How RFID can Minimize Product Shrinkage in the Supply Chain

Vendor Perceptions of How RFID can Minimize Product Shrinkage in the Retail Supply Chain

Abstract:

The objective of this paper is to investigate product shrinkage in the retail supply chain, and to consider how radio frequency identification (RFID) could act as a partial solution toward a retailer's loss prevention strategy. The research uses semi-structured interviews to collect data, and a qualitative content analysis to present the results. Given that the number of RFID deployments in the retail supply chain is limited, RFID vendors, resellers, and associations are instead used to gather the current value propositions. Representatives from nine Australian RFID vendors and associations were interviewed in August and September of 2006. The results indicate that RFID can be used to minimize losses in the supply chain significantly and particularly address product authentication issues. For RFID to be adopted as a loss prevention mechanism, however, organizations must have some visibility of what constitutes product shrinkage in their retail supply chain, and the resultant monetary losses ensuing. All too often, return on investment (ROI) calculations on the adoption of RFID in retail, is calculated only on known sources of product shrinkage, while unknown sources are unaccounted.

SECTION I. Introduction

This paper will determine the perceptions of RFID vendors and associations for the potential of RFID to minimize product shrinkage across the retail supply chain. Today, RFID is used for automatic toll collection on motor highways, tracking medicine vials in the pharmaceutical industry and accurately sorting luggage at international airports. However, the only application of anti-theft technology in major Australian retailers is Electronic Article Surveillance (EAS). Beyond the basic features of EAS, newer Generation-2 (Gen-2) RFID technologies facilitate the accurate tracking of goods across the supply chain giving the retailer unsurpassed ‘visibility’ of stock. Managing inventory using RFID offers a number of benefits that existing EAS and legacy barcode systems cannot achieve. Throughout this paper, employees from eleven different organizations offer their ideas and perceptions on various issues regarding RFID and product shrinkage. Real world examples are given on the application of RFID in industry to provide a grounded understanding for which lessons can be learned for the future adoption of the technology. An important question to be answered in this paper is; does RFID hold the potential to minimize product shrinkage across the retail supply chain?

SECTION II. Background of RFID Vendors and Associations

The unit of analysis for this part of the study is RFID Vendors and Associations. A total of nine organizations formed this group, each of which was represented by an individual employee. RFID vendors included technology providers, manufacturers, system integrators and resellers of hardware and software, and the associations group included an RFID association and an RFID standards body. Employees selected for the study covered a broad range of expertise in the field of RFID. Employees involved in the study primarily included staff with managerial positions. However, technical staff, sales staff and consultants also took part in the study.

SECTION III. Methodology

The research was conducted using semi-structured interviews with RFID vendors in the Australian market. Ten different vendors and Associations were interviewed.

A. Interviewees

  1. RFID Vendor 1 Business Development Manager
  2. RFID Vendor 2 Systems Engineer
  3. RFID Vendor 3 Managing Director
  4. RFID Vendor 4 VP Marketing & Business Development
  5. RFID Vendor 5 Managing Director
  6. RFID Vendor 6 Managing Director
  7. RFID Vendor 7 National Sales Manager
  8. RFID Association
  9. RFID Consultant
  10. RFID Standards Standards Development Coordinator

B. Questions

  • Determine the interviewee's job title and their role and responsibilities

  • Gain an understanding of their experience in their given industry

  • Gain an understanding of their experience with RFID technology

  • Identify the contributing factors to product shrinkage in retail

  • Identify items that constitute product shrinkage

  • Identify areas where product shrinkage occurs in the supply chain

  • Specify where product shrinkage occurs in the supply chain

  • Identify characteristics of the organization's customer-base

  • Discover the main drivers to adopt an RFID system

  • Discover the benefits of RFID as part of a retail supply chain

  • Discover the barriers to RFID adoption in the Australian retail industry

  • Investigate the possibility for RFID to minimize product shrinkage

  • Determine the advantages that Gen-2 RFID systems have over the well-established barcode (legacy systems) perceived by the retailer

  • Identify standards used by the organization

  • Ascertain the organization's view on source-tagging from the supplier

  • Learn how RFID can be used with additional technologies

  • Discover other perceived benefits of RFID besides minimizing product shrinkage

SECTION IV. RFID Vendor Perceptions of Product Shrinkage

loss prevention.jpg

When defining product shrinkage RFID Vendor (1) explained that it varies between industries, but generally it includes; lost, stolen (theft) and damaged goods. When asked about product shrinkage a typical response included these three sources. RFID Vendor (4) emphasized that “theft is the predominant contributor to product shrinkage.” It was also interesting to discover that some vendors were unaware of all the sources that contribute to product shrinkage. This suggests the possibility that vendors are oblivious to the problems encountered by retailers; organizations which could represent a large portion of their customer base.

Nonetheless, the Systems Engineer (RFID Vendor 2) was well informed on sources that contribute to product shrinkage, as he had previously worked in the retail industry. He provided a detailed understanding of the contributing sources to product shrinkage including:

theft, damaged goods, overdue items, past due date items. Since I got into IT, I have been doing a lot in the supply chain, so there is obviously damage within transit, misrouted or otherwise lost goods throughout the supply chain, incorrect numbers shipped, over shipped, under stocked, all that kind of stuff constitutes product shrinkage (RFID Vendor 2).

When the Managing Director (RFID Vendor 3) was asked what product shrinkage was he simply replied “[a]nything that represents a loss of a physical asset.” A physical asset in the retail industry generally covers consumer-based products and the reusable pallets and containers which carry them. Physical assets can be unaccounted for at any point across the supply chain. RFID Vendor (3) further explained that main contributors to product shrinkage have not been accurately determined:

I don't know and I don't believe anybody knows. I tried to get figures out of the New South Wales Police on fraud, they didn't know; the New South Wales Retailers Association, they didn't know… the real issue is there hasn't really been a way to measure it. And one of the things that RFID can do is actually assist you in measuring it.

The most significant part of this quote resides in the fact that there is no way to measure product shrinkage. RFID Vendor (3) may have recognized RFID as a technology which can be used to accurately measure the contributing sources of product shrinkage, yet in what ways can RFID minimize product shrinkage?

SECTION V. Minimizing Product Shrinkage Using RFID

Figure 1 RFID as a means to minimize product shrinkage

RFID technologies were considered by most RFID vendors and associations as a solution to product shrinkage in the retail industry. As proposed by RFID Vendor (2) the main drivers for the adoption of RFID in the retail industry is the technologies potential to minimize shrinkage and to improve supply chain efficiencies. Not all the benefits of RFID within a retail environment have been realized by vendors. There are a number of techniques and applications that give this technology the ability to minimize product shrinkage across the retail supply chain (Figure 1).

A. Visibility

It was discovered that one of the main drivers pushing RFID in the industry was its ability to provide visibility across the entire supply chain. Visibility is described as an organization's ability to accurately track and observe the movements of products across the supply chain [1][2]. As stated by RFID Vendor (6), “[t]he whole thing's about getting visibility in the supply chain”. Gaining visibility across the supply chain allows a retailer to collect accurate information to support the decision making process [3]. Furthermore, the visibility of products throughout the supply chain process increases the likelihood that a product will reach its destination; the customer. RFID Vendor (4) offered a scenario to demonstrate this theory: “[1] et's say you build 100 items, so if RFID saves shrinkage you'll have 100 items to sell. If you know where the 100 items are you can actually sell those 100 items and allows you to hold less stock.” This example illustrates the basic, yet fundamental concept of visibility provided by an RFID solution. Further supporting this idea, Garfinkel and Rosenberg [4], also recognizes the reality, that if a retailer cannot find a product, they cannot sell it. If a retailer has the ability to find and pinpoint the exact location of its products, it can potentially minimize:

  1. warehouse discrepancies;

  2. theft; and

  3. misplaced and lost products.

It is important to realize that these three factors are major contributors to product shrinkage in the retail industry. The automatic identification (auto-ID) of products using RFID has the potential to accurately manage stock across the retail supply chain, effectively reducing the chances of misrouted or misplaced products.

1) Warehouse Discrepancies

The continuous demand from customers in the retail industry requires a constant flow of goods from the point of manufacture to the retail outlet. Retailers must successfully coordinate timely and effective responses to customer demand. As suggested by Pisello [5], RFID can support this process by validating the accuracy of deliveries and shipments. Inaccuracies which occur in a retail supply chain are commonly called discrepancies. A discrepancy represents any form of an inaccuracy in a delivery. For example, a retail outlet may order 1000 products from the warehouse and only receive 980 products. Due to the large number of cartons, the back-dock attendant is not required to scan each individual box using a barcode scanner. Thus, 20 cartons are unaccounted for and subsequently, a discrepancy occurs. As suggested by the RFID consultant from the RFID Association:

[a] retailer wants to minimize mistakes. When you are at the dock and you receive your deliveries you have to check ever single item on the pallet, right? Well how about you just scan the pallet and the pallet itself will just tell you what's inside. So you don't need to undo the pallet at all.

Apart from its ability to minimize human intervention and labor costs, RFID can automatically identify products as they leave a delivery vehicle. Tagged products that pass by a number of RFID antennas in a gateway arrangement can be automatically counted. During this process, warehouse personnel can be alerted to any errors that may occur and finally verify a delivery ready for dispatch. Using RFID, a retailer has the ability to minimize warehouse discrepancies by accurately confirming a delivery vehicle's load. It is anticipated that reducing errors in preparing and receiving deliveries from the distribution centre to the retail outlet will result in a reduction in overall product shrinkage levels.

2) Theft

The application of Electronic Article Surveillance (EAS) technology has been widely embraced by retailers as an antitheft mechanism. EAS is a closed-loop system with the sole purpose to deter thieves (RFID Vendor 2). Furthermore, RFID Vendor (3) agreed that EAS is not a total solution but a deterrent. To “get a total solution you actually need to track everything from the point of manufacture, you need to tag it at the point of manufacture… and then integrate it throughout the entire supply chain” (RFID Vendor 3). Gen-2 RFID technologies offer advantages that surpass a simple EAS antitheft configuration.

As stated by RFID Vendor (7) using RFID to combat sources of shrinkage “you've got the ability to keep track of products in and out of the store.” Using RFID to actively monitor products in a retail outlet can potentially assist in preventing theft [4]. In this particular application a retailer can detect abnormal behavior, such as twenty razor blade packages being removed from the shelf at once [6]. Using a notification system, employees could be alerted to watch the individual who removed the products ensuring that the products are paid for before the shopper leaves the store [6]. Monitoring products using RFID coupled with a notification system in a supermarket is not the only instance were RFID can provide visibility by actively tracking products.

3) Misplaced and Lost Products

Products can also be monitored using RFID throughout the entire retail supply chain. Firstly, the definitions of misplaced and lost products within a retail setting are to be defined. Products that have been ‘misplaced’ have generally been moved to a misallocated section of a warehouse or retail outlet. However, if a product is not located within a certain timeframe, its status is said to be ‘lost’ or unaccounted for. Unrecovered products are typically assumed to be lost and as a result are added towards the total of unknown product shrinkage.

A product that is believed to be out of stock or unavailable does not necessarily occur because products have been sold or stolen; products are also commonly misplaced. RFID can assist by tracking and tracing products at any point across the supply chain. According to RFID Vendor (1), a retailer using RFID has the ability to “track and trace a particular product at item-level through the whole supply chain process.” If a retailer can accurately monitor stock throughout the supply chain products are less likely to go missing in the first place.

B. Authentication

RFID can also offer value by minimizing product shrinkage in its ability to rapidly authenticate a tagged object. A retailer can take advantage of this feature by scrutinizing tagged products at any point across the supply chain. Authentication can be used to locate defective products during recalls, detect possible acts of fraud and identify counterfeit products.

1) Recalls

Product recalls are considered to be one of the primary motivators to adopt RFID. According to RFID Vendor (1), “product recalls cost millions and millions of dollars”. Products in the retail industry (especially food products) need to comply with certain safety criteria. If these criteria are not met products are assumed to be defective and unfit for consumption. When a product line is recalled large quantities of stock need to be identified, gathered and disposed of. Unfortunately, not all goods identified in this process are actually defective. In fact, extortion attempts against large corporations which target popular products in most cases do not pose a threat to the consumer. However, in this situation the manufacturer or retailer has no alternative but to dispose of the majority, if not all products that are said to be defective.

The ability to authenticate a product using RFID can minimize the overall impact of product recalls and extortion attempts. RFID is gaining much momentum in the pharmaceutical industry as a tool to manage recalls (RFID Vendor 1) [7]. Using an RFID scanning device retail employees can accurately locate a desired product and establish whether it is subject to recall. From a safety perspective, the pharmaceutical and retail industries together rely on the overall quality of their products. The pharmaceutical industry may be investing in RFID technologies to minimize the impact of product recalls, but why have we not seen Australian retailers adopt RFID to minimize this issue as well?

2) Fraud

In the retail industry, fraud includes refunding products to an alternative store (other than the place of purchase) to receive a higher return. As described by RFID Vendor (3) retail fraud also involves the act of placing foreign barcodes on products as to ensure that they scan at a lower price. As a barcode can essentially be an adhesive label, barcodes are easy to reproduce (RFID Vendor 3) and fastened over a product's original barcode. As described by RFID Vendor (3), “nine times out of ten the checkout person wouldn't know.” However, barcode fraud can also occur at any point across the supply chain. For instance, a third party supplier may dishonestly alter barcodes on a number of products included in a large delivery and being unaware of this a retailer could accept the delivery.

