Abstract: Recently, there has been significant
interest by both business and academia in wireless product identification
and related technologies. Such technologies offer the opportunity
to provide total supply chain management across organisations
and represent a major step towards the realisation of the aims
of the Efficient Consumer Response (ECR) initiative. A major
experiment of these concepts in e-retailing and after-sales using
standards compliant radio frequency identification (RFID) and
wireless networking infrastructures is the MyGrocer project.
Building on the experience gained through MyGrocer we identify
the major obstacles for the efficient and effective adoption
of such technologies in retailing as well as barriers in customer
perceptions that must be overcome for a successful deployment
of relevant services to the end consumer.
In its quest to offer value
added services to current business practice, eCommerce expands
into services increasingly cost efficient and consumer-oriented.
At the same time the retail sector attempts to expand efficiency
levels with Internet based collaborative, cross-organisational
supply chain models  that provide a direct, shared and cost
efficient channel from the supplier all the way to the customer.
This interaction brings a novel kind of service, which is on
demand, ubiquitous and personal. This paper reports on the experience
gained through the EU funded MyGrocer project (IST 2000-26239)
which aims to provide the service of automatic replenishment
of home supplies (a service also known as vendor managed inventory
or VMI) through monitoring of radio frequency identifiable consumer
Indeed, the main objective
of MyGrocer  is to introduce advanced B2C e-services over
intelligent mobile access devices, to enable full interactivity,
personalization and automation of the replenishment process of
home supplies. The project focuses initially on products in the
grocery sector but it is designed to facilitate future extensions
to the retail sector in general. To this end, it develops the
necessary infrastructure for the products, the supermarkets and
the "smart" homes, as well as a supportive mediation
platform to act as the gateway between retailers and consumers,
providing personalized services to consumers and advanced marketing
facilities to retailers.
However, a global deployment
of MyGrocer faces several challenges both technological and societal.
This paper will focus on the required supporting infrastructure
to MyGrocer before it enters the mainstream. In particular, the
focus of this paper is on the need for standardization in identification
product codes and electronic product catalogues and electronic
business processes. Successfully resolving issues relating to
consumer trust and protection of user rights will also be addressed.
2. The efficiencies of electronic
The use of RFID technologies
for e-retailing [1, 2, 4] focuses on its ability to provide faster
inventory counts based on shelf content as well as significant
reductions in point of sale (POS) costs. In particular, it has
been estimated  that in a typical supermarket out of stock
conditions cause up to 3 percent loss of revenue due to the loss
According to a study by Andersen
Consulting, in 53 percent out of stock conditions are due to
store replenishment inefficiencies. Even worse, a further 8 percent
of on the floor out of stock conditions occur despite the fact
that the necessary supplies are in storage on site. A possible
solution [2, 6] to this problem is to distance the store from
the ordering process, that is to establish ordering on the basis
of consumption. A goods receipt system that automatically and
accurately adds incoming material to inventory book-keeping combined
with point of sales (POS) demand information, enables new, possibly
order-less, replenishment solutions between distribution centres
and supermarkets. It is expected that this approach would reduce
significantly out of self-stock conditions.
For an automatic goods receipt
the identification of products would not have to be item level,
transport package or pallet level identification would already
be sufficient. For after sales, wireless product identification
technologies also make new customer service models possible.
Especially in the business-to-business situation new solutions
based on wireless product identification can create notable after
sales benefits to the customer.
For example, RFID technology
could be used as the basis for new after sales solutions by constructing
a portable maintenance database that may be updated with each
service transaction. In the case of a grocery product, when the
customer exhausts her inventory and discards packaging, the tag
is read, the database is updated and a consumption alert generated
and delivered to the customer most probably through her mobile
device (Gould, 2000).
3. Technology standardisation
In order to fully exploit the
MyGrocer business opportunity it is necessary that all IT systems
from the manufacturer all the way down to the consumer must be
compatible, in the sense that they must be able to exchange data
in a meaningful way. Although in theory it is conceivable that
this may result through peer-to-peer agreements the complexity
of this task becomes unmanageable in the long run. Thus the need
for standards. Indeed, the requirement for interoperable supply
chains has been recognised by both vendors and regulators and
thus several standards bodies are currently working on different
aspects of collaborative commerce.
