retailers (RFID journal, 2003) which are already executing a
number of pilot applications.
The benefits of RFID adoption in various application areas can be sought across
the following axes (Pramatari, 2006):
o the automation of existing processes, leading to time/cost savings and
more efficient operations;
o the enablement of new or transformed business processes and innovative
consumer services, such as monitoring of product shelf availability or
consumer self check-out;
o the improvement of different dimensions of information quality, such as
integrity, accuracy, timeliness etc. (Ballou et al., 1998) and
o the formation of new types of information, leading to a more precise
representation of the physical environment, e.g. a product’s exact position
in the store, a specific product’s sales history etc.
For the full benefits to be ripped, the information needs to be shared among the
supply chain partners in a complex network of relationships and decision making.
The internal exploitation of RFID technology by a network leader-retailer looking
solely at its own benefits is expected to have a negative impact on RFID market
acceptance and adoption rates since suppliers will confront RFID as another
unfortunate strategic necessity (Barua et al., 1997). Under this perspective, the
proposed scalable-distributed architecture supports RFID-enabled collaborative
supply chain processes and decision-making in a networked retail business
environment, so that both retailers and suppliers can benefit from the employment
of RFID.
RFID-enabled Supply Chain Collaboration Services in a Networked Retail...
103
3 A Scalable-Distributed Architecture for RFID-Enabled
Supply Chain Collaboration in a Networked Business
Environment
This section proposes a scalable-distributed architecture that can support new
RFID-enabled supply chain collaboration services and decision-making in a
networked business environment. The field case considers the grocery retail
business sector, since it is characterized by an intense supply chain environment
on one hand, handling thousands of products and supply chain relationships on a
daily basis, and increased competition and consumer demands on the other.
This architecture employs the following technologies into an integrated network
infrastructure:
o Data stream management systems (DSMS) supporting real time analytics
and decision support based on queries of transient data streams regarding
product movement across various stages of the supply chain.
Many applications involve data items that arrive on-line from multiple sources in
a continuous, rapid and time-varying fashion. In these applications, it may not be
possible to process queries within a database management system. For this reason,
applications have recently been developed in which data is modelled not as
persistent relations but rather as transient data streams. A good example of such
an application would be one that constantly receives data of electronic product
code observations across a chain. In data streams we usually have “continuous”
queries rather than “one-time”. The answer to a continuous query is produced over
time, reflecting the stream data seen so far. Computing real-time analytics
(potentially complex) on top of data streams is an essential component of modern
organizations (Chatziantoniou et al., 2005).
Therefore, the ability to efficiently perform complex real time analysis on top of
streams of RFID measurements is the reason data stream management systems are
employed by this architecture. In addition, a relational database management
system (DBMS) is used to support less information intensive scenarios and other
elements of the application.
o Web service orchestration and/or choreography enabling secure and
seamless information sharing and collaboration in a distributed
environment (Muehlen et al., 2005).
A web service, as defined by the W3C Web Services Architecture Working
Group, is a software application identified by a URI, whose interfaces and
bindings are capable of being defined, described, and discovered as XML
artifacts. A web service supports direct interactions with other software agents
using XML-based messages exchanged via Internet-based protocols (W3C, 2002).
In general, a web service is an application that provides a Web API, supporting
application-to-application communication using XML and the Web.
Orchestration refers to an executable business process that may interact with both
internal and external web services. Orchestration describes how web services can
interact at the message level, including the business logic and execution order of
the interactions. These interactions may span applications and/or organizations,
and result in a long-lived, transactional process. With orchestration, the process is
always controlled from the perspective of one of the business parties.
But choreography is more collaborative in nature, where each party involved in
the process describes the part it plays in the interaction. Web Services
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
104
choreography aims at the coordination of long-running interactions between
distributed parties, which use web services to expose their externally accessible
operations (Muehlen et al., 2005).
Figure 2 gives a high-level schematic representation of the proposed architecture.
It is a distributed architecture, where the application layer runs on the system of
each collaborating partner and web services implement the interface between the
different partners’ systems using SOAP (Ferris et al., 2003) requests and
responses. The data layer is implemented by both a relational database system and
a data stream management system providing the application layer with a
continuous stream of unique product information. A central orchestration engine
(Arkin, 2002) coordinates the exchange of messages between the partners’ web
services (W3C, 2002) following the logic of the specific collaborative process
scenarios. A collaboration registry is also used, implemented by a Universal
Description, Discovery and Integration (UDDI) directory enhanced with
additional higher-level information regarding each collaborative relationship, to
include and organize the necessary info of which partner collaborates with each
other under which process scenario and with what security privileges.