RFID can assist by authenticating a product's point of origin. If a product can be identified and confirmed as previously owned by a retailer, the products' value has a better chance of being retained by the retailer and not lost due to fraud. The issue of fraud is closely related to illegitimate product reproductions.

3) Counterfeits

The authenticity of goods is a great concern in the pharmaceutical industry (RFID Vendor, 1–4; Heinrich 2005). According to Heinrich [8], “[t]he Food and Drug Administration (FDA) mandate for pharmaceutical manufacturers to use RFID-tagged pill bottles was driven by the desired to eliminate the estimated 2 to 7 percent (approximately [US]$30 billion) of counterfeit drugs sold each year.” RFID is capable of the mass serialization to track and trace individually tagged products. Serial numbers is a fundamental requirement for a successful anti-counterfeit solution [6]. In the retail industry the application of RFID for anti-counterfeiting purposes is most likely to include clothing and other high-end products.

Electronics, designer clothing brands and other high value items, often targeted by fraudsters, are ideal items for anti-counterfeit technologies. The Benetton Group initiative in the United States required clothing items to be embedded with an RFID tag to detect counterfeit products (RFID Vendor 7). In this application, clothes can be assumed counterfeit if the garment is found without a tag or the tag contains an invalid item code [9]. In this particular case, RFID holds the potential to combat criminal operations. In addition, it can reduce the distribution of goods throughout the ‘grey market’ and ultimately, prevent the sale of counterfeit products to consumers. The anti-counterfeiting capability of RFID can minimize product shrinkage by eliminating the possibility of a retailer unknowingly investing in counterfeit products.

C. Automation

Fischer and Green [10] identify “bad checks” as an activity that contributes to loss experienced by retailers. Checking products using a barcode system involves manually scanning a product's barcode at any point across the supply chain. A bad check occurs when a product fails to be recognized, due to human intervention or a barcode error. However, RFID offers the potential to minimize these errors.

The Electronic Product Code (EPC) standard for data storage on an RFID tag is designed for the automatic identification of products across the retail supply chain. An EPC code identifies the manufacturer, product category and the individual item [11] [12]. Automatic identification of such data is designed to reduce errors incurred by human intervention.

1) Human Error

RFID facilitates automatic inventory auditing [13]. Auditing, more commonly known in retail as stock take is the process of determining stock levels. Stock take generally involves the use of barcode scanners to identify products, which are then manually counted by hand. Miscalculated products are most likely linked to human errors which then add to overall product shrinkage levels (RFID Vendor 6). However, stocktaking can be completed quickly and accurately using an RFID enabled handheld scanner [13]. Using the EPC convention for data storage a product can be individually identified and the total number of products recorded. According to RFID Vendor (2), RFID can streamline supply chain processes and remove the necessity for personnel to assist with tedious operations; “zero human intervention operation” (OHIO). A system which requires minimal physical manipulation of stock level data is just one benefit of RFID adoption within a retail environment. However, reducing errors due to human intervention is not the only benefit where RFID can minimize product shrinkage.

D. Auxiliary Applications

In a retail environment products are generally spoiled if they are: damaged, broken, unsealed, exposed to incorrect temperatures or out of date. Products that have been spoiled are commonly discarded and hence, contribute to large quantities of product shrinkage. RFID can minimize product shrinkage using the following auxiliary features.

1) Damaged Products

An interesting issue raised by the RFID Association was RFID's ability to gather information about a product and categorize it accordingly. For example, a retailer could implement an RFID reader to record damaged stock at the opening of a waste deposit. The retailer would then be able to keep an accurate record of damaged goods. In this application RFID does not reduce damaged stock, but it does record it. As suggested by the RFID Association:

They might not be able to fix the problem, but they are going to categorize it; this is stolen, this is broken and then they could get rebates from their suppliers. If they have information about where and why the product is part of shrinkage, then maybe they can get dollars back.

If a retailer can record damage products they can claim for credit through insurance or through other formal agreements with their suppliers. This information could also be made available to manufacturers interested in a regularly damaged product. Improvements could be made to a particular product or its packaging to resist certain elements on its way to the retail outlet and onto the shelf.

In addition, as suggested by RFID Vendor (2) transporting goods using RFID simply removes the human interaction as products are scanned automatically. Minimal handling of stock by personnel results in a further reduction in the likelihood that products are accidentally dropped or mishandled. “The big cost for most retailers is the amount of handling that occurs at the manufacturer through distribution centre to the retail store” (RFID Vendor 7). A retailer can further reduce spoilage of products by closely monitoring temperature.

2) Temperature

In the retail industry, it is imperative that perishable products remain within a fixed temperature range across the entire supply chain. Perishable products in-transit are vulnerable to incorrect temperature exposure. For example, frozen seafood awaiting dispatch at a distribution centre may be unintentionally left in direct sunlight for an extended period of time. In addition, large prime movers (delivery vehicles) travel great distances and take multiple routes during transportation. During this process, products are vulnerable to fluctuating temperatures.

According to RFID Vendor (2), a temperature sensor can be attached as an additional device on an RFID tag. Sensors can monitor temperature levels in real-time [14] or at various intervals. Tags for this purpose can be attached to a shipping container, a vehicle or an individual product. As RFID tags can function at temperatures ranging from −40°C to 204°C [4], they are suitable for cold and frozen storage and logistics. It is in this particular application that RFID tags can eliminate or reduce product spoilage [15].

In the not too distant future RFID tags will offer seamless product temperature records from point of manufacture to the time of purchase [14]. Using this form of RFID application both the retailer and the customer can be reassured of a product's temperature throughout the entire supply chain process.

3) Expiration Date and Stock Rotation

Monitoring expiration dates of a retailer's complete inventory list is a challenging task. Currently, products that are found to be expired are disposed of. According to Symbol Technologies [2], RFID can be used by a retailer to monitor product expiration. If a retailer can immediately determine when a product is due to expire, products can be strategically placed or re-priced for quick sales.

Existing technology utilized by retailers does not allow data such as expiration dates to be monitored. Advances in RFID could ensure the retailer is constantly aware of products that are approaching expiration. Employees could be notified in real-time if the product should be moved to the front of the shelf. This would drastically reduce the human intervention required in recognizing items that are soon to expire.

A product's expiration date is closely linked to the practice of stock rotation in retail. Stock rotation involves the routine of physically moving products from the back of the shelf to the first row on display to the customer. This basic routine plays a role in minimizing product shrinkage.

 

Figure 2. The cascading effect of product shrinkage

SECTION VI. Conclusion

The RFID vendors and associations involved in this study acknowledged the potential of RFID to minimize product shrinkage across the supply chain. In most cases the interviewees were aware of the issue of product shrinkage, yet they were unaware of its main contributing factors. This unfamiliarity suggests that their knowledge of their customer base (consisting of retailers) is not as extensive as expected. It was discovered that one of the main drivers pushing the adoption of RFID in the retail industry was its ability to provide ‘visibility’ of stock, improve efficiencies and potentially minimize product shrinkage across the supply chain. Visibility was a key finding to the prevention of warehouse discrepancies, theft and the likelihood of products being misplaced or lost (figure 2). The technology's capacity to authenticate products during recalls, acts of fraud and in identifying counterfeits was also found to be of benefit. The automation of supply chain processes recognized RFID as being a means to dramatically minimize human errors. Finally, RFID's auxiliary features allow a retailer to minimize loss by recording products as ‘known damaged’, maintaining correct temperatures in storage and during transportation, manage the expiration dates of products and rotate stock effectively. All these characteristics were recognized by RFID vendors and associations, accompanied by supporting academic papers and trade sources, as being characteristics of RFID with a potential to minimize product shrinkage across the retail supply chain. It is expected that the adoption of RFID for visibility throughout the supply chain, would in most cases, reveal a far greater detail and size of product shrinkage occurring than most loss prevention managers are currently estimating.

References

1. "Business Benefits from Radio Frequency Identification (RFID)", Technical Brief, pp. 1-6, Sep 2004.
2. "Understanding Gen-2: What is it How will you Benefit and Criteria for Vendor Assessment", White Paper, pp. 1-8, Jan 2006.
3. Retail News: Technology News for Loss Prevention and Supply Chain Management.
4. S. Garfinkel, B. Rosenberg, "RFID Applications Security and Privacy" in , Upper Saddle River:Addison-Wesley, 2005.
5. T. Pisello, The ROI of RFID in the Supply Chain RFID Journal.
6. H. Forcinio, Prevent Losses with RFID Managing Automation.
7. RFID Solution for Pharmaceutical Track and Trace.
8. C. Heinrich, "RFID and Beyond: Growing Your Business Through Real World Awareness" in , Indianapolis:Wiley Publishing Inc., pp. 176, 2005.
9. S. Lahiri, "RFID Sourcebook" in , Upper Saddle River:IBM Press, Pearson Education, 2006.
10. R.J., G. Green, "Introduction to Security" in , Burlington:Butterworth-Heinemann, pp. 345, 2004.
11. R.A. Kleist, T.A. Chapman, D.A. Sakai, B.S. Jarvis, "RFID Labeling: Smart Labeling Concepts and Applications forthe Consumer Packaged Goods Supply Chain" in , Irvine:Printronix Inc., 2005.
12. R. Want, "An Introduction to RFID Technology Pervasive Computing", IEEE, vol. 5, no. 1, pp. 25-33, Jan-March 2006.
13. M.M. Ollivier, "RFID: a new solution technology for security problems", European Convention on Security and Detection, pp. 234-238, May 1995.
14. J.N. Smith, Specialized Logistics for a Longer Perishable Supply Chain World Trade Magazine.
15. What is RFID used for?.
 

Keywords

radiofrequency identification, Supply chains, Marketing management, Engineering management, Australia, Standards organizations, Marketing and sales, Pharmaceutical technology, Standards development, Pulp manufacturing, supply chain management, RFID, retailing, return on investment, vendor perceptions, product shrinkage, retail supply chain, radio frequency identification, retailer loss prevention strategy, Australian RFID vendors, product authentication, monetary losses, vendors

Citation: Nicholas Huber and Katina Michael, 2007, "Vendor Perceptions of How RFID can Minimize Product Shrinkage in the Retail Supply Chain", RFID Eurasia, 2007 1st Annual, 5-6 Sept. 2007, Istanbul, Turkey, 10.1109/RFIDEURASIA.2007.4368121

 

Barriers to RFID Adoption in the Supply Chain

Abstract

This paper will explore the interplay between the retailer's dilemma of product shrinkage and the solutions advocated by RFID vendors and associations to minimise product shrinkage. RFID as an emerging technology holds the potential to fulfil the needs of stakeholders in the supply chain.

Section I.

Introduction

This paper will explore the interplay between the retailer's dilemma of product shrinkage and the solutions advocated by RFID vendors and associations to minimise product shrinkage. RFID as an emerging technology holds the potential to fulfil the needs of stakeholders in the supply chain. The recent ratification of Generation-2 (Gen-2) RFID and the Electronic Product Code (EPC) standard developed by Global Standards One (GS1) has greatly influenced the adoption of RFID in certain industries. Despite these current standards supporting the technology, there still remain a number of challenges that prevent RFID appealing to the retail industry. These challenges involve overcoming barriers and inhibitors to the adoption of RFID implementation for the tracking of goods, especially at carton-level and item-level. An important point raised by the retailer's Delicatessen Manager is that “[i]t's hard to keep track of how many items we have in the supermarket.” If so, then why have we not seen a more effective supply chain management (SCM) solution in the Australian retail industry, such as RFID?

Section II.

RFID: The Emerging Technology

Rivalry among businesses leads to the relentless pursuit of competitive advantage. According to research conducted by [1], across all industries 28 percent of organisations are planning to experiment with RFID technologies within the next two years. This interest in RFID technology suggests that it could also be used by retailers for strategic advantage. Consider Michael Porter's [2] theory that well established organisations are in the best position to integrate new technologies with SCM by leveraging existing assets (legacy barcode systems) to further support their investments. In this light, retailers willing to minimise product shrinkage, now have the ability to do so by complementing existing legacy barcode systems and other supply chain processes with RFID. Today, retailers and manufacturers are using RFID technologies to manage their supply chains. U.S. based companies such as Wal-Mart, Tesco, Target, Proctor and Gamble, and Gillette have implemented RFID technologies across their supply chains. According to the RFID vendors and associations involved in this study, RFID is currently used by Chinese and Korean airports, pharmaceutical industries and casino and gambling industries. RFID is a reality in these industries by the support of Gen-2 RFID standard of tag and EPCGlobal for data storage. However, even with the proliferation of RFID across a diverse spectrum of industries, it is yet to engage the Australian retail industry.

Section III.

Methodology

Interview transcripts were combined and then analysed using the Leximancer content analysis software. The program is designed to automatically detect concepts in interview transcripts and create an analysis report or concept map (Figure 1). This map illustrates the interaction between concepts and provides an overview of how concepts relate to one another. The size of a circle which encapsulates a particular concept represents the relative importance of a concept and overlapping circles characterise association or closely allied concepts.

 Figure 1. Leximancer Concept Map

Figure 1. Leximancer Concept Map

The concept map for this study was used to create themes for further discussion topics (Table 1). A total of six major concepts were discovered within the interview transcripts, each ofwhich forms part of this paper.