Standardization efforts relevant
to MyGrocer are in the areas of product identification and intelligent
tagging, business processes and data sharing and exchange. Central
in this respect are the efforts of the Global Commerce Initiative
(GCI). GCI is not a standards body but rather a coalition of
user groups and initiatives. Its work is expected to result to
standards through traditional bodies in this filed, for example
EAN International and the Uniform Code Council, Inc. (UCC). Although
the technical details that underlie these requirements are beyond
the scope of this paper, in this section we will discuss briefly
the missing components before a successful global deployment
of MyGrocer type services.
The first MyGrocer requirement
is for the uniform identification of products and automated data
capture along the supply chain. The current situation is that
there exists a range of complementary standards and implementation
guidelines, a fact that leads to confusion for users in most
cases. On the other hand, GCI aims to create a set of clear implementation
guidelines for a global recommended standard for identification
of products and evaluate its costs and benefits, thus defining
a clear migration path for users.
One of the core requirements
for the success of this aim is that the developed standard [7,
8, 9] has global scope and that it includes current UCC, ECCC
and all EAN Numbering Organisations. Thus, GCI aims to address
Product Identification so as to remove barriers that hinder the
free exchange of goods across borders. It is expected that widespread
adoption of any resulting standards will be through the use of
the collective involvement of GCI members to recommend improved
standards and best practices. As part of this effort, GCI expects
to deliverable a unified standard for the resolution of current
divergent product lists as well as an integrated system to ensure
current work fits with emerging technologies, primarily RFID.
A second MyGrocer requirement
if for the development of a globally adaptable, flexible Product
Classification system for the general merchandise and grocery
business. This is particularly important as a catalyst to foster
competition within the market segments, especially for own and
budget shopping. The product classification should also provide
methods for item set-up, maintenance, authorisation and query.
A first version of the Product Classification for Food &
Beverages has been developed by GCI and is available since April
2001. It is currently planned that the product classification
system will be extended to cover the apparel, drug, food service,
general merchandise and indirect purchasing segments.
The third requirement of MyGrocer
is for the extension of Enterprise Resource Planning (ERP), Advanced
Planning and Forecasting (ASP)and Supply Chain Management (SCM)systems
to cater for the free information flow between and across trading
partners. Indeed, ERP is internally focused and ensures that
all departments within the same organisation talk the same language
and ASP does for planning what ERP does for execution. Last but
not least, SCM succeeds in facilitating the synchronization of
information between organisations. Alas, ERP, ASP and SCM although
they have undergone significant evolution have at their basis
a fundamental focus on transactions.
On the other hand, the commerce
over the Internet has opened up new channels but it does not
imply that simply putting activities over the Internet immediately
changes the nature of the relationship between trading partners.
Internet-based Collaborative planning is that consumer behavior
could be communicated "live" within multiple levels
of the value chain (or trading partners) so as to make public
the interpretation of the change in pattern. Instead of focusing
on individual transactions which most frequently disguise the
true nature of demand, the wholesaler and manufacturer could
collaborate on the interpretation of change. If they collectively
agreed that the demand change was real, they would collectively
accelerate product push through the supply chain without any
locally harmful effects. To this end the VICS CPFR and the ebXML
efforts have produced specifications for process description
and data exchange which bring this target closer to realisation.
Thus, a key requirement of
MyGrocer is for real-time, global, secure and simultaneous communication:
Real-time updates are necessary since if the information is outdated
it losses its value; global is an implication of the fact that
participants in a particular value chain may be from diverse
geographic locations; security is paramount if trust is to be
established across multiple trading partners and simultaneous
since each value chain is a many-to-many relationship which is
also the root of complexity of the phenomenon. Indeed, information
is shared between numerous interested parties at the same time.
4. Social barriers to service
Aiming at capturing user requirements
MyGrocer project conducted research into consumer perception
of its services. Research was carried out in Athens, Greece and
there are plans to repeat it in Helsinki, Finland. Four focus
groups were presented with a description of the MyGrocer services
in development and were asked to discuss the implications in
their everyday life.