Figure 2: Schematic presentation of the scalable-distributed network architecture
Since, this architecture is developed to support collaborative processes and
decision making in the grocery retailing sector, it is necessary to interlink it to the
Global Data Synchronization Network (GDSN) and Object Name Service
(ONS)/EPC Network infrastructures or similar infrastructures of the same
purpose. The GDSN, established by GS1 (www.gs1.org) and GCI (www.gci.org)
supports information sharing about product type currently identified via a
barcode and is implemented through a collection of data pools and global
registries. On the other hand, the EPC Network (www.epcglobalinc.com)
RFID-enabled Supply Chain Collaboration Services in a Networked Retail...
105
supports information sharing about unique product instance identified via an
RFID tag, following the EPC standard (EPCglobal, 2004) and is supported by
the ONS infrastructure. The suggested architecture connects to either these two or
similar directory services in order to get the master product information (e.g.
product name, manufacturer, weight, etc.) associated with a specific product type
identified via a barcode (GDSN), or additional information associated with a
specific product instance (e.g. production date, distribution history, etc.) identified
via an EPC (ONS/EPC Network).
Finally, the architecture enables different collaborative processes and decision-
support scenarios. Each of these scenarios can be supported by separate
components at the application layer. These components perform different
functionality on each site, depending on what is the role of the collaborating
partner, e.g. supplier, distribution centre, retail store.
4 RFID-Enabled Supply Chain Collaboration Services
The proposed system, categorized as a distributed Web-based decision support
system according to Zhang et al. (2005), is employed in the course of the SMART
research project, funded by the European Commission (IST-2005, FP6), with
participating user companies being European grocery retailers and suppliers from
the fast-moving consumer goods sector. Companies in the sector already have a
more-than-ten-years collaboration history and some collaboration processes have
become standard business practice across Europe, such as CRP/VMI employed in
retail warehouse replenishment or Category Management dealing with the
marketing aspects of managing product categories in the store (Pramatari, 2006).
The proposed architecture is a generic distributed architecture that can potentially
support various supply chain collaboration and decision support scenarios,
whether these are enabled by RFID technology or not. However, in the context of
the SMART project, the research focuses on eight RFID-enabled collaboration
services. Each RFID-enabled collaboration scenario, described in detail below,
has its own value proposition and can be characterized, on a high-level, by the
information shared between suppliers and retailers, the level of tagging
(pallet/case/item level) and the location of the tag readers.
o Backroom Visibility
In this scenario, both retailer and suppliers have a clear picture of the products
stock level in the store, as well as of the products sales and collaborate on order
placement for store replenishment. The store personnel receive from the system
real time information about the backroom inventory level of each product. If a
product is out-of-shelf, but there is available stock in the backroom, the store
personnel is informed to refill the shelf; otherwise, if there is no stock (out-of-
stock), a new store order is placed and sent to the distribution center. The
salesmen of direct-store-delivery suppliers have also direct access to this
information through their PDAs
The system updates the backroom inventory records automatically and sends the
information to the PDA of the suppliers’ salesmen. The salesmen inform the store
staff to refill the shelf, but if there is no backroom stock, they prepare an order
based on the inventory information provided by the system. At the retailer’s
headquarters, they can monitor the orders that the suppliers salesmen have
placed. The salesmen leave the store satisfied, since they succeeded in moving
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
106
their products to the shelves and they also took efficient ordering decisions to
avoid out-of-stock & out-of-shelf. The tags are applied on case and item level.
The tag readers are fixed on the backroom entrance and the backroom to sales
floor entrance.
o Out-of-shelf Response
The last 50 yard problem of product shortages on the shelf is a crucial issue in
retail operations, both for the supplier and the retailer. On one hand the retailer
should be aware of the time to move items from the backroom to the shelf, and on
the other hand the supplier should be able to monitor the level of out-of-shelf in
the stores, in order to identify problems and take corrective actions about the
service level of new products to the end customer.
The system monitors the stock in the backroom and on the shelves and when there
are out-of-shelf cases it generates an out-of-shelf alert and sends specific
instructions on the PDA of backroom personnel about which goods to move from
the backroom to the shelf. The staff refills the shelf, following the orders from the
PDA. In addition, the suppliers product managers have access to a weekly
detailed report about products shelf availability and inventory levels. The tags are
applied on case and item level. The tag readers are fixed on the shelves, the
backroom entrance and the backroom to sales floor entrance.