 Table 1. Discussion themes created from the concept map

Table 1. Discussion themes created from the concept map

A. RFID Interviewees

RFID Vendor: 1 Business Development Manager

RFID Vendor 2: Systems Engineer

RFID Vendor 3: Managing Director

RFID Vendor 4: VP Marketing & Business Development

RFID Vendor 5: Managing Director

RFID Vendor 6: Managing Director

RFID Vendor 7: National Sales Manager

RFID Association

RFID Consultant

RFID Standards Standards Development Coordinator

 

Section IV.

Barriers To Adoption

There are a number of challenges that are currently restraining the proliferation of RFID in the retail industry as a SCM solution and as a means to minimise product shrinkage. These barriers to adoption were identified as cost, lack of awareness, immaturity of RFID technology and differing perceptions of product shrinkage and RFID.

A. Cost

This study revealed through supporting evidence that RFID is currently too expensive to be implemented by a retailer. The retailer's existing application of EAS tags to certain products is cost driven by the unit price or product lines deemed to be high-theft targets. According to the retailer's Loss Prevention Manager (1), cost prohibits the investment of newer generations of RFID at this stage. Although the technology has improved dramatically over the past decade, the cost of various RFID components remains a significant inhibitor to its adoption. It was agreed on by both the retailer and the RFID vendors and associations that cost was the most dominant barrier to the integration of RFID in a retail setting. In addition, RFID was dismissed as a possible SCM solution on most occasions solely based on this factor. As recognised by the Business Development Manager from RFID Vendor (1): “I think it'll take a fairly low cost tag and cost effective reader for them to implement an RFID system… the manufacturers of the technology are doing their best and investing a great amount of money into improving the technology. I think it's only going to get better and it's only going to get more cost effective, which means eventually it will be implemented.”

RFID readers and tags were found to be costly outlays in an RFID implementation. However, RFID tags in a supply chain solution require constant replenishment. RFID readers on the other hand have an initial outlay, but in most cases require little maintenance. A large scale operation, such as integrating RFID within a retail supply chain, requires a large number of RFID tags. Consequently, it was discovered that tags represented the larger expense of the two. The Systems Engineer from RFID Vendor (2) claimed: “[i]t's the tag cost that does sting, especially when you're comparing it to things like barcodes.” The price of an RFID tag is relative to the law of economies of scale. Economies of scale refers to the decreased per unit cost as output increases [3]. In other words, when RFID tags can be produced on a larger scale with less input costs economies of scale are thus achieved. The latest silicon technology and other advancements in RFID are to influence production volumes due to the lower costs of such materials (RFID Vendor 4). As illustrated in Figure 2, as the price of RFID tags fall and become more affordable, the adoption of RFID will increase. As predicted by RFID Vendor (2) “the magic number in the industry is 10 cents a tag” and retailers are more likely to see a return on investment with an RFID solution that is consistently cost effective. Nonetheless, the technology relies on other components rather than readers and tags alone.

 Figure 2. RFID adoption model (cost vs production volume) Adapted (Kleist et al. 2006, p. 39 [4]; Lahiri 2006, p. 230 [5])

Figure 2. RFID adoption model (cost vs production volume) Adapted (Kleist et al. 2006, p. 39 [4]; Lahiri 2006, p. 230 [5])

It is most likely that an RFID solution for a retail supply chain would need to integrate a middleware application.

Middleware was also found to be an expensive component of an RFID system. As suggested by RFID Vendor (4): “you might need to get a middleware company involved like IBM or SAP and that's where your large costs are.” Many vendors were providers of hardware-based solutions and relied on a third party to integrate middleware and the communication between RFID tags and a Warehouse Management System (RFID Vendor 2). It was therefore confirmed that the overall costs involved in an RFID implementation are a barrier to its adoption. The technology may exist to build an RFID solution for a retail supply chain, yet it all comes down to developing business cases (RFID Vendor 3) and improving the general awareness of the technology in the industry.

B. Lack of Awareness

Another commonly occurring concept was ‘think’ which represents the lack of awareness of RFID technology. It was found that the overall awareness of Gen-2 RFID within the retailer studied was generally low. Loss Prevention staff members had a reasonable understanding but failed to recognise the true potential of RFID as a retail SCM solution and an effective loss prevention mechanism. This lack of awareness requires information sources to be directed at retailers to instigate a solution.

The RFID Association involved in the study was a nonprofit organisation, solely established to increase awareness of RFID through communication and forming a knowledge base. An interesting point raised by the RFID Consultant was that RFID “brings different knowledge into the same room” (RFID Association). This suggests that integrating RFID across the supply chain may require more than just the retailer and an RFID vendor. Perhaps other parties need to be involved such as; standards bodies, government departments, product manufacturers, logistics companies, wireless and other innovative technology providers. Forming business consortiums may instigate an alternative driver for RFID.

 Table 2. Australian Demonstrator Project [6]

Table 2. Australian Demonstrator Project [6]

As quoted by RFID Vendor (1), “there really has to be a business case, and I think people really need to understand that”. So far, the Australian retail industry has only witnessed the Australian Demonstrator Project, chiefly conducted by Global Standards One (GS1) and the Commonwealth Scientific and Industrial Research Organisation (CSIRO) [6]. The study involved numerous participants (Table 2). As part of a pilot study, these participants set out to discover the benefits of RFID in a retail supply chain environment. The project formed a business case with a principal finding that internal knowledge and the use of standards is essential to a successful RFID implementation [6]. The study also advised that it is important that retailers in search of similar solutions investigate their own business challenges [6]. This could be made possible by forming consortiums and establishing a common goal through forming agreements or industry compliance mandates. A business challenge identified through the research in this thesis was product shrinkage; the retailer's dilemma.

C. Immature Technology

To be become a well established and accepted technology, like barcodes, RFID needs further development. As acknowledged by RFID Vendor (4) retailer's have “got some pretty good systems that have matured over time and it would be difficult to see where RFID could actually improve those systems.” In this instance, the vendor is referring to legacy barcode systems. RFID Vendor (1) also supported this theory: “retailers have invested an immense amount of money in moving their products from their distribution centres out to their stores and they do that quite well in this point in time.” RFID has a long way to go before its proliferation industry wide.

The suppliers of RFID equipment are also limited. For example, the Managing Director of RFID Vendor (5) claimed that his company is the only manufacturer in Australia for ultra long-range active tags. Using advanced battery management technology, similar to that of mobile phones, this type of tag has a battery life of seven to eight years (RFID Vendor 5). As a leading edge technology only recently available to the Australian market, suggests that these tags would most likely be expensive. This is yet another inhibitor to the adoption of RFID.

When asked whether RFID was hype or reality, the RFID Standards Body claimed that it is “somewhere in between”. In the case of Wal-Mart in the United States RFID is a reality (RFID Standards Body). However, in Australia, even though we consider RFID a reality, there are only fifteen major deployments including toll-ways on motor highways (RFID Standards Body). Conversely, RFID Vendor (5) responded: “It's a reality, definitely a reality… there's very, very few people that are actually providing solutions. There are a lot of people that are supplying tags, readers, technology and what have you. But you go and approach them and ask them how to solve a particular problem, they'll go huh? You'll have to go see an integrator to do that. Where are these integrators? So, unfortunately in that regard the industry is in its infancy.

It's only some of the big players that are only interested in the multi billion dollar deals with the likes of the Department of Defence and Wal-Mart, that are really getting into this. Down at the normal level, there are very few players that provide an actual solution. We're one of the few that do.”

In this light, RFID may well be a reality, yet in an Australian context it is still considered to be in its infancy. The barriers to entry expand even further when considering user perceptions of the technology. As this thesis is concerned with product shrinkage as a means to minimise product shrinkage, it was relevant to discover the differing views of product shrinkage and RFID.

Section V.

The Convergence of RFID and Legacy Systems

Australian retailers have invested large amounts of time and capital into refining their existing legacy barcodes systems. What was highlighted by numerous RFID vendors and associations involved in the study, is the inevitable convergence of RFID and barcode systems, suggesting that both technologies be integrated into the retail supply chain.

 Figure 3. Dis(advantages) of Barcode and RFID

Figure 3. Dis(advantages) of Barcode and RFID

Interestingly, The Managing Director (RFID Vendor 6) mentioned that he would be very surprised if bar code systems were ever phased out completely. The future potential for barcodes to operate in conjunction with RFID as a backup system was also envisaged (RFID Vendors 3–6). The RFID Consultant from the RFID Association also stressed the importance of smart labels. A smart label is an adhesive label with a barcode and an RFID tag (Figure 3). This technology is designed to support cross-compatibility between barcode and RFID systems within a supply chain configuration. Dual compatibility of smart labels has required the development of a new standard for data storage.

Technology standards also need to converge if RFID and barcodes are to coexist. The Standards Development Coordinator from the RFID Standards Body was asked about the convergence of UPC, EAN and EPC standards. He explained that EAN and UPC form part of the EPC standard which is known as tag data standards (RFID Standards Body). Uniting barcodes and RFID using smart labels and tag data standards faciliates a transition period from a combined barcode and RFID solution, to RFID only. However, RFID Vendor (6) predicted an ‘RFID only’ solution for a retail supply chain to be highly unlikely. The levels at which RFID tags are to be applied to products and other assets across the retail supply chain is also significant.

 Figure 4. The Barcode and RFID Adoption Lifecycle

Figure 4. The Barcode and RFID Adoption Lifecycle

A. Level of Tagging

RFID tags can be applied to objects at various levels. The three main levels include: item-level, carton-level, pallet-level and container-level (RFID Vendors 1–7; [7]). The most appropriate level of tracking depends on the application and the industry vertical in which a solution is to be implemented (RFID Vendor 2). According to the RFID Standards Body, the most realistic application for a retailer at this stage is carton-level or pallet-level tracking. This type of tracking monitors individual cartons or groups of cartons on a pallet. Other than the inhibitor of cost previously mentioned, item-level tracking is presented with a number of problems including read ranges and the complexity of integration throughout the entire supply chain (RFID Vendor 2; RFID Standards Body). However, the Vice President of Marketing and Business Development (RFID Vendor 4), suggested that item-level tracking is definitely an enabling technology in areas such as; access control and asset tracking but, “it doesn't make sense to put them on cans of beans or on clothes where barcodes are suitable.” Comparison of Characteristics BARCODES RFID Cost Relatively cheap, as the technology is quite mature. Expensive, although costs are expected to drop significantly as uptake increases and economies of scale are created. Ease of Use Simple and easy to use with little or no training required. The removal of human intervention and the level of automation negates any operating difficulties Ongoing Innovations Although barcodes are a mature technology, there are still continual innovations in the technology such as mobile phone barcode scanners and multimedia messaging service (MMS) barcode tickets such as “mobi-ticket”. RFID development is at a relatively immature state which means new applications are continually emerging. Reliability and Accuracy Barcodes are quite reliable and accurate, but are subject to operator mistakes and environmental hindrances. Some initial read reliability and accuracy issues have been discovered through pilots, however these are being solved as the technology matures. The technical nature of RFID and lack of human involvements means that theoretically its reliability and accuracy will be extremely high. Line-of-sight Barcodes are limited by line-of-sight optical scanning. Consequently, objects often have to be manually manipulated through human intervention. The radio nature of RFID means tags can be scanned remotely through packaging. It also leads to simultaneous reading where large numbers of items can be scanned within seconds. Information and Data Properties Traditional barcode symbologies only hold a minimal amount of information. Symbology innovations like two-dimensional (2D) and reduced space symbology (RSS) allow more information to be stored. Their uptake has been limited. Tags can typically hold as little or as much information as required by users, although this is limited by cost. Tags will allow for each individual item in the supply chain to be uniquely identified. In addition to this, tags can be updated as they move along the supply chain creating an audit trail. Environmental Considerations Asset Tracking Inventory Tracking A significant limitation of barcodes is the environment. As barcodes have to be in view of scanners they are subject to damage, weather and other stresses associated with movement across the supply chain. Barcodes can be used to track assets, enabling businesses to monitor the use of many investments such as tools. Limited inventory tracking is available; however, barcodes can generally only specify what type of product an item is, limiting its effectiveness. RFID tags can be very durable with some tags withstanding harsh chemical and extremely high temperatures. They are not subject to weather, nor are they typically damaged by rough handling, as they are stored inside packaging with the product. RFID tags allow organisations to track their assts as they are used. Tags can be attached to returnable items such as beer kegs to help maximise their use. The individual tracking of objects as they move along the supply chain is easy with RFID. The information on tags can also specify a product's expiry date. Inventory Management and Visibility Inventory control is one of the primary reasons for using barcodes in SCM. They provide better visibility, allow management systems to better forecast demands, and manage stock on hand, utilising practices such as just in time inventory management. Once fully deployed, RFID would provide organisations with an accurate picture of inventory levels in real-time. This allows management systems to act with enhanced knowledge and monitor all inventory details to maximise efficiency. Quality Control and Recall Management The inability to track unique items across the supply chain means that recalls and quality control cannot be very accurate. Individual item level management allows organisations to undertake stringent quality control practices and make very specific recalls when required. Tags can also monitor shock and temperature levels to ensure the quality of the end product. Level of Visibility The requirement of manual scanning at many SCM phases limits the availability and timeliness of information. Non-line-of-sight properties allow the continual monitoring of objects, which equates to real-time visibility. Security Barcodes provide limited or no security capabilities. Information rich, always-on tags give organisations the ability to constantly monitor tagged objects. Should an item go missing in the supply chain, systems can immediately initiate the appropriate response. Tags can also authenticate products to ensure they are not counterfeit. Error Reduction Compared to manual data entry, barcodes can reduce errors significantly. However as the scanning of barcodes is a physical process, human error can creep into the process with staff forgetting to scan items. RFID is highly automated and when setup correctly can achieve near perfect read rates. Automation removes the need for human manipulation, further lowering errors. Cost Savings Barcodes can help companies improve inventory management and efficiency; however, the physical scanning requirement of barcodes means that a large labour component is required. Once fully integrated into the supply chain, RFID could substantially lower operating costs and improve efficiency, reducing problems such as out-of-stock occurrences. Labour Considerations Provides a reduction compared to manual data entry, although scanning items still requires a sizable labour contingent. Automation directly eliminates a substantial labour component from SCM. As the technology becomes more pervasive, further labour reduction could be achieved through things like automated checkouts and smart shelves. Deployment Considerations Aside from environmental factors, there are few deployment considerations as the technology is inexpensive and widely used. Radio interference can prove to be a major issue in deployment, requiring numerous pilots and testing. The cost of RFID deployment and training are some other considerations. Established Barcodes are highly developed and are the standard in auto-ID SCM technology. It will be around for quite some time. RFID has a limited number of deployments in SCM. Despite this, recent mandates from leading companies mean that in the near future the technology will be used extensively. Privacy Concerns The barcodes inability to track individual items limits consumer privacy concerns. Tags are information rich and as they are quite durable, they can remain active for the lifetime of many products. The pervasive ‘always-on’ nature of the technology has caused concern among many privacy advocates.

