Module: Design Practical 2

Assignment 2: RFID in Retail

M.Des 1.1

Name: Harshal Desai

Lecturer: Arabella Pasquette

Date of Submission

21/12/2011

Word Count: 2334

TABLE OF CONTENTS

EXECUTIVE SUMMARY .............................................................................................................. 2

INTRODUCTION ......................................................................................................................... 3

RFID 101 ..................................................................................................................................... 3

WHAT IS RFID ......................................................................................................................... 3

HOW DOES IT WORK ............................................................................................................ 4

HOW IS IT DIFFERENT FROM A BARCODE ........................................................................... 5

TYPES OF RFID ........................................................................................................................ 6

SECURITY CONCERNS .......................................................................................................... 7

WHERE IS IT ALREADY USED ................................................................................................. 8

RFID FOR CONSUMERS AND RETAILERS ................................................................................. 9

SETUP AND COSTS .................................................................................................................... 9

PROPOSED SOLUTION ............................................................................................................ 10

Works Cited ............................................................................................................................ 12

EXECUTIVE SUMMARY

RFID is an interesting technology that has generated a great deal of interest

in the last few years. For this study, the focus is specifically on the impact of

RFID technology in a supermarket.

By understanding the details behind RFID and clearing some misconceptions

regarding privacy and security, this report aims to clarify the adoption of RFID

in major supermarkets such as FairPrice.

Towards the end, we aim to provide a summarized solution on how RFID

technology can benefit the store and the steps required to implement it in a

supermarket.

INTRODUCTION

One of the reasons for long lines at a checkout counter in supermarkets is

barcodes. People visit grocery stores to purchase their items, the cashier

scans the selection, there is an audible beep and a computer registers the

amount to pay. Bar codes have been around for decades, and are literally

on almost every product available today. However, an interesting fact would

be that while barcodes were patented in 1952, it took them 30 years to

become popular. (History of Bar Codes)

There were only 15,000 suppliers using it in 1984. By 1987, there were 75,000

suppliers. The reason for the change???

Wal-Mart

Wal-Mart is one of the biggest retailers on the planet. When Wal-Mart started

using barcodes for their inventory listing, every other retailer began to catch

up and the popularity of the barcode increased threefold.

The same situation is occurring today, only now there is a new technology

called RFID. When Wal-Mart speaks, the retail industry listens. Wal-Mart

notified its top 100 suppliers to install RFID tags on all products by January 1,

2005. It is only a matter of time that RFID replaces the bar code. (Meloan,

2003)

RFID 101

RFID technology was patented in 1973 (Genesis of the RDIF Tag), but its

commercial applications are becoming more popular recently.

WHAT IS RFID

RFID are essentially Radio Frequency Identification microchips that do not

require a direct line of sight in order to scan them. The tags can be used and

reused multiple times if necessary and can be smaller than a grain of rice

(Hitachi Unveils Smallest RFID Chip, 2003)

The chips act as a transmitter and receiver, “listening” for a radio frequency

sent by an RFID reader. The frequency activates the RFID tag and in turn it

transmits a unique ID code back to the reader. The tags don’t run on

batteries in most cases and are powered directly by the radio signal, making

their lifespan technically limitless.

HOW DOES IT WORK

RFID works on several operating frequencies depending on the type of range

required for reading.

FREQUENCY TYPE FREQUENCY RANGE SCANNING RANGE

Low Frequency 30-300 kHz 50cm

High Frequency 3-30 MHz 3m

Ultra High Frequency 300MHz – 3GHz 9m

Microwave Frequency >3GHz >10m

Table 1: RFID Operating Frequencies (Dobkin, 2005)

Singapore had widened its RFID frequency band in 2004 to ensure that their

local inventory tracking systems will interoperate with those in Europe and U.S.

and vice versa. Several major retailers that export goods to Singapore

committed to invest more than seven million dollars towards improving RFID in

the island city. (Singapore Widens RFID frequency, 2004)

An RFID tag typically contains

- Encoding/Decoding Circuitry

- A Memory Microchip

- Antenna

- Communication control chip

The tags cost up to 50 cents, however researchers from Sunchon National

University in South Korea invented a new type of tag using ink laced with

carbon nanotubes instead of the traditional silicon type. This considerably

reduced the cost of production to 3 cents per tag. This is because instead of

using a microchip, the tag could be directly printed as part of a package.

