Stelio Sergio
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Although currently impractical except for high-value products, item-level RFID tagging offers tangible benefits to both suppliers and retailers. However, widespread development will ultimately depend on public concerns about public privacy protection.
The past years have seen an increased interest in Radio-Frequency Identification (RFID) due to its fast large use throughout the supply chain. RFID applications monitor store-keeping units (SKUs) not individual items due the high cost of RFID development. Future previsions envision carts with onboard computers or RFID-enabled smartphones that display information and promotions wirelessly from the system. This could also enable quick checkout at the counters and thus eliminating queues which are one of the most negative aspects of supermarket shopping. Moreover, to embed RFID devices in loyalty cards could accelerate the processes at the point of sale counter, however that raises privacy concerns.
Radio-Frequency Identification
RFID indicates to any system that can transmit identification numbers over radio. These systems exist since the World War II. Nowadays, it is also used in animal tracking, automatic toll collection, car immobilizers and building access control systems. The interest in this technology has come to public interest in means of gathering how RFID use could affect everyone. Not falling far behind, supermarkets and retailers are currently implementing RFID solutions throughout their supply chain.
When it comes to operating principles, RFID systems are divided into the tag and the reader. The tag is composed by a microcontroller, an antenna and polymer-encapsulating material. On the other side, the reader is the one that initiates the identification process by generating an RF field which the tag detects and responds by transmitting the identifier that it holds. RFID tags are also divided into passive and active. Passive RFID tags are those that do not require any power source, meaning they can only be read within few centimeters from the reader and plus they have a high rate of error. On the other hand, active RFID tags have longer range, provide reliable communication and work until the battery runs out. Even though the difference in the tags is apparent, their transmission range will depend mostly on the antenna’s size.
Like any other technology, RFID has its own implications. In order to perform accurately, RFID requires differentiation in the frequencies used. It needs to operate without being absorbed by neither water nor metals. Another implication is the privacy because as the technology is deployed, new uses are discovered, and these might affect consumer’s privacy.
Item-Level Tagging in Retail
Although the cost is too high, there is a tendency to implement item-level tagging for high-value products. In the pas there was a successful implementation of Efficient Consumer response (ECR) initiatives which support the use of information technology to increase consumer value and decrease supply-chain inefficiencies.
Furthermore, using RFID at the SKU level improves vendor-managed inventory (VMI) by automating the scanning of stock and enabling continuous and accurate data flows.
Another proposed use, was in user profiling in order to do the price refinement in order to attract and retain specific consumer groups. During the same period, RFID use was expected to provide understandings into consumer buying habits and patterns so that the organizations exploit this information and gain a competitive advantage. This is possible because RFID use in the stores creates an information trail of locations, routes and interactions with products, hence retailers can combine and mine this information to develop offers and promotions.
Consumer Privacy Perceptions
In order to gather public opinion regarding privacy issues, a research was conducted, and which the outcome was that participants objected any recording of data on delivery of personalized commercial communications. The reason for this objection was because they viewed it as a direct privacy violation, and required more control instead of commercial benefits. Although they understood the tradeoffs, they did not advocate uncontrolled use of personal data because they do not have any assurance that the data will not be used beyond the expressed purpose. Moreover they felt that the collection of data can violate individual’s freedom of choice and sense of uniqueness.
An attempt to address privacy issues was the creation of an extension with a destroy command for RFID in which the tags will stop accepting read requests, however this was still under deliberation because consumers did not have any way of verifying that the tags have been disabled.
RFID and Risk Management
Nowadays, technology and business govern culture; nonetheless it is a society’s privacy culture that defines the values, sensibilities and commitments. The aspects of the technology that emphasize trust problems are: RFID-based systems’ silent and transparent operation and the fact that trust is not a purely cognitive process and thus is not opened to a strictly quantitative treatment. Actually, many challenges reside in managing data that RFID generates and monitoring the contact between user and system. In a near future, RFID use in the supply chain will turn into a common practice at the SKU level, yet item-level tagging will be constrained to high-value products. While businesses, users and the society in general struggle to handle excess of new data sources and their privacy implications, new mechanisms of use of the same data will appear, shopping behavior will change and consumer engagement will increase.
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Reference
G. Roussos, “Enabling RFID in Retail,” IEEE Local Computer Networks, no. 31, 2006, pp. 25
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