A. RFID Source-tagging

Retailers drive their EAS source-tagging initiative by forming agreements with their suppliers. This initiative currently focuses on EAS anti-theft tags that are applied at point of manufacture and play a minor role in SCM processes. A high-end product may come source-tagged, but the tag's only function is to operate at store entry and exit points solely as an anti-theft mechanism. Consequently, the retailer's Store Trading Manager claimed that EAS does not minimise product shrinkage to a significant level. The enhanced functionality of Gen-2 RFID technology holds the potential to improve business decision making, especially when including all players in a retail supply chain.

Preliminary EAS agreements between suppliers and retailers may create the foundations for future agreements for an RFID enabled supply chain. This topic is closely linked to the notion that awareness and the formation of consortiums play a large role in the tagging of products at the point of manufacture. It was recommended by all RFID vendors and associations involved in this research that a successful RFID implementation requires the participation of all parties involved in a retail supply chain.

Section VI.

Integrating RFID Across the Entire Supply Chain

The levels at which products are to be tagged for distribution across the supply chain needs to be determined for the implementation of an RFID solution. When considering item-level tagging RFID Vendor (4) proposed the following: “[t]he whole benefit of barcodes wasn't established until everything had a barcode on it. So if you're going into a retailer and say I'll tag all the expensive stuff, but I won't tag all the cheap stuff, then they're not really utilising the benefits of RFID, you really have to tag everything, because otherwise you've got to have two systems. A system for the products that are tagged and one for the products that aren't tagged.” This quote suggests that stakeholders of a retail supply chain need to apply tags at item-level to utilise the full potential of RFID. Furthermore, RFID needs to be implemented across the entire supply chain to function in this manner and “[t]hat's where the real effort comes in” assured the Systems Engineer (RFID Vendor 2). Setting up a system at a distribution centre with over thirty truck bays can be extremely complicated (RFID Vendor 2). From a hardware perspective, testing and fine-tuning RFID solutions regularly encounters issues such as cross-over, multiple reads and other types of read errors (RFID Vendor 2). The task becomes “hugely complicated if we're talking about a full supply chain” (RFID Vendor 2).

Section VII.

Conclusion

This paper discussed the current issues surrounding RFID as an emerging technology for a SCM solution and as part of a loss prevention strategy for a retailer. Primary themes discussed the barriers to RFID adoption encompassing the costs involved in a solution, lack of awareness, RFID as an immature technology and the differing perceptions of product shrinkage and RFID. As each barrier to entry was examined, reciprocal relationships were found to exist between the retailer and RFID vendors and associations involved in this study. Investments made by retailers in legacy systems, was found to influence the convergence of RFID and barcodes supported by smart labels and tag data standards. With the various levels of RFID tagging available, it was determined that both pallet-level and carton-level tracking were most appropriate for an Australian retail application. Building upon business cases like the Australian Demonstrator Project and forming consortiums was found as a primary instigator to the future deployments of RFID. Source-tagging products at the point of manufacture was also supported by both the retailer and RFID vendors and associations as a means to minimise product shrinkage at various point across the supply chain, other than point of sale. These types of initiatives are likely to reinforce the overall success of an RFID SCM solution as part of a loss prevention strategy. Finally, it was discovered that the incorporation of retail supply chain stakeholders is critical to the overall effectiveness at which an RFID solution can function in order to minimise product shrinkage.

References

1. C. Bass, "Enterprise Solutions Mean Always Having New Opportunities to Add Value Outlook Point of View", 2003, [online] Available: http://www.accenture.com/NR/rdonlyres/8E86C567-F811-4B6F-B80DAD37D12E9446/0/enterprise_solutions_usltr.pdf.

2. E.M. Porter, "Strategy and the Internet Harvard Business Review", vol. 79, no. 3, pp. 62-79, 2001.

3. D. Besanko, D. Dranove, Schaefer, S. Shanley, "Economics of Strategy" in , Chichester:John Wiley, 2004.

4. R.A. Kleist, T.A. Chapman, D.A. Sakai, B.S. Jarvis, "RFID Labeling: Smart Labeling Concepts and Applications for the Consumer Packaged Goods Supply Chain" in , Irvine:Printronix Inc., pp. 39, 2005.

5. S. Lahiri, "RFID Sourcebook" in Pearson Education, Upper Saddle River:IBM Press, pp. 230, 2006.

6. "EPC Network Australian Demonstrator Project Report", Global Standards One Australia, 2006, [online] Available: http://www.gs1au.org/assets/documents/info/case_studies/case_epc_demo.pdf.

7. J. Borecki, "RFID Overview: Challenges and Opportunities", 2005, [online] Available: http://www.clm-mke.org/Presentations/Borecki%2001-06.pdf.

IEEE Keywords: Radiofrequency identification, Supply chains, Pharmaceutical technology, Supply chain management,Australia, Code standards, Standards development, Information systems, Investments, Manufacturing

INSPEC: supply chain management, radiofrequency identification, product shrinkage, radiofrequency identification, supply chain management

Citation:  Nicholas Huber, Katina Michael, Luke McCathie, Barriers to RFID Adoption in the Supply Chain, 1st Annual RFID Eurasia, 2007, Date of Conference: 5-6 Sept. 2007, Conference Location: Istanbul, Turkey, DOI: 10.1109/RFIDEURASIA.2007.4368128

 

Minimizing Product Shrinkage across the Supply Chain using Radio Frequency Identification

Abstract

This paper identifies the contributing factors of product shrinkage and investigates the current state of anti-theft technology as part of the loss prevention strategy for a major Australian retailer. Using a case study approach a total of eleven interviews were conducted with employees of the retailer to identify factors contributing to product shrinkage and ways to overcome these through the use of radio frequency identification (RFID) technology. Known sources of product shrinkage included: warehouse discrepancies, internal and external theft, product recalls, shop return fraud, extortion, human and system error, poor stock control, poor rotation of stock, misplaced product items, lost products, product spoilage and damage. Each of the retailer's stores, in the chain of approximately 700, loses about 350000 Australian dollars to product shrinkage every six months. This paper argues that RFID would act as a partial solution toward the minimization of the retailer's product shrinkage and provide greater visibility throughout the supply chain.

Section 1. Introduction

This paper will determine the contributing factors of product shrinkage and investigate the current state of electronic identification as part of a loss prevention strategy in a case study of an Australian retailer. The main method of data collection for the case study was using interviews. In total, eleven interviews were conducted with members of the retailer's Loss Prevention Department, and managers of departments within retail outlets in two regions of New South Wales in Australia. The retailer is currently using barcode systems to identify products, and electronic article surveillance (EAS) as an anti-theft technology. As a key driver to the existence of a loss prevention strategy, product shrinkage and sources which comprise it were identified. Radio frequency identification (RFID) is then proposed as a partial solution to minimize the retailer's product shrinkage. This paper aims to explore how RFID could replace EAS given its superior functionality.

Section 2. Background of the retailer

The grocery retailer chosen for the case is one of Australia's leading supermarket chains, with approximately 270 stores in New South Wales and over 700 Australia wide. Supported by thousands of suppliers, the retailer has over 42,000 product lines on sale to consumers. Product lines include both Australian made consumer goods and internationally imported goods. Goods on sale by the retailer consist of long-life foods (e.g. confectionary, canned fruit, condiments), perishable foods (e.g. vegetables, bread, frozen meals) and general merchandise (e.g. electrical appliances, cosmetics, liquor). Over 100,000 staff members across Australia work together to get products into stores and on displays, which are then purchased by over 13 million customers each week.

Section 3. Methodology

 Product shrinkage

Product shrinkage

The research was conducted using eleven semistructured interviews with employees from Loss Prevention, and various departments within five retail stores. All the interviews were conducted in August and September of 2006. The interviewees had the following job descriptions: Loss Prevention Manager (1), Loss Prevention Investigator, Loss Prevention Manager (2), Liquor Manager, Grocery Manager, Store Services Manager, Store Trading Manager, Store Manager, Delicatessen Manager, Night-fill Captain, and Customer Implementation Executive. Employees within Loss Prevention work as a team to ensure policies and procedures are adhered to at a store level (figure 1). Product shrinkage is considered to be the general indicator of how well a store's loss prevention strategy is performing, or how well it has been executed. Furthermore, the primary motivator of loss prevention is to reduce product shrinkage. As stated by the Loss Prevention Manager (2): “[The Retail Organization] has been fairly focused on shrinkage for the last 5 years.” The interviews were transcribed and then analyzed using the Leximancer computer assisted qualitative data analysis software (CAQDAS). As a tool used to extract main concepts from documents, the researcher was able to use these concepts in the creation of themes to be addressed in the narrative.

Section 4. The retailer's legacy systems

The retailer currently uses barcodes for the automatic identification of products across the supply chain, and EAS for anti-theft purposes as part of a loss prevention strategy. Both systems have distinct functions and operate independently of one another. Barcodes provide a way to record damaged products and identify targeted areas, whereas EAS is used to deter thieves.

4.1 Barcode for product identification

The retailer's barcode system is primarily used to identify products in a variety of daily activities. One of these activities, closely related to loss prevention, is its ability to help keep track of damaged goods. For instance, damaged products can be scanned and automatically declared as ‘damaged goods’, electronically recorded and then disposed of. This process notifies the automatic stock ordering system that products are damaged and need to be re-ordered, thus helping to maintain product availability in the retail outlet. Barcodes can assist in minimizing product shrinkage by recording damaged products but exist primarily to semi-automate supply chain operations. When the Night-fill Captain of one of the retailer's leading stores was asked if barcodes play a role in minimizing product shrinkage, he responded: “[i]t makes you aware of it. It doesn't actually deter or prevent it in any way. It gives you more knowledge of what's going on and where the targeted areas might be.” In other words, stock which has been misplaced or stolen is not readily identified by retail staff As supported by the Loss Prevention Investigator: “[b]arcoding really has no impact. All it does is identify that we have lost something by scanning it at the end of the day.” Furthermore, these targeted areas are usually brought to the retailer's attention once a store has been targeted by a thief or when stock fails to arrive from the distribution centre. It is in this light that barcodes offer knowledge through recording goods as damaged or by identifying targeted areas. As a result, barcodes play a minor role in a loss prevention strategy. EAS however, plays a more active role in loss prevention as an effective deterrent against theft.

4.2 Electronic article surveillance as a theft deterrent at the retail outlet

The retail organization currently utilizes EAS as part of its loss prevention strategy. The system's primary activity is to reduce theft within supermarkets and liquor stores. According to Lahiri (2006), EAS tags are generally unaffected by magnets and are available in various sizes to be applied [1]. The retailer uses a combination of adhesive and reusable EAS tags which are strategically fitted to certain products.