(Grossman, 2010)

HOW IS IT DIFFERENT FROM A BARCODE

There are three primary differences between an RFID tag and a bar code.

RFID tags are scanned via radio communications and do not require to be

oriented in the direction of a scanning device. This means that RFID tags can

be read through other objects, clothing etc. Certain types of tags could also

be signalled from great distances, however for the purposes of a retailer such

as FairPrice, one only needs a short distance (approx. 5-10 feet) in order to

have a scanner identify an RFID tag.

RFID tags also have a unique identification system. Bar codes generally

indicate the type of item purchased, e.g. a carton of milk. What RFID does is

not only indicate the product type but can also uniquely distinguish one

carton of milk from the other cartons by using an encrypted serial code

known only to the manufacturer and retailer.

Lastly, bar code scanners require a laser beam to scan the codes

individually. This takes up a lot of time and effort. RFID tags can be identified

by a handheld scanner at the rate of 100 tags per scan. Theoretically, an

individual managing an inventory for a supermarket would increase the

speed and efficiency by 90% by using RFID technology. (RSA Labs - FAQ on

RFID)

TYPES OF RFID

There are three different type of RFID tags: Active (battery-driven), Semi-

Passive (also battery-driven) and Passive (activated through inductive energy

of radio frequency), and are used in different applications.

Active

Tag Semi Passive Tag Passive Tag

Power Source Battery

on Tag

Battery for Chip

Operation Only. Radio

wave Energy from

Reader for

Communication

Radio wave energy

from Reader for both

Operation and

Communication

Tag Signal

Availability

Always

on, 100

feet

Only within field of

reader

Only within field of

reader, less than 10

feet

Signal Strength

Tag High Low Very Low

Required

Signal Strength

from Reader

Very

Low Low Very High

Typical

Applications

Useful for tracking high-value

goods that need to be scanned

over long ranges

Useful for high-volume

goods, where items

can be read form short

ranges.

Table 2: Comparison of RFID Tags (Meloan, 2003)

For supermarkets such as FairPrice, a passive tag would be ideal. If the

products would be marked with a passive tag, passing through the checkout

gates would activate them via a signal, complete the transaction and then

deactivate them. It reserves the privacy of the consumer at home too since

the products need to be at very close ranges to an RFID reader in order to

scan them.

SECURITY CONCERNS

Many consumers would be worried about their privacy and security when it

comes to using RFID tags for groceries. Certainly, one can buy items like a

pair of jeans or a pack of cigarettes with anonymity today and it will not be

the case with RFID technology. However, supermarkets already have

methods to keep track of these purchases should they require it. Several

CCTV cameras are installed in the store, and bar codes scanned are

automatically inventoried as well.

Regarding privacy at home, there are currently two methods to block RFID

tags from being scanned once a purchase is complete

1. A kill command

Probably the most direct approach to protect consumer privacy

ensuring they don’t carry live RFID tags after purchasing the items from

a store. A kill command is a special code that is sent out through the

radio signal telling the RFID chip to permanently disable itself so it is no

longer readable. These kill commands are known only to the

manufacturer and retailer to prevent misuse

2. RSA Blocker Tag.

These are special tags having a unique code that is unreadable by any

scanner unless they have a correct authorization key. This means that

only scanners that have access, for instant, supermarket scanners with

a 256bit code (256 digit password), would be able to read the

information from an RFID chip.

This prevents unwanted scanning of purchased items and protects the

privacy of the consumers.

(RSA Labs - Protecting Consumer Privacy)

It is crucial to understand that new technology does not just affect privacy

but also solves critical problems. Researchers are constantly working to make

RFID more reliable, pervasive and privacy-friendly. There will be some minor

concerns about privacy, but they are no bigger risk than the issues people

already have with social media and cellphones.

RFID technology, at least for the supermarket, will ensure the security

standards of the consumers are fulfilled and all data collected regarding

purchases within the store is restricted to the retailer for overall market

analysis of the products.