This collaborative scenario enables the store personnel to better manage the shelf
replenishment process, which is currently one of the major causes behind the out-
of-shelf problem (Gruen et al., 2002). Sharing out-of-shelf alerts with the
products’ suppliers is also important, especially in direct-store-delivery where the
suppliers are responsible for replenishing the store, in order to further monitor the
problems as well as develop more accurate demand forecasts. While the previous
scenario requires real-time information flows to support daily operations, this
scenario is more about business intelligence and decision support.
o Remote Shelf management
Retailers and suppliers are provided with real time information about the actual
shelf layout and have the opportunity to collaboratively manage the shelves
allocation and appearance. RFID readers “scan” and “read” the shelves and
provide their “digital image”, including information about the size, specific
products’ position and layout, as well as information about the shelves’
performance.
By using the system, the suppliers are now able to check if the products get the
room they deserve on the shelf and are neatly positioned according to the store’s
planogram. If the suppliers notice that some of the products have fewer facings on
the shelf, than what has been agreed with the retailer, or that some shelf space has
been left empty, they informs the retailer, as well as the merchandiser to visit the
store and take care of the shelf. Moreover, the suppliers monitor the shelves
performance (shelves’ sales) and can create a new planogram suggestion for the
retailer. Both the retailer and the suppliers are satisfied, since they can better
manage the limited, but so valuable, shelf space. The tags are applied on item
level. The tag readers are fixed on the shelves. The process of shelf-management
is already based on supplier-retailer collaboration to a great extent, but currently
involves many manual and time-consuming steps that make it quite cumbersome.
The adoption of RFID transforms the process with the automation of many steps,
or even by making them unnecessary.
o Dynamic Pricing
RFID-enabled Supply Chain Collaboration Services in a Networked Retail...
107
Retailers and suppliers have the opportunity to identify products that are close to
their expiration date, or are standing still on the shelves for a long time. For these
reasons they can dynamically reduce the products’ price, in order to boost
consumer demand and reduce waste. This collaborative service (see Figure 3) is
very useful for fresh products, such as dairy products, bread, meat, etc.
When consumers visit the store with their shopping list, they usually purchase
products with the longest expiration date, since they cost the same. Thus, in order
to avoid big on-hand stock of expired products, the system does periodic checks
of on-hand stock to identify products approaching expiration date and then
informs the suppliers. The suppliers, based on the system’s recommendations,
suggest to the retailer to decrease the price of these products. The retailer
approves the suppliers proposal for price change. In this case, the customers face
a dilemma, if they should sacrifice the longest expiration date for a better price.
But there are economic difficulties, so they usually choose the cheaper one. As a
result, the customers leave the store happy that they managed to save money and
both the retailer and the supplier are also satisfied because they managed to sell
products that would otherwise be trashed. The tags are applied on case and item
level. The tag readers are fixed on the shelves, on the backroom entrance, and on
the backroom to the sales floor entrance.
Figure 3: Dynamic pricing RFID-enabled collaborative service
o In-store Promotion management and Promotion evaluation
Customers get direct information about special offers and promotions relevant to
the product they just picked up from the shelf. When the consumer picks up the
product, the fixed tag reader scans it and the customer gets a promotion message
on a special information screen or even its mobile phone.
The system distinguishes between shelf sales and promotion stands sales. The
suppliers use the system to monitor the sales of products in every store and get
assistance in the design of new in-store promotion events. The system even
provides them with statistics, evaluation reports, recommendations and specific
locations in the store to use, based on their performance and cost. The tags are
applied on item level. The tag readers are fixed on the shelves, on the promotion
stands and near the special information screens.
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
108
o Demand management
According to this scenario, retailers and suppliers are capable of monitoring the
inventory and the sales of products in every store and relocate them, if needed,
(e.g. in case of a special promotion event) in order to eliminate lost sales
opportunities. Using the system, they receive, on real time, from every retail outlet
the on-hand inventory level in the backroom, on the shelves, and even on the
promotion stands. They also get sales data from the Point-Of-Sales system. For
example, if the supplier runs a promotion campaign for product A and notices that
product A is almost out-of-stock in store Y, where it has high sale rates, but in
store X there is a lot of product inventory that is not sold then he issues an order
“Move product A from store X to store Y”. The tags are applied on case and item
level. The tag readers are fixed on the backroom entrance, on the backroom
entrance to the sales entrance, on the shelves and on the promotion stands.
o Traceability information
According to this scenario, the consumer at the end-point-of-sales (retail store)
has a clear view of the products history and origin. When the consumer reaches
the shelf, he cannot be sure for the product’s quality and safety. So, he picks up
the product, the fixed tag reader scans it and, by special information screens, the
customer gets details about production date and origin, expiration dates and other
unique product’s information that can ensure product authenticity and safety. The
tags are applied on item level. The tag readers are fixed near the special
information screens. The traceability information that belongs to the suppliers is
shared with the retailers, in order to enable this collaboration service.
o Smart Recall
Retailers and suppliers have the capability to identify the location of products with
specific characteristics and recall them fast and at minimum cost from the market,
e.g. in case there is a risk with consumer safety.