EAS antennas, also known as gateways, are installed at store entrances and exits (Figure 2). When a product with an active tag passes through a gateway, an alarm sounds to notify staff of possible theft. For the retailer's particular application, EAS tags are attached to products at the item-level. Tagged products generally include high theft lines and high dollar value items. Not all products were found to be tagged, in fact, most products were not secured by the EAS system. As expressed by the Loss Prevention Manager (1):

it's what we deem to be high-theft lines and obviously what our stores are recording as known stolen as well. So you look at the high-theft lines as well as the most attractive lines, some of it is going to be cost driven just by the unit price, in terms of what we put an EAS tag on. The retailer is currently testing new reusable EAS tags designed to be attached to liquor bottles.
 Figure 2. EAS tag and EAS gates in a liquor store

Figure 2. EAS tag and EAS gates in a liquor store

Instead of using an adhesive tag, which is easily removed or a tag which is concealed within a packet, reusable tags are encased in high density plastic and manually fitted to products. Attached to the neck of a bottle with a zip locking mechanism, this new type of tag is removed by staff with a decoupling device at point of sale. As revealed by the Loss Prevention Manager (2): “[w]e are running trials at the moment on new tags in our liquor departments in five stores. They have been extremely successful, as they have minimized product shrinkage across our range of spirits by 62%, which is a great result.” Other than the obvious benefit of the tag's ability to be reused, this type of EAS tag has a number of other benefits. The tags are difficult to remove by hand, tagged products ‘standout’ and regularly deter thieves. “Many times I have seen people walk into a store and be overwhelmed by the EAS tagging” explained the Sydney-based liquor manager. The use of reusable tags by the retailer may help to minimize product shrinkage by deterring thieves, however, additional labor is required by retail employees to manually apply and remove tags.

Products bearing adhesive or concealed tags within a product's packaging are either tagged in-store manually by retail employees or source-tagged from the supplier. As revealed by the Store Trading Manager: “ …we have a specific list that we have got to stick to. A lot of the stock actually comes in pre-tagged now.” Source-tagged products provide the only example where EAS is used across the supply chain. However, by the same token, those tags remain idle until they come in contact with an EAS antenna or tag deactivator. As suggested by the Loss Prevention Manager (1), with the help of a recently designated Source Tag Manager the retailer is attempting to extend the ‘source-tagged list’ and push suppliers to tag products at the point of manufacture. Essentially, suppliers then take part in the overall process of applying EAS tags to products which will definitely reduce some overhead costs for the retailer. However despite this, it was found that the retailer's EAS system had a number of inefficiencies.

The retailer's thoughts on the overall performance of the system varied. One of the main questions relating to EAS was whether the technology was considered a deterrent or a total solution. All employees agreed that it was definitely a deterrent and it would be hard to find a total solution. As supported by the Loss Prevention Investigator: “[l]ook as a deterrent, yes. As I said before it's not the be-all and end-all. There's certainly some new stuff coming out.” As part of a loss prevention strategy, EAS was believed to be a deterrent on many occasions. When the Loss Prevention Manager (1) was asked for his opinion, he also said that it was a deterrent: “I wouldn't say it's a total solution. I suppose with any loss prevention initiative or procedure, there are thousands of bricks in the wall and EAS is one of those.” To further support the responses of the loss prevention staff, Lahiri also suggests that RFID is an “effective deterrent against theft” [2]. To be an effective anti-theft solution within a retail environment an EAS system is required to operate consistently and meet the demands of customer traffic. During initial testing phases of EAS systems some time ago, tests were conducted between two major brands. The Loss Prevention Manager (2) was asked whether he was happy with the overall performance of the EAS system: “Not really … I thought ‘X’ performed better than ‘Y’. But unfortunately we have invested in the ‘Y’ system.” This suggests that a retailer may not always consider an EAS system's level of performance a high priority. Other factors, such as the cost of a system may also have a direct effect on the retailer's willingness to invest in an anti-theft solution.

In one particular case, the way in which the system was installed revealed some drawbacks of the technology. When the Liquor Manager from one of the retailer's leading liquor stores was asked if he was happy with the overall performance of the system, he revealed “our gates leading out of our shop into the centre are too far apart, so there is a gap in the middle that can be exploited if you walk down the middle.” He believed that incorrect measurements had been made during the installation of the EAS system and as a result, he was unhappy with the overall performance of the system. An additional view which also supports a negative outlook on EAS was the way in which it can be exploited even when it has been correctly installed and functioning the way it was intended. According to the Loss Prevention Investigator:

Some of the practices of professional thieves and even people that associate with certain people within a community know how to beat EAS systems. The EAS tagging that we have can be ‘beaten’, three or four main ways and good crooks or people that associate with people that target our stores would know those ways of doing it.

This highlights the fact that an EAS system can be exploited by people who know about the technology. It was also understood by the Night-fill Captain that: “people are aware that EAS is out there, people know about it, so they can work around it.” Poor work practices at store level also contribute to the ineffectiveness of EAS. “Store practices have an effect. Double tagging, bending tags past 90 degrees, putting tags behind metal, those sorts of things all detract from the system,” explained the Loss Prevention Investigator. EAS tags are generally damaged because they are applied manually by hand, hence it is important to realize that retail employees play an active role in overall workings of an EAS system.

The Store Trading Manager highlighted the fact that the EAS system requires staff members to work as part of the system. Apart from manually attaching tags to products, staff members must react to the EAS alarm system and act accordingly. She said “I don't think the culture's there for it…” Occasionally staff members at point of sale do not respond to the alarm system appropriately. Employees either fail to respond to an alarm, or when a customer activates the alarm the employee assumes that they did not deactivate a tag and allow the customer to leave the store. In this typical scenario, the employee has not taken into account the possibility that the customer may in fact have a packet of batteries in their bag. The Store Trading Manager claimed that the EAS gates are not monitored properly and responding to the system's alarm is not always enforced by staff supervisors.

Retail employees agreed that EAS plays an important role in their loss prevention strategy. According to the Grocery Manager “at the moment, it's the best it can be.” If the EAS system is operating at an optimum level and in the way in which it was designed, it raises much concern when reflecting back on some of the short comings of the system. The retailer's EAS system may play an active role in minimizing product shrinkage at point of sale, but what about across the entire retail supply chain?

Section 5. Product shrinkage

To ensure stock levels are maintained in-store, an efficient supply chain is required to provide an uninterrupted supply of products for shelf replenishment. However, it is far from unusual to come across an empty shelf in a supermarket. On many occasions, this empty shelf can be directly linked to theft or unsupplied stock due to warehouse discrepancies, both of which contribute to product shrinkage — the retailer's dilemma. When Loss Prevention Manager (2) was asked whether product shrinkage was a major concern to his organization he replied: “[i]t's a huge problem, especially from distribution centre to retail outlet.” This concern reinforces the importance of this issue to the retailer and is fundamental to this study. But from a retailer's perspective, what actually constitutes product shrinkage?

5.1 Factors contributing to shrinkage

From the retailer's perspective, product shrinkage is broken into two main categories: known and unknown. “Loss Prevention Investigator: At the end of each half of the financial year we record an unknown shrinkage which is obviously the difference between our bookstock and our physical counts at stock take times. So there are two separate figures. ǀ Interviewer: So there is known and unknown? ǀ Loss Prevention Investigator: Yes.” The contributing factors of known shrinkage are calculated progressively throughout the financial year by the retailer. For example, the retailer may calculate that 75% of stock was lost due to warehouse discrepancies, 20% due to internal theft and 5% due to other sources. Whereas, the figure found for unknown shrinkage is calculated only twice a year by stock take and can be contributed to by any number of sources. It is significant that unknown sources were the largest contributor to product shrinkage (Store Manager; Store Services Manager).

According to the retailer's Grocery Manager of a supermarket in Sydney's south, product shrinkage is “damaged stock, theft, warehouse discrepancies, paper work errors; not checking stock correctly off invoices, recalled stock and withdrawn stock.” In the retail industry, poor stock control across the supply chain covers misrouted and unsupplied products due the common occurrence known as a warehouse discrepancy. More specifically, it was discovered that warehouse discrepancies were the largest contributor to product shrinkage. “Through experience I would say warehouse discrepancies, that's the biggest one,” explained the Store Trading Manager. A warehouse discrepancy was described as the difference in what the retailer is charged for, and what they actually receive from the warehouse or supplier (Loss Prevention Manager (1); Store Trading Manager). The Grocery Manager further supported this by stating: “[t]he main contributor is warehouse discrepancies and number two would be theft.” In this instance, it was discovered that the two main contributors to product shrinkage were warehouse discrepancies and internal and external theft. Warehouse discrepancies are largely a procedural based problem, as thoroughly explained by the Loss Prevention Manager (1):

Look there's a couple of thoughts on it. There has been some research done in the States, they tend to do most of the loss prevention type research. They tend to think that internal theft is probably the bigger contributor. I don't know if that would be the case, certainly external theft in [region] that I look after, the main core chunk of Sydney from eastern suburbs out to the western suburbs certainly external theft I think plays a bigger part than the actual internal theft. So you've got your internal paperwork errors and procedural errors which result in loss. You've got internal theft and certainly external theft and they're probably the three drivers for shrinkage. But certainly I can say within [region] external theft would probably play the predominant role. But if you look at it on a national basis procedures would probably tend to take over.

From this extract it was therefore discovered that the three main contributors to product shrinkage could be recognized in order of the severity in which they contribute as: (i) warehouse discrepancies (errors due to procedures); (ii) external theft; and (iii) internal theft. In a recent study conducted by the National Retail Security Survey, it was discovered that internal theft caused 46 percent and shoplifting caused 32 percent. This study takes an opposing stance compared to that of the Loss Prevention Manager (1) although external theft encompasses more than shoplifting alone. Figure 3 illustrates the breakdown of known and unknown sources to product shrinkage.

 Figure 3. Contributing factors to product shrinkage

Figure 3. Contributing factors to product shrinkage

5.2 What products commonly constitute shrinkage?

Both high-end products and a variety of other products were found to contribute to product shrinkage. These included: batteries, razor blades, liquor and products from the health and beauty range. Table 1 summarizes the main types of products (including brand names) that were identified by all interviewees as items that constitute product shrinkage.

 Table 1. Products and associated brands often named as contributing to product shrinkage by the retailer

Table 1. Products and associated brands often named as contributing to product shrinkage by the retailer

To support theories upheld by the retailer, similar results were found by the Food Marketing Institute in 2003. It was also discovered that items with a high resale value and items that are easily concealed could go missing at any point across the retail supply chain. The Night-fill Captain of one of the Sydney-based stores said: “[b]asically, it's anything they can get their hands on. If the consumer wants something they'll take it. The size is a variable; it doesn't really matter if they can sneak out of the store they'll get it out. People are pushing trolleys of stock, mountains stock out through liquor, with observant staff catching them, so size isn't really a factor.” However, what are the primary factors that have a direct influence on the possibility of a product being transported to the wrong store or the unknown disappearance of a particular product?

Section 6. Product shrinkage in the supply chain-a process, technology or people problem?

Contributing sources to product shrinkage are considered to originate from a process, technology or people problem. These three factors collectively create the foundation for product shrinkage and its regular occurrence in the retail industry. When the Loss Prevention Manager (1) was asked whether product shrinkage was a process problem, technology problem or people problem, he responded: “[a]ll three would contribute to it in some way.” The following retail based examples in Table 2 are to provide a context in which the three can be understood.

 Table 2. Retail-based Examples of Process, Technology and People Problems in the Supply Chain

Table 2. Retail-based Examples of Process, Technology and People Problems in the Supply Chain

When the Loss Prevention Investigator was asked about his opinion on these three factors affecting product shrinkage, he replied:

I think it encompasses all of it. We certainly have some processes that need to be looked at. The way that our DC [distribution center] is structured, the way that they ship items from there certainly needs to be looked at and will be over a period of time. Obviously, to take out the human side of it would certainly help because unfortunately humans make mistakes and that does certainly cause some errors. The other side of it is theft which is very much a human side of it, people walking in and just stealing from us. And also poor practices in-stores also contribute where we don't follow our processes and procedures.

It was revealed in this case that both processes and people were a primary influence to the many sources of product shrinkage. The retailer was concerned about the processes involved at the distribution centre when organizing the transportation of goods across the retail supply chain. In addition, human error, poor practices in-store and theft were recognized as being contributors to the problem of product shrinkage.

The Store Services Manager also identified the issue of poor procedures when receiving goods at the back-dock as a process problem. “[T]here is no way that you can physically scan every item that comes in on the load. There's no way.” Employees involved in the study were asked when their superiors begin to ask questions about loss. As emphasized by the Store Trading Manager, based on previous audits a product shrinkage figure is predicted for each individual store: “[s]o if it's over that, then they will definitely come in and investigate and usually the first thing they look at is systems and procedures in the store. If they're not right then it's automatically the store's responsibility to get it right.” It was certainly recognized that procedures, closely connected to processes are critical in minimizing product shrinkage levels. These three factors may influence product shrinkage levels, but whereabouts does it occur across the retail supply chain?

Section 7. Where does product shrinkage occur?