WHERE IS IT ALREADY USED

RFID is already available in Singapore; cellphone payments, public transit

cards such as the EZ link cards, ERP gantry, casino chip tracking, animal

identification at the zoo, several inventory systems etc.

Regarding supermarkets, Wal-Mart and MetroStore UK are the biggest users

of RFID technology today. Wal-Mart even has a published requirement

mandate that guides vendors about placing RFID tags on products.

Considering the size of this organization, this mandate impacts thousands of

companies worldwide.

Singapore’s Infocomm Development Authority (IDA) is already working on

creating a multi-frequency RFID tag that can be used globally. Regarding

supermarkets, they are focusing on FairPrice and the Grocery Logistics of

Singapore (GLS) to deploy RFID in their distribution centers for product

tracking. It is only a matter of time before they open the technology for

consumer benefits too. (Singapore's RFID Journey, 2004)

In fact, two of Singapore’s fashion retailers are already using RFID technology

for their products, specifically to manage their inventory. They are Bella East

Fashion Studio and 77th Street Pte. Ltd. They adopted RFID in early 2007 and

using passive tags to ensure the privacy of their consumers.

Currently the employees are responsible for placing the tags on their

products, but they are hoping to have the manufacturers even take control

and tag the garments themselves. (Swedberg, 2007)

One of the most recent

applicants, a company

named ShelfX created

smart shelves with RFID

capabilities and is currently

testing their products in

local stores in Colorado,

United States as of late

October this year. (Smart

Shelves Abolish Lines at

Supermarket, 2011)

Figure 1: ShelfX technology (Source: http://www.shelfx.com/shelfx-news)

RFID FOR CONSUMERS AND RETAILERS

Using RFID technology will enable real-time inventory mapping for retailers.

The entire point of this is to keep track of their supply both through their

distribution centers and warehouses.

By doing so, the retailers can ensure their products are rarely out of stock,

since items that are near depletion would be notified to the staff and either

have them ordered directly through a software or manually depending on

retailer’s needs.

Since RFID contains unique identifying content for every product, its also

possible to track expiry dates of each item within the store and even during

the inventory process at warehouses. This virtually guarantees alerting the

staff when an product is past its expiry date and would contribute towards

supplying better quality products to the consumer.

Regarding consumers, RFID technology means not having to wait in lines.

Complete control is given to the consumer to just pick the items they require

and simply walk out. A receipt dispenser would be kept at the end just as a

safeguard to put the consumer’s mind at ease that they weren’t

overcharged. (Prater & Frazier, 2005)

SETUP AND COSTS

To carry out the initial experiment, each shelf costs around $10 per

installation, including the cost of the server.

To have an RFID shelf based system setup and running across an entire store,

there are a few criteria that must be satisfied.

1. Scanning the area to for existing radio frequencies. Its essential that

these frequencies don’t interfere with the ones emitting from the RFID

tags.

2. Setting up a server in the store to maintain communication with the

RFID tags

3. Setting up the scanning gates at the store and linking them with

computers that monitor and track the items purchased for inventory

purposes. This also constitutes of tracking the number of items

remaining on the shelves and a system to alert staff in case of errors or

when any item is close to running out of stock.

4. Software upgrades on the computers to get real time inventory

monitoring and automated ordering, along with collecting valuable

real time statistics of products.

Since the system relies mostly on wireless communication, there isn’t much

wiring and setup required and the process is relatively quick and easy.

Extra cost would be required in terms of salary for an on-hand technician for

the possibility of an event where the system malfunctions.

When consulted with the manager of ShelfX technologies, sharing with him

the size of a FairPrice Xtra store and the type of items, initial costs of a full

setup are estimated at $40000.

PROPOSED SOLUTION

Considering a hypermarket such as FairPrice, our ideal solution would be to

use a variant of ShelfX technology on a small section of FairPrice products to

test the feasibility before revamping the entire store.

The first step would be to conduct market research on the top 30 essential

items bought by the target consumer and place them in a special area

having RFID enabled smart shelves.