When a crisis happens and the products of a specific production lot are found
defective, the suppliers quality managers issue an order “Recall the defective
production lot from the market”. The system identifies the products and provides
with all the locations in the retailer’s stores where the products of the specific
production lot have been sent. The store personnel is informed to withdraw the
products from the specific shelves, promotion stands and the backroom and
prepare them to be sent back to the suppliers. As a result, the retailer has avoided
the customers’ dissatisfaction and for the suppliers it was not necessary to recall
all the products of the kind. The tags are applied on case and item level. The tag
readers are fixed on the backroom entrance and shelves, on the backroom to the
sales floor entrance, on the shelves and on the promotion stands.
These innovative scenarios capitalize on RFID capabilities for automatic data
capture and identification of unique product instances, in combination with other
information that can be derived in association with RFID, such as the shelf
location, the context of an in-store promotion event, etc. Some of the scenarios
focus on the management of specific operations and processes (e.g. backroom
visibility, dynamic pricing, smart recall), other focus more on supporting
decision-making and building domain-knowledge (e.g. out-of-shelf response,
remote shelf management), and other combine both aspects (e.g. promotion
management, demand management, traceability information). Furthermore,
collaboration between retailers and suppliers takes place either through joint
involvement in a collaborative process (e.g. promotion management), through
RFID-enabled Supply Chain Collaboration Services in a Networked Retail...
109
information sharing for decision-support purposes (e.g. out-of-shelf, promotion
evaluation) or through information sharing in order to support the delivery of a
service to the end customer (e.g. traceability information).
Table 1 summarizes the above RFID-enabled supply chain collaboration services.
Each scenario is presented according to the information shared between the
collaborating retailers and suppliers, the tag readers location, and the tagging
level.
RFID-enabled
Collaboration
service
Information shared
Tag Readers Location
Tagging
Level
Backroom
visibility
Backroom on-hand stock
Orders
POS data
Backroom entrance
Backroom to sales floor
entrance
Case, Item
Out-of-shelf
response
Backroom on-hand stock
Shelves on-hand stock
Out-of-shelf alerts
Backroom entrance
Backroom to sales floor
entrance
Sales floor shelves
Case, Item
Remote shelf
management
Number of products’ facings
Products’ position
Shelf layout
Shelf sales
Sales floor shelves
Item
Dynamic Pricing
Products expiration date
Backroom on-hand stock
Shelves on-hand stock
Backroom entrance
Backroom to sales floor
entrance
Sales floor shelves
Case, Item
In-store
Promotion
management and
Promotion
evaluation
Shelf sales
Promotion stands sales
POS data
Sales floor shelves
Promotion stands
near the special information
screens
Item
Demand
management
POS data
Backroom on-hand stock
Shelves on-hand stock
Promotion stands on-hand
stock
Backroom entrance
Backroom to sales floor
entrance
Sales floor shelves
Promotion stands
Case, Item
Traceability
information
Product traceability
information (production
date and origin, expiration
date, product history, etc.)
near the special information
screens
Item
Smart Recall
Product information
Product location
information
Backroom entrance
Backroom to sales floor
entrance
Backroom shelves
Sales floor shelves
Promotion stands
Case, Item
Table 1: Characteristics of the eight RFID-enabled Supply Chain Collaboration
Services
However, the above table presents only the first findings of a research-in-progress
with the ultimate purpose to assess and categorize the RFID-enabled supply chain
collaboration scenarios according to the following four dimensions:
o the extent of collaboration required between retailers and suppliers,
o the RFID technology requirements,
o the transformation of existing (or the introduction of new) processes and
Cleopatra Bardaki, Katerina Pramatari, Georgios I. Doukidis
110
o the performance impact, the business case contribution of the RFID-enabled
collaborative service.