Barriers to acceptance of the
MyGrocer services referred primarily to the collection and processing
of personal data as well as to the installation of RFID readers
(perceived as monitoring devices) in consumer homes. A fundamental
distrust in technology and technology providers in particular
made the vast majority of the interviewees skeptical about MyGrocer.
Especially the home scenario was treated with particularly negative
Substantial skepticism about
the fair use of purchase statistics accumulated per customer
was expressed by a number of respondents. A large percentage
of them was particularly concerned about the use of this information:
the sensitivity of this group was triggered principally by the
eponymous customer identification and the idea of a preference
list created by an analysis of their own purchase history.
A second barrier of acceptance
lied in the fact that the suggested shopping format for some
respondents seemed to imply a life-style regulated by technological
means. In addition to this, the idea of a preference list based
on a historical record of their purchasing habits appeared threatening
and patronizing. In fact, most interviewees rejected the possibility
that their behaviour could be effectively captured by any kind
of information technology system since they considered their
shopping activity unpredictable to anyone but themselves. The
implication of close monitoring of their activities and the resulting
promotions was considered as limiting to the fun of shopping
and contrary to the concept of shopping according to their mood
and individual needs at any particular time. Furthermore, several
respondents objected to the implications of this scenario in
employment since MyGrocer services were perceived to limit working
positions at supermarket stores.
The in-home scenario created
strong defensive attitudes among respondents. This fact may be
primarily attributed to the perceived intrusion of consumers'
homes by monitoring devices which are perceived as the centerpiece
of their private lives. As a direct consequence to that, respondents
felt the need to defend their family environment by external
factors. Individual habits were perceived as in need to be treated
with the utmost discretion and thus the idea that they could
be monitored and examined by experts for the benefit of retailers
was strongly opposed to. Some interviewees even questioned the
ability of technology providers to protect customer rights and
as evidence to that they cited the currently frequent defacements
of commercial web sites.
In this paper we have discussed
the implications of emerging wireless product identification
technologies for vendor managed home inventory. In particular,
we claim that to maximise the return from the introduction of
such services it is necessary to accelerate the adoption collaborative
commerce processes. On the other hand, collaborative processes
over the Internet depend on the adoption of open standards and
provision of access to internal processes to trade partners.
A significant step to this direction is the introduction of the
GCI product code and categorisation as well as the e-business
process specification. Furthermore, a crucial step to this direction
is the development of trust relationships with end consumers.
Since VMI depends on personal data sharing between vendor and
consumer, the intimacy of this relationship reaches an unprecedented
 L. Jones (1999) "Working
without wires", Industrial Distribution, Vol. 88, No. 8,
 M. Karkkainen and J. Holmstrom
(2001) "Wireless product identification:
Enabler for handling efficiency, customisation, and information
Chain Management: An International Journal, to appear.
 W.C. Kim and R. Mauborgne
(1999) "Strategy, Value Innovation, and the
Knowledge Economy" , Sloan Management Review, Vol. 40, No.
3, pp. 41-54.
 P. Kourouthanasis, G.Lekakos,
G. Doukidis and J.O. Tuominen (2001)
"Intelligent Product Identification and Home Networking",
6th Official ECR Europe Conference Seminar.
 G. Roussos, P. Kourouthanasis
and O. Seppala (2001) "MyGrocer White
Paper", Technical Report, Electronic Trading Research Unit,
Athens University of Economics and Business.
 J. Smaros and J. Holmstrom
(2000), "Reaching the consumer through e-grocery
VMI", International Journal of Retail and Distribution Management,
Vol. 28, No 2, pp. 55-61.
 R. van Hoek (2001) "E-supply
chains virtually non-exixting", Supply Chain Management:
An International Journal, Vol. 6, No. 1, pp. 21-24.
 E. van Roessler, P.Kesteloot
and P.Howgate (2000) "B2B e-Commerce: Open standards for
interoperable e-catalogues", Proceedings of the e2000 Conference.
 VICS CPFR Committee (1999)
The Collaborative Planning, Forecasting and Replenishment Committee
of the Voluntary Interindustry Commerce Standards (VICS) Association
CPFR Voluntary Guidelines, UCC Council.