Stores within each of the retailer's regions receive goods from both company owned warehouses and third party suppliers. Company owned warehouses consist of one regional distribution center (RDC) and five local distribution centers (DC). An RDC may supply products to hundreds of retail outlets, whereas a DC will only deliver goods to a designated region. The majority of stock is supplied from company owned distribution centers, yet interestingly there are more third party suppliers. Third party suppliers are external to the retailer and are known as direct suppliers. The retailer engages in hundreds of transactions with suppliers daily. All stock is ordered using an automatic stock ordering system. It was estimated by the Store Manager that approximately 200 transactions are made daily between his store and its suppliers. The Loss Prevention Manager (1) stated that a “continuous electronic barrage of orders” is required to keep retail outlets fully stocked in order to satisfy customer demands. Coordinating these orders across the entire retail supply chain and scheduling deliveries is an enormous task performed by the retailer using its warehouse and logistics services. During this process, product shrinkage occurs at various points, whether it be at the distribution centre, in-transit, or when a delivery is received by a back-dock attendant at a retail outlet. When the Loss Prevention Manager (1) was asked where most product shrinkage occurs across the retail supply chain he replied:

Look we are aware that you can have theft issues with truck drivers. Truck seals aren't put on, we know stock can go missing. We have had instances where drivers have been caught. I suppose our processes are not conducive to checking, so you're relying on what the DC says that they send you, is in fact what you are receiving. So if you have a store that has 10 palettes of stock delivered from a DC, unless we pick-up at store level the fact that we're missing something and it's pretty hard if you've got 10 palettes of stock, night-fill come in and fill it. Unless you do a line-by-line check, how do you know what's missing? And certainly the stores put in an order for X-amount we're trusting that that store will get X-amount, if they don't, a lot of that tends to go uncaptured. If you look at the case of say [Cold-Storage Logistics Company] which is one of our external suppliers, they warehouse it and distribute our cold stock, but there's massive issues with them. It's not uncommon for a load to come in several thousand dollars short. Do we pickup on that fact? No, we don't. Because it comes in, it goes into a cool room and then night-fill or then your perishable people will come through and fill, it's pretty hard to pickup on the fact that you're short on a line, it might be a couple of days down the track and you might say where's that? You then go through and make your stock adjustments so [automatic stock ordering system] will then reorder it, but by that time it's too late to put in a discrepancy. Big problems with [Cold Storage Logistics Company], the sooner that comes in-house so we get some better control of it the better.

Issues raised here by the Loss Prevention Manager are critical when recognizing the contributing factors of product shrinkage. Contributing factors across the retail supply chain include: (i) internal/external theft by vehicle drivers; (ii) assuming deliveries are correct; (iii) not realizing deliveries are missing stock; (iv) being too late to notify the automatic stock ordering system of a discrepancy; and (v) problems with direct suppliers e.g. the retailer's direct supplier of cold goods. These factors reveal that product shrinkage occurs at various points across the supply chain. The Liquor Manager also believes when an order made by the automatic stock ordering system is picked at the warehouse, the incorrect amount or type of product is often dispatched. Inconvenient and time consuming tasks, such as the process of having to return an incorrect order, are then necessary. Incorrect orders may require additional labor intensive tasks to be performed, however, there are more serious consequences that accompany product shrinkage.

7.1 The consequences of product shrinkage

There are a number of consequences that are directly related to product shrinkage. The primary consequence of product shrinkage is financial loss. When asked how much stock is lost over a period of 12 months, the Loss Prevention Manager (1) replied: “its millions of dollars in unknown shrinkage.” Product shrinkage is a relentless force in the retail industry and the loss it causes is extremely high. When the Loss Prevention Investigator was asked how much stock is lost, he said: “[s]ome stores will lose as little as 350,000 in six months.” In the Store Trading Manager's experience, unknown product shrinkage totaled $360,000 for a period of six months. Apart from the direct financial loss incurred other forms of loss involve additional costs (e.g. EAS systems, loss prevention staff), additional labor (e.g. security guards, manually applying EAS tags), and out of stocks (e.g. empty shelves effects sales levels and customer satisfaction). According to the Grocery Manager, due to theft alone prices can rise up to 15 percent ultimately affecting customers. If products can be accurately tracked across the supply chain it is anticipated that it will have a direct effect on product shrinkage.

Section 8. Tracking products across the supply chain

The retailer currently tracks products across the retail supply chain using a combination of barcodes and manual paper work procedures. When asked how products were tracked from distribution centre to retail outlet, the Store Trading Manager replied: “there's that big void in the middle where an order goes onto the load list and we can check it line-by-line if we want, but we just don't have the man power. It's not a standard thing that you check a load list line-by-line and given that here they get 30 to 35 pallets a night.” As this employee suggests, it is unfeasible to count each individual carton of a large delivery using existing procedures.

The distribution centre coordinates the largest deliveries to be transported to the retail outlet. Currently, employees rely on the DC to select the desired goods and ship them accordingly. The current system has the ability to track products to a certain extent, but acknowledged by the Grocery Manager “it's not 100% accurate, probably because they're expecting people at the warehouse to do it correctly.” As the DC is responsible for other discrepancies, it can be assumed that other procedures carried out at the same site are also heavily flawed. Deliveries may arrive at a store's back-dock missing a number of products, so how are products monitored during transportation?

The retailer uses Global Positioning Systems (GPS) as a means to track vehicles across the supply chain. Using a pre-planned route, GPS-enabled trucks are tracked from the distribution centre to the retail outlet. The system is designed to provide the geographical position of the truck during the transportation of goods. However, GPS does not provide information regarding the status of goods onboard. A number of voids exist across the retail supply chain where products fail to be accurately tracked. When asked if products were tracked across the supply chain, the Loss Prevention Manager (1) said: “[p]roducts aren't tracked. If you're talking about electronic tracking or things like that, then no.” In this response, the Loss Prevention Manager (1) is referring to new RFID systems designed to track products across the supply chain.

Section 9. The retailer's perceptions of RFID

Employees of the retailer were asked if they were aware of the latest RFID systems and their benefits. It was found that employees involved in the study had a positive outlook on new RFID technologies yet were unaware of the technologies' commonly reported primary benefits. Loss prevention employees had a far better understanding of the technology than managers from other departments. As explained by the Loss Prevention Manager (1): “I have a basic understanding. There are all sorts of things product tracking, inventory management, there's a whole range of things.” Furthermore, he explained:

I haven't done any research in it, there would be a whole range of things. There'd be all sorts of cost benefits there I would assume in inventory management right down to even, we may even be able to know the product size and weights in terms of transport we'd be able to work out to the nearest cubic centimeter how much stock we can fit on a truck. Whether we are being over charged in transport costs, for weight or pallet space or size, they'd probably be a whole range of hidden benefits there that you probably haven't even thought of before.

It was interesting to discover that loss prevention managers focused on secondary benefits of the technology. Rather than its ability to provide total visibility of stock across the supply chain and ultimately a means to minimize product shrinkage, employees concentrated on some of the benefits it could bring to point of sale. For example, the Loss Prevention Manager (1) recognized that “you can put X-amount of stock in a trolley with RFID that are all tagged, pass it through some antennas and you know exactly what went out of the store and if it was paid for.”

The Store Trading Manager claimed to have little knowledge of RFID as a technology with the ability to track products across the supply chain. However, she declared that it would definitely benefit the retailer as it would “probably reduce our shrinkage by a huge amount, not to mention the time spent actually adjusting the stock on hand because there have been miss-picks and things haven't gone right.” In this instance, the Store Trading Manager not only suggests that RFID is likely to minimize product shrinkage, but also the manual procedures. The Store Services Manager also had an appreciation for the technologies' ability to minimize manual procedures at store level. She claimed that less labor would be required when manually stamping products with the store stamp as a new RFID system would require suppliers to do it at the product's point of manufacture. She also believed that if the retailer was to implement an RFID system that its imperative that suppliers also be part of the overall system as “[i]t would be of no benefit otherwise.” The Store Services Manager believed that if such a system was introduced, their suppliers would most likely comply: “[t]he suppliers usually do come into line with any new systems that we are bringing in so I couldn't see that there would be a problem.” She also highlighted the fact that RFID tagging would most probably have an effect on the total price of a product, but she believed that this increase could be counteracted if product shrinkage was kept to a minimum.

An organization willing to adopt a new RFID system must be able to see potential for a return on investment (ROI). When the Loss Prevention Manager (1) was asked whether he thought the retailer would ever be interested in investing in an RFID solution he responded: “[t]here's always that cost versus benefit exercise and if the sums are right, then yes.” As identified by Global Standards One, in the case study called the Australian Demonstrator Project (which claimed to be Australia's first case study), it was revealed that it is “necessary to estimate the potential benefit that will come from deploying RFID and improving the business process using the data that the system provides” [2]. It is in this light, that testing an RFID system is highly recommended prior to total rollout as it assists in building an expected ROI.

Section 10. Conclusion

It was discovered that the retail organization currently utilizes two technologies as part of a loss prevention strategy; a barcode auto-ID system and an EAS anti-theft system. Operating independently, it was revealed that both technologies possess a number of limitations which consequently present adverse challenges to the retailer. The barcode system can record damaged products and detect targeted products or areas, yet the technology plays a minor role as part of the retailer's loss prevention strategy. Even though the retailer was currently testing a new EAS system throughout five liquor stores, the technology was still considered a deterrent rather than a total solution. It was also discovered that professional thieves avoid triggering the alarm using a variety of methods and staff members regularly neglect standard procedures readily relied on by the EAS system. These inadequacies expose a weakness in the retailer's loss prevention strategy as a result effecting product shrinkage levels. Made up by contributing sources, the two main categories of product shrinkage identified were known and unknown, with unknown representing a larger value of the two. Contributing factors to product shrinkage were found to come from a diverse range of sources and through various activities. Warehouse discrepancies and theft were identified as the two highest sources of product shrinkage. Whether it involved a standard company procedure or an illegal activity, it was found that during most of these events provisions were lacking to effectively counteract these activities. It was verified, particularly by loss prevention staff members that all sources originated from the combination of three factors; process, technology and people. Furthermore, the loss prevention department claimed that product shrinkage across the supply chain was one of the department's main challenges, especially when transferring goods from distribution centers to retail outlets. This dilemma necessitates an alternative solution be found to minimize product shrinkage across the retail supply chain.

References

1. S. Lahiri, RFID Sourcebook, Upper Saddle River:IBM Press, Pearson Education, pp. 77, 2006.

2. Australia (2006) EPC Network Australian Demonstrator Project Report, September 2006.

IEEE Keywords: Supply chains, Radiofrequency identification, Australia, Marketing and sales, Information systems, Humans, Error correction, Control systems, Merchandise, Electrical products

INSPEC: supply chain management, business data processing, fraud, radiofrequency identification, stock control, RFID, product shrinkage across minimization, supply chain, major Australian retailer, anti-theft technology, loss prevention, radio frequency identification technology, internal theft, external theft, shop return fraud, poor stock control, poor stock rotation, lost products, product spoilage

Citation: Nick Huber, Katina Michael, 2007, "Minimizing Product Shrinkage across the Supply Chain using Radio Frequency Identification: a Case Study on a Major Australian Retailer", ICMB 2007. International Conference on the Management of Mobile Business, 2007, 9-11 July 2007, DOI: 10.1109/ICMB.2007.43

Beyond Mere Compliance of RFID Regulations by the Farming Community

Abstract

Radio-frequency identification (RFID) is changing the face of livestock identification and management. Beyond satisfying the regulations of government agencies for livestock to be a part of a national identification system for tracking purposes, farmers are now considering venturing beyond mere basic compliance systems. Once installed, farmers have begun to realize that their initial capital investment into an RFID system holds great strategic potential. The initial outlay while substantial is a once only cost that with a few more application-centric uses can yield a return on investment manifold. This paper presents a case study of the Cochrane Dairy Farm situated on the New South Wales South Coast. The case study shows that the Cochrane Dairy farm utilizes advanced total farm management techniques that will before too long lead to greater dividends. The contribution of this paper is in presenting how a dairy farm has adopted RFID initially to meet government directives, and then for broader more personalized requirements. Farming processes are defined explicitly and the paper points to encourage other farmers to consider adoption of RFID beyond the need for compliance and toward the perspective of longer term productivity and strategic visibility.

Section 1.

Introduction

This case study was undertaken on the Cochrane dairy farm, located in Pyree on the New South Wales South Coast. This farm has been selected as the case study, as it has a substantial use of radio frequency identification (RFID) technology, and is well-known in the region as one of the most advanced RFID setups. As the farm also utilizes RFID tags that are compliant with Australia's NLIS (National Livestock Identification System), the farm provides an applicable example of how participants in this system can derive additional benefits through the use of RFID on their dairy farms.

Section 2.

Previous literature

Articles by Ishmael [1] and Karnjanatwe [2] provide a glimpse of the possibilities for utilizing electronic identification for enhanced farm management, however these articles are not focused upon the dairy farm industry, nor do they provide an in-depth look at the total farm management operations used at these farms. Ishmael (2001) tells of the economic benefits achieved by a group of farmers resulting from the utilization of RFID technology to provide individual identification and subsequently enhanced farm management operations on their beef farm in America. Karnjanatwe (2005) provides an insight into an actual application of RFID technologies used to enable enhanced farm management of pigs, such as automating the feeding process and regulating how much each pig eats. Geers et al. [3] do likewise, devoting a chapter to the electronic identification of farm animals, however this chapter does not have a dairy industry focus. Geers et al. demonstrate the growing awareness and importance of electronic identification for farm management. Considering improved disease and fraud controls, combined with the desirable and dominant cost-benefit ratio that can be derived from the utilization of electronic identification for farm management, Geers et al. (pp. 26–28) provide a clear message that electronic identification is the likely path of animal identification in the future. Michael's unpublished thesis [4] further supports this view. A section (pp. 249–250) regarding animal identification using RFID demonstrates that traditional forms of animal identification are considered inferior in comparison to RFID technology. James [5] and Davies [6] provide more information on deriving benefits specifically related to the dairy industry, however also lack depth and explanations of the farm management practices undertaken to gain these benefits. James states how electronic identification can be used to reduce the labor required for the milking process, providing large cost savings, while Davies demonstrates the ability to improve the quality of milk yields through controlled feeding processes based on electronic identification.