The extent of collaboration between trading partners will be analyzed based on the
collaboration index of Simatupang and Sridharan (2005), which defines three
interrelated dimensions: information sharing, decision synchronization, and
incentive alignment. Information sharing refers to the act of capturing and
disseminating timely and relevant information for decision makers to plan and
control supply chain operations; decision synchronisation refers to joint decision-
making in planning and operational contexts; and incentive alignment refers to the
degree to which chain members share costs, risks, and benefits.
The RFID technology requirements, the processes and the performance impact
dimensions are based on the 5Ps of RFID proposed by Loebbecke and Palmer
(2006) to analyse RFID implementations: the Physics of the tag, the reader and
the data transfer; the Processes being changed and enhanced, the Prices for
technical components and their installation, the Privacy aspects of capturing and
retaining customer data and the Performance impact, the business case contribution,
of RFID implementation (Loebbecke, 2007). Specifically, the RFID technology
requirements refer to the level of tagging, the location of the tag readers and the cost
of the implementation including the cost of necessary hardware and software
infrastructure.
Tag costs constitute the bigger part of RFID deployment costs and, thus, the
tagging level is the dominant variable when deciding on the adoption of
alternative RFID-enabled processes (Alexander et al., 2002). On the other hand,
the benefits of RFID are expected to increase significantly as adopters migrate
from pallet, to case, to item-level tagging and tag readers are located in more
areas. Moreover, time and labour savings, data accuracy, supply chain visibility,
inventory management, products traceability, etc. are among areas in which
improvements and enhancements of business performance are sought.
Using these four dimensions we will perform a detailed assessment for each of the
supply chain collaboration scenarios, in order to understand the anticipated costs
and benefits as well as predict the expected barriers of implementation and
adoption, including process changes and collaboration incentives. This assessment
follows both an operational and strategic perspective, as some of the scenarios
focus on the management of specific operations and processes (e.g. backroom
visibility, dynamic pricing, smart recall), other focus more on supporting
decision-making and building domain-knowledge (e.g. out-of-shelf response,
promotion evaluation), and others combine both aspects (e.g. promotion
management, traceability information).
5 Conclusions and Future Research
Supply chain collaboration in retailing and Fast Moving Consumer Goods
industry (FMCG) has mainly been expressed in the form of practices such as
Vendor Managed Inventory (VMI), Continuous Replenishment Program (CRP),
and Collaborative Planning, Forecasting and Replenishment (CPFR). The
emergence of RFID is expected to revolutionize many of the collaborative supply
chain processes and to empower new collaboration scenarios, such as anti-
counterfeiting, product recall and reverse logistics, collaborative in-store
promotion management and total inventory management.
RFID-enabled Supply Chain Collaboration Services in a Networked Retail...
111
This paper proposes eight RFID-enabled supply chain collaboration services (e.g.
dynamic pricing, smart recall, in-store promotion management, out-of-shelf
response) in a networked retail business environment. The services are
characterized, on a high-level, by the information shared between retailers and
suppliers, the level of tagging (pallet/case/item level) and the location of the tag
readers. However, these RFID-enabled supply chain collaboration scenarios will
be further assessed according to four dimensions (for details, see Section 4): the
extent of collaboration required between retailers and suppliers; the RFID
technology requirements the transformation of existing (or the introduction of
new) processes and the business case contribution of the service.
Also, a scalable-distributed network architecture, building on the possibilities
provided by web service orchestration and data stream management systems, is
proposed to support these collaborative supply chain management processes. The
proposed system, categorized as a distributed Web-based Decision Support
System according to Zhang et al. (2005), is employed in the course of the SMART
research project, funded by the European Commission (IST-2005, FP6), with
participating user companies being European grocery retailers and suppliers from
the fast-moving consumer goods sector.
Finally, to further extend this research, three of the proposed RFID-enabled
collaborative services (out-of-shelf response, promotion management and
traceability information) will be implemented and tested via field experiments, in
order to evaluate in practice the benefits of RFID adoption from a business
perspective. It is also important to evaluate the degree to which the proposed
architecture adequately supports the corresponding scenarios and fulfils the
requirements from various perspectives, which is a clear next direction of research
in this area.
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Presents a theoretical framework for analysing interorganizational collaboration. Argues that Collaborative Planning, Forecasting and Replenishment (CPFR) should be viewed as a general approach to coordination of processes between participants in a supply chain, rather than following a slavish step-by-step model, as suggested by the organization Voluntary Inter-Industry Commerce Standards (VICS). This approach demands a deeper analysis of both integration depth and scope of various collaboration forms. This is done primarily from a theoretical perspective, but supported by an empirical study of Danish companies’ attitudes towards interorganizational collaboration.