Consumers would be given a special payment card, similar to an EZ Link card

and encouraged to purchase items via tapping the card onto the shelf and

taking the necessary products.

The next step is for them to simply walk through the RFID scanners placed a

few meters before the exit, take the receipt issued by a device near the

scanner and walk out.

This will automatically make the consumer realize the potential of RFID

technology as it eliminates the conventional queuing system.

Another feature that can be added is a guarantee clause to ensure

consumers they won’t be overcharged by using RFID. They can build up trust

by giving a promotion stating that if any consumer finds that they were

overpriced, not only will that item be given for free, but their entire shopping

list purchased in that day will be free of charge.

The error rate of passive RFID tags has reduced considerably from the 10%

back in 2006 to just 2% in 2011. It should be adequate for the store to provide

such a guarantee. (Elamin, 2006)

Since the obvious drawback is for people who are persistent on paying cash,

there should always be a few traditional cashiers in the store. This will not only

give consumers a choice, but also help in making an even clearer distinction

within their minds. Once those who are standing in line, see that other

consumers are just walking out with ease, they will naturally gravitate towards

the RFID solution.

This should be an ideal method to allow a smooth transition for the consumers

towards the new RFID system: Tap, take, walk out.

To see a demo of the proposed solution, please visit the following link:

http://on.fb.me/th6ika

WORKS CITED

Hitachi Unveils Smallest RFID Chip. (2003, March 14). Retrieved December 19,

2011, from RFID Journal:

http://www.rfidjournal.com/article/articleview/337/1/1/

Singapore Widens RFID frequency. (2004, November 5). Retrieved December

19, 2011, from Fibre2Fashion:

http://www.fibre2fashion.com/news/NewsDetails.asp?News_id=10698

Singapore's RFID Journey. (2004). Retrieved December 19, 2011, from IDA

Singapore:

http://www.itu.int/osg/spu/ni/ubiquitous/Presentations/4_poon_RFID.pd

f

Smart Shelves Abolish Lines at Supermarket. (2011, October 27). Retrieved

December 19, 2011, from ShelfX: http://www.shelfx.com/news/shelfx-

smart-shelves-abolish-lines-and-offer-retailers-enhanced-inventory-

management

Dobkin, D. (2005, October). RFID Frequency Bands. Retrieved December 19,

2011, from Enigmatic Consulting: http://www.enigmatic-

consulting.com/Communications_articles/RFID/RFID_frequencies.html

Elamin, A. (2006, October 03). Multiscan RFID uses reflectors to reduce errors.

Retrieved December 19, 2011, from FoodProductionDaily.com:

http://www.foodproductiondaily.com/Supply-Chain/Multi-scan-RFID-

uses-reflectors-to-reduce-errors

Genesis of the RDIF Tag. (n.d.). Retrieved December 19, 2011, from RFID

Journal: http://www.rfidjournal.com/article/articleview/392/1/2/

Grossman, L. (2010, March 26). The End of Bar Codes. Retrieved December

19, 2011, from Wired.com:

http://www.wired.com/wiredscience/2010/03/rfid/

History of Bar Codes. (n.d.). Retrieved December 19, 2011, from About.com:

http://inventors.about.com/od/bstartinventions/a/Bar-Codes.htm

Meloan, S. (2003, November 11). RFID. Retrieved December 19, 2011, from

Sun Developer Network:

http://java.sun.com/developer/technicalArticles/Ecommerce/rfid/

Prater, E., & Frazier, G. (2005). Future Impacts of RFID on e-supply chains in

grocery retailing. Supply Chain Management: An International Journal,

134-142.

RSA Labs - FAQ on RFID. (n.d.). Retrieved December 19, 2011, from RSA

LAboratories: http://www.rsa.com/rsalabs/node.asp?id=2120

RSA Labs - Protecting Consumer Privacy. (n.d.). Retrieved December 19, 2011,

from RSA.com: http://www.rsa.com/rsalabs/node.asp?id=2119

Swedberg, C. (2007, October 31). Two Singapore FAshion Retailers Use RFID to

Track Inventory. Retrieved December 18, 2011, from RFID Journal:

http://www.rfidjournal.com/article/view/3721