Section 3.

The case study - the Cochrane Dairy

The Cochrane dairy is a family-run business, operated by partners Geoff and Cathy Cochrane, their children, and one farm hand. The farm's core business function is dairy, however they have recently diversified, and begun experimenting with rearing steers until they are 2 or 3 years old. The Pyree farm is one of several properties in the region owned by the Cochranes'. Established on approximately 360 acres, the Pyree farm supports around 350 head of lactating Illawarra cattle (their full herd size is approximately 420 including the dry cows they have on their other properties). All cows in the herd have a National Livestock Identification System (NLIS) compliant RFID tag attached to their right ear. This tag is applied to calves immediately (0–4 days) after birth, and plays an integral role in the total farm management operations of this farm.

3.1 The cows and the tags

This RFID tag is utilized to aid in farm management operations from early in a cows' life. For a new born calf these tags are first utilized merely weeks after birth, as they provide the identification mechanism to enable automated calf feeding. Later in the cows' life (when they enter lactation), the RFID tags are also utilized in the dairy to identify each cow as she walks into the milking parlor. This identification subsequently facilitates a number of functions within the dairy. As each cow exits the dairy, these tags are also utilized to facilitate the use of automatic drafting sates.

 Exhibit 1. NLIS RFID Tag on Livestock

Exhibit 1. NLIS RFID Tag on Livestock

Exhibit 1 shows a separate plastic identification tag is also placed in the cow's right ear (traditional tag), which displays the cows on farm identification number (as opposed to the RFID tag number). This number is allocated by the Cochranes' at the time of a cow's birth, and used to identify the cow in relation to their own herd. These tags provide farmers with an important immediate visual identification mechanism for each cow. It is traditionally one of the most common forms of identifying cows on farms that are not utilizing RFID. Additionally, the Cochranes' are maintaining the use of these tags in order to comply with NLIS regulations, which state that farmers must maintain the use of either a tail or ear tag as a secondary identification mechanism until the 1st of January 2006 [7].

3.2 Herd management software

The software application adopted by the Cochranes' is Dairy 2000, and is produced by Victorian company OnFarm Electronics. As with most implementations, Dairy 2000 has been specifically tailored to suite the data storage and herd management needs of the dairy industry, and provides the ability to store information pertaining to each individual cow in the Cochrane herd.

3.3 The dairy

The current dairy was built approximately two years ago, and features a twenty-five a-side Herringbone milking parlor (25 bails on each side, therefore catering for up to 50 cows at once). The dairy features a high degree of automation, some of which is combined with RFID technology, while others are triggered by manual actions. The dairy contains the following features: an RFID reader upon entry to the milking parlor; an automated entry gate opening and closing; feed bins above bails; feed troughs for each milking bail; a rotating bail entry blockers; two LCD computer screens (displaying cow information); an audio speaker (to provide audio notification of particular cow attributes); a set of milking cups for each milking bail; milking controller units for each set of milking cups; automated raising of the feed trough to allow cows to exit milking parlor; RFID reader upon exit to the dairy; drafting gates associated with RFID reader upon exit to dairy; and multiple high pressure hoses throughout.

3.4 Milking times and operators

Milking takes place twice daily on this farm – firstly, at 5am, and secondly at 3pm. Each milking session takes approximately two hours, and is conducted by two operators.

Section 4.

Milking procedure

The milking procedure of the Cochrane dairy is one major area gaining benefits from the use of RFID. A detailed examination of this procedure grants insight into how RFID is currently being utilized.

Dairy preparation

Prior to milking, one operator prepares the dairy for milking. This involves ensuring the equipment is clean and ready, and that the computer system is ready for operation.

Move fresh calves to be with their mother

Fresh calves (new born calves) require their mother's milk for the first few days of their lives. The Cochranes' facilitate this by moving the fresh cows into a pen with their natural mother. The calves can then suckle their mother for milk while the milking in the dairy is conducted.

Round-up cattle – Move cattle to dairy holding area

While the cows are approaching the dairy, both operators spend time observing the herd for any signs of cows that may be on heat. If the operators determine a cow to be on heat, they will record her identification number (from the visual identification tag placed in her ear beside the RFID tag). If this cow is determined to be beyond their first 60 days of lactation, the operators will then record this cow number into the nearby computer and select it to be drafted when it exits the dairy (where the cow will then be artificially inseminated). After the cows reach the holding area, both operators finalize the preparations for milking. The gate to the holding area is then closed by an operator (ensuring the cows to be milked are retained in the holding area), before re-entering the dairy, ready for milking to begin.

Operator presses button – opens milking parlor entry gate

Operator presses button to open the milking parlor entry gate - gates open automatically.

Cows enter milking parlor – pass through RFID reader

Cows enter the milking parlor in single file, passing through a permanent RFID reader installed on the entry gates. This reader retrieves the identification number from the RFID tags attached to the ear of each cow. This unique identification number is then used to gather data pertaining to each cow from the central database.

Individual cattle information displayed on computer screen – audio readout to alert milkers of cattle requiring particular attention

As each cow passes through the RFID reader, their individual information is displayed on the two computer screens located in the dairy. These screens provide a selection of information pertaining to each cow. This information is drawn from the central herd management database, and the user is able to specify the specific fields of information to be displayed on the screen. The cows are listed in rows, with their characteristics displayed in the corresponding columns.

Cows with attributes requiring particular attention from the operators are highlighted with various colors on the computer screen. For example, slow milking cows are highlighted in red on the computer screen, cows that have freshly calved are highlighted in yellow etc. For these cows, an audio readout is also generated from the computer system, providing a verbal signal to aid in identifying cows requiring particular attention. This allows the operators to better plan their milking approach for a batch of cows, and aids to ensure they take the required actions. For example, the operators will begin to milk the slow milking cows before the others, thus aiding in efficiency for each batch of cows.

For freshly calved cows, and cows that have had a penicillin injection, the operator will also attach the milking cups to a separate holding drum. This effectively separates specific cow's milk from the main milk, allowing it to be thrown away after milking.

Cows enter bails in consecutive order

Cows enter their bails in sequential order (from one to twenty-five). The order in which they enter bails is enforced by having each bail blocked when the cows first enter. The only bail available for entry is the end bail (number 1). When a cow enters this bail, it will push forward a rotating bar. This will subsequently rotate and open the next bail (bail number 2). Enforcing this sequencing process allows the computer to establish which bail number each cow will enter as they are read.

When bails full, entry gate closed

By reading each cows' RFID tag as she enters the dairy, the computer system is able to determine when twenty-five cows have moved into the dairy. Thus, when a side is full, the entry gate automatically closes. This prevents other cows from entering the milking parlor during milking.

Rationed feed automatically dropped into individual bail troughs

Approximately 40 seconds after the cows have passed through the reader (enough time for them to reach their bail); the feed is automatically dispensed from feed holders above the bails. The amount of feed given to each cow varies according to her production and lactation cycle.

Roughly, a cow producing 50 liters or more per milking session (extremely high) will receive 12 kilograms of feed. Those producing approximately 30 liters will receive 8 kilograms, 20 liters will receive 6 kilograms, and finally, those producing 12 liters or less per milking will be provided 2 kilograms of feed during the milking session. Production amounts in between these boundaries will receive an amount of feed rationed to their exact production.

Once a cow has passed their 150th day of their 300 day lactation cycle, they are considered to have past their peak production abilities. As such, the feed provided is then gradually decreased to only 75% of the figures provided above. As a cow passes the 250th day of lactation, they are considered to be well past their peak production capacity, and the feed is again gradually decreased to 50% of the above provided figures, so as to gradually wean the cow off this food supply. This 50% of the original stated amount is then maintained until the cow is dry and thus does not return to the dairy.

The data regarding how much milk each cow is producing is extracted from the central herd management database (this data is recorded by Dairy Express herd recording services) according to the cow's unique RFID identification number. This rationing of feed ensures that cows are provided the nutrients they require to continue their milk production.

When a cow enters the dairy for the first milking of her new lactation cycle, the automatic feeder also starts this cow at a low amount of feed (approximately 1 kilogram). The amount of feed is then gradually increased over a 20 day period, up to a standard 8 kilograms of feed. This feed is then maintained until the cows production capacity is measured (through the use of Dairy Express herd recording), and her amount of feed is then determined by this figure. This gradual incrementing of feed is required so as to allow time for the cow to develop the required bacteria in their stomachs to handle the wheat and grain in the feed.

Operators take any special actions that may be required

As the cows enter their bails, operators are able to take any required action on cows. For example, if a cow has had a penicillin injection in the last few days, their milk must be disposed of, as it is not suitable for consumption by any animal. Other actions that may be required include attaching the milk pipes for specific cows to a secondary milk vat. This vat is used to store milk that the Cochranes' consider second grade milk, and is later used to feed the calves via the automatic calf milking machine. Therefore, to maximize the quality of the milk provided to the manufacturer (in this case Dairy Farmers), the Cochranes' separate the lower quality milk. Thus, this separation and use of secondary milk maximizes the use of produced milk and provides enhanced benefits for the farmer.

Operators attach cups to teats – milking automatically begins

Operator presses lever to begin milking pulsation and suction within milking cups before attaching these cups to the teats of a cow. For slow milking cows, the operator will often begin the milking process by hand, so as to get the milk flowing. For the majority of cows, the cups are simply attached to all four teats however, some cows may have problems with a specific teat on their udder, may have had one teat dried off for a particular reason, or are currently being treated for a disease in a teat. Cows requiring these varied actions are identified by colored leg bands that are attached to the legs of cows using Velcro straps. The color and placement of the leg band signifies the position of the problem teat on this cow, and how the milking operator should conduct milking for her. It is up to the operators to recognize these leg bands and combinations, and to not apply milking cups to the teat identified as having the problem. Cows that have had a penicillin injection are identified with a single leg band (utilizing the color and placement code previously described to identify the problem teat), as well as blue spray paint on the back part of their udder.

Operators tend to any issues that may arise

Occasionally unpredictable events will occur that will require the operator's attention. These events include cows kicking the milking cups off before they have finished milking, cups not retracting correctly when milking completed, slow milkers may require a check to ensure they have provided all of their milk (requiring a manual feel of the milk left in the teat). The milk line filter is then placed in the milk line between the milking cups and the main milk flow line that leads to the milk storage vat. As milking is being conducted, milk flows through this filter before it enters the main milk flow line, thus aiding to remove any impurities in the milk. Additionally, as this filter is associated with each individual milking bail, this filter is a good indicator of the milk quality being provided by the cow in that milking bail.

Milking completes – cups fall from teat

The milking cups automatically detect when the cow has finished giving milk. As they fall from the teat a piece of cord linking the milking cups to the base of the milking controller unit will retract, thus raising the cups to a stationary position – keeping them off the floor and at a position ready for attachment on the next cow.

Operators spray disinfectant onto teats

As cows finish milking, operators spray an iodine-based disinfectant onto cow teats.

Operators spray homeopathy onto udders of specially marked cattle

While the process of spraying disinfectant onto teats is being conducted, homeopathy is also applied to the udders of those cows identified as requiring the treatment.

Clean equipment if ill cow just used

If a cow with an illness has just been milked, the operators clean the inside of the milking cups that were used on that cow.

Operator presses button, feed troughs lift to release cattle

When all cows in the row have completed milking, all additional actions taken, the operator is free to release the row of cows. This is achieved by pressing the designated release button. Pressing this button triggers the feeding bails that are currently placed in front of the cows to automatically be brought backward and raised into the air. This enables the cows to move out of their bails in a forward direction, underneath the feed bails. Once they have moved far enough out of their bails, the operator presses the lower button to bring the feeding bails back to the feeding position and ready to hold the next group of cows.

Cattle exit dairy at own will – pass through drafting gates upon exit

Once they have moved beyond the bails, cows may exit the dairy at their own will. As the cows are not occupying the bails, the operators can immediately bring in the next group of cows for milking into that row, thus aiding to save time and effort for the operators. As the cows exit the dairy, they again move single-file through a drafting gate.

RFID readers linked to drafting gates identify individual cows

An RFID reader is placed slightly in front of these drafting gates to determine the identity of each cow before they enter the gates. This reader attains the unique identification number from each cow's RFID tag, and utilizes this number to query the database and derives information relating to the direction in which the current cow should be directed.

Drafting gates react to individual cows – move to direct cow to holding paddock or back to grazing paddock

From the information gathered on each cow, the drafting gates will move to direct the cow to the desired area. By default, these gates point straight ahead to the grazing paddock but if a cow has been selected to be drafted out of the main group, then the drafting gates will move to direct a cow either to small holding paddocks on the left or right. When a cow that has been selected for drafting is recognized by the RFID reader, two flipper gates will rotate to block entry to the drafting gate for this cow. This gate prevents the selected cow from entering the drafting gate section until it has completely changed direction, and is ready to lead the selected cow directly to their designated paddock. Visual detection devices are utilized on the entry to the drafting gates to ensure that the cow that was read previous to the currently selected cow is clear of these gates before they close.

Repeat process until all cows milked

This completes the milking process for a batch of cows (one row of 25 cows). This process is then repeated for the remainder of the herd (approximately 300 cows), and is conducted on both sides of the milking parlor (enabling the dairy to cater for 50 cows at once). Each row of the dairy can be at a different stage of this process, thus aiding to maximize efficiency in milking – i.e. on one side of the dairy the operators may begin attaching milking cups to the cows, while the cows on the other side are moving in or out of their bails (where human intervention is not required).

Clean dairy

Once all cows in the herd have been milked and moved out of the dairy, the cleaning process begins. This involves thoroughly washing out the dairy floor and milking area, flushing out the faeces catcher, and hosing down any other areas that may have been dirtied, including the outside of the milking cups. Automatic cleaning of the milking equipment is then undertaken. To facilitate this, the milking operators place each set of milking cups onto their holding rack (four fixed prongs). A milking operator can then exit the milking parlor, and select on the central milking controlling computer to begin the cleaning cycle for the dairy equipment. This cleaning process involves pumping a range of chemicals (including alkaline and acid) throughout all pipes and milking equipment through which milk flows. The milking operators can then exit the dairy, and leave the cleaning process to manage itself.

Move secondary milk to calf feeder

The milk that was pumped to the secondary vat (milk taken from cows considered to be giving secondary quality milk) is then transported from the dairy to the calf feeding area.

Take required action on drafted cattle

Once the dairy has been cleaned, the required action is then taken on the drafted cattle before releasing them to return to the grazing paddock with the rest of the herd.

Section 5.

Automatic calf feeder

The other key area in which RFID is utilized on the Cochrane farm is for the important process of calf feeding. To undertake this task, the Cochranes' have implemented an automatic calf feeder. This feeder utilizes a calves' RFID tag to gain their unique RFID identification number and regulate the amount of milk being provided to each calf on a daily basis. The automatic calf feeder dispenses milk through an artificial teat, which the calves suckle to gain the milk. Calves access this teat by walking into an entry gate (barrier) that ensures only one calf has access to the teat at any one time. As they approach the teat through this walkway, an RFID reader built in to the walkway gains the identification number of the calf from the RFID tag in its right ear. This number is then used to retrieve data regarding the amount of milk this calf is allowed to drink over a 24-hour period, and how much of this they have consumed already. If they have already drunk their full quota of milk over the past 24 hours, no milk will be supplied to the fake teat. This ensures that calves do not drink excessive amounts of milk. However, if they have not drunk their full quota, they will be provided with more milk until they reach this full quota. The calf feeder at the Cochrane dairy provides two separate milking points for feeding, thus enabling two calves to be fed at once. When the calf is first introduced to the calf feeder (from around 4–7 days after birth – before which they feed from their mother), they are provided 4 liters a day. As they grow older, they are gradually allowed more, up to a maximum of 7 liters. After approximately three months on the calf feeder, the calves will join the rest of the cows in the grazing paddocks, where they will not receive this supply. The calf feeder allows the farmers to view the amount of milk that any specific calf is drinking through a simple screen attached to the machine. This feature is highly useful, and the operators frequently utilize this to check that calves are drinking most, if not all of their allocated amount of milk.

To introduce a new calf to the feeding machine, the operator simply sets the mode on the calf feeder to record new calf. They then swipe the RFID identification tag passed the RFID reader in the feeder entry, and that calf is immediately registered.

Section 6.

Herd information storage and retrieval

The Cochrane dairy utilizes the Dairy 2000 software application to assist in their herd management operations. This software has the ability to store data on a range of characteristics for each cow, such as the date of artificial insemination, date calved (date a cow gave birth to a calf), treatments (such a penicillin), milking rates etc., as well as a range of data that may assist in facilitating herd management. As such, this software is able to provide an entire history of any particular cow. This data can be easily accessed and updated based on a cow's unique RFID tag number, or also by the cow's unique farm number as assigned by the Cochrane farm. This software application is the underlying component of all of the RFID operations of the dairy. The data contained in this program is accessed by the RFID readers and utilized to facilitate the relevant automation operations, such as deciding on the amount of feed to be provided to a cow etc. It also provides the interface to display individual cow data to the milking operators in the dairy during milking.

The Cochranes' also utilize 2 manual entry books as a form of running diary for their herd management operations – one for the purposes of recording cow information, and the second for recording paddock information. They fill in the cow diary with information pertaining to any actions taken on cows for that day. For example, penicillin injections, artificial inseminations etc. They manually write down the cow number, action taken and any other relevant information in this book. Retaining this form of manual record keeping subsequently requires the farmers to record cow data twice - once in the diaries, and again to transfer this information into the herd management software. This approach is required however, so as to enable the farmers to record information while they are in the field conducting the actions. Additionally, having this information provided in two forms and in two locations (the computer system located at the dairy and also the portable diary) provides valuable backup sources for this information.

The Cochranes' also utilize the services of Dairy Express herd recording to test the milk produced by each of their cows. The Cochranes' also download the results of this analysis, and are able to import this information directly into their herd management software. This allows for the information relating to each cow to be updated on a frequent monthly basis, thus aiding to provide up-to-date information to be utilized in RFID operations, and providing a common ground for analysis and comparisons to be made.

Section 7.

RFID benefits

The Cochranes' believe that they are certainly gaining a good return on their RFID investment, both financially and in general convenience.

7.1 Automatic feeding

One of the benefits of the RFID setup is that it makes individual feeding uncomplicated. Having the computer calculate and deliver the appropriate amount of feed for each cow (depending on their production as measured during the last herd recording), makes the feeding process far easier for the operators, as it relieves them from managing this aspect of the milking process. Providing this automated feeding also guarantees that cows are provided the required amount of feed to sustain the amount of milk they are currently producing. Subsequently, this ensures that the cows are given the best chance at good health, while leaving no room for human error in providing the varied amounts. This approach also saves the farm significant money, as they do not have to provide large amount of feed for low producing cows, nor do they suffer from wasted feed through spilling. With feed accounting for a large proportion of dairy farm costs, it is certainly beneficial to ensure that this feed is being utilized to gain the best possible return. The ability to automatically detect recently calved cows (those new to the dairy for this lactation cycle), and to gradually introduce them to the feed is also a valuable asset. This ensures the cows do not fall victim to wheat or grain poisoning, as may happen if they immediately are provided with a large amount of feed. Thus, this provides another avenue to aid in the ensuring the health of cows, which subsequently aids to encourage high milk production and continued good health for the farms most important assets.

7.2 Automatic drafting

Another significant benefit is obviously the ability to automatically separate cows that require particular attention from the rest of the herd. This is achieved through the use of the RFID reader linked with the automatic drafting gates. By entering the numbers of the cattle to be drafted into the herd management software, these cows will be automatically separated from the rest of the herd at the designated milking session. This saves the farmers from having to attempt to identify individual cows outside of the milking session, and also saves them from having to exit the milking parlor and retrieve a cow as she exits the milking parlor if they wish to gain her at that time. As such, this automatic drafting can be seen to provide a reduction in hassle for the farmers, while increasing the efficiency of the milking process. The Cochranes' also utilize this drafting ability to provide additional attention for their selected show cows. By drafting their show cows to a separate paddock after each milking session, the Cochranes' are able to easily provide these cows with additional feed of hay and silage.

7.3 Automatic calf feeder

Automating the practice of calf feeding provides large benefits for the Cochranes', primarily through the reduction of labor required to undertake this activity. Prior to the automated calf feeder, the Cochranes' undertook calf feeding in the same manner as many other dairy farms – by grouping calves into age groups, and manually providing milk to each group of calves via buckets at designated feeding times. While effective, this approach is quite time consuming for the farmers, and depending on the manner in which the calves are fed, it may be difficult to gauge exactly how much milk each calf is receiving. Utilizing the automatic calf feeder, this human labor requirement is reduced, as the calf feeder will automatically manage the task. This results in the only remaining labor required for calf feeding being a regular check of the machine to ensure it is working correctly, and for the farmers to view the amount of milk each calf is currently consuming (easily achieved via the associated information screen for the machine). Of course the calves will require human attention for a number of other activities, however this large labor requirement for feeding is now virtually eliminated. This provides additional valuable time to the farmers to undertake other activities on the farm. Alternatively, the Cochranes' have elected to increase the amount of calves being raised on the dairy, without having to increase the amount of labor provided. The ability of the calf feeder to adjust the amount of milk being provided to each calf ensures that each calf receives the correct amount of milk required for their age on a daily basis. This aids to ensure that calves develop and grow healthily, while providing them with the ability to drink when they desire, rather than at a preset feeding time. As the calf feeder is capable of determining each calves' age (and subsequently the amount of milk to provide) through their identification tag, the machine also removes the requirement to group calves into similar age groups. As such, this further removes the labor requirement and hassle for farmers. This also benefits the calves, as they are free to associate and learn from a larger and more diverse group of other calves.

7.4 Provision of information during the milking procedure

As noted earlier, selected information relating to each individual cow, as well as the bail number that each cow is assigned to in each milking row is displayed on two screens located at either end of the milking parlor. The ability for the milking operators to be provided with this information as the cows enter the milking parlor is highly useful for the Cochranes'. Primarily, this ability provides another mechanism for informing milking operators of any cows with particular characteristics that may subsequently require particular attention or additional steps to taken during the milking process. The associated audio readout of this information, as well as the color-coded highlighting of this cow on the computer screens also aids to ensure that these characteristics are recognized by the operators and appropriate action taken.

This relay of information also enables the operators to better plan their milking procedure for each row of cows that enter. This is possible as milking operators may begin preparations for milking of cows requiring particular attention as soon as they enter the milking parlor – as opposed to only recognizing that a cow requires additional actions to be taken when the operator arrives at this cow to place the milking cups on her. Additionally, the operators can also begin milking the slow milking cows first. Taking these actions aids to increase the efficiency of milking for each row of cows, subsequently aiding to reduce the total time taken for milking the herd.

Section 8.

RFID cost-benefit

The cost, as well as the effort and labor required to implement the current RFID setup on the Cochrane dairy certainly required a large investment of both time and money. The combined cost of both the hardware and software for the upgrade to RFID was estimated to be $60,000. As to whether the Cochranes' believe this large investment has been justified, Tom Cochrane (2005) states, “the advantages have outweighed the cost of it, long term. Like, if you're talking only over a year, there's no way you can justify that cost, but if you justify it over 20 years, it's paid for itself well and truly.” Regarding the ongoing costs of RFID, the Cochranes' do not see these are being excessive either. The main ongoing cost for this implementation is for additional RFID tags. However, as these tags are now mandated by law in NSW (due to NSW NLIS regulations), the Cochranes' point out that there is now no option but to identify cows with RFID devices anyway. As such, this cost cannot be attributed solely to ongoing costs of this setup, but is a required cost by law. Rather, the application of these tags at the start of a cows' life (rather than only as they exit the farm) and subsequent use of these tags to facilitate farm management operations is simply an optional way for the farm to gain benefits from this required cost.

Section 9.

Future RFID implementation

The Cochranes' have found great benefits from their use of RFID currently, and are interested in further advancing their RFID operations in the future. However, the only advancement that they are realistically considering is the implementation of milking meters for every milking bail. Implementing these milking meters will provide the ability to record the amount of milk each cow has provided at every milking session. This is in contrast to the current practice of only gaining these figures once a month through the use of the herd recording services of Dairy Express. Attaining milk production figures for every cow from every milking session will provide vastly more information for the farmers to utilize in their farm management decisions. This ability may facilitate enhancements to a range of other activities also, such as enabling more up-to-date figures to be utilized for the calculation of feed requirements for each cow. Further, this frequent recording of information may also serve as a means to detect problems with cows. All in all it is very important to remember that while RFID can aid in enhanced total farm management practices, it is the fundamental process that needs to be developed alongside the technology. The Cochrane Dairy Farm is a good example of alignment between the process and the technology, which has made it a successful case study for RFID adoption beyond that of compliance.

References

1. W. Ishmael, The Power of One, 2001, [online] Available: http://beef-mag.com/mag/beef_power_one/.

2. K. Karnjanatwe, How RFID tags can track livestock Bangkok Post, 2005, [online] Available: www.bangkokpost.com.

 3. R. Geers, B. Puers, V. Goedseels, P. Wouters, Electronic Identification Monitoring and Tracking of Animals, New York:CAB International, 1997.

4. K. Michael, The Automatic Identification Industry Trajectory, 2003.

5. D. James, "Automatic cow identification pays in the milking parlour", Farmer's Weekly, pp. 42, 2004.

6. R. Davies, Electronic Gains Aplenty, 1997, [online] Available: http://www.agricultural-technology.co.uk/fwedit/.

7. NSW Department of Primary Industries - Agriculture, 2004, [online] Available: http://www.agric.nsw.gov.au/reader/nlis/questions-answers-nlis-nsw.htm.

Citation: Adam Trevarthen & Katina Michael, Beyond Mere Compliance of RFID Regulations by the Farming Community: A Case Study of the Cochrane Dairy Farm, International Conference on the Management of Mobile Business (ICMB 2007), Year: 2007, pp. 8 - 8, DOI: 10.1109/ICMB.2007.21

IEEE Keywords: Radiofrequency identification, Agriculture, Animals, Technology management, Cows, Government,Investments, Costs, RFID tags, Industrial electronics

INSPEC: radiofrequency identification, dairying, capital investment, radiofrequency identification, Cochrane dairy farm, livestock identification,livestock management, compliance system, government agency

Control, trust, privacy, and security: LBS

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Location-based services (LBS) are those applications that utilize the position of an end-user, animal, or thing based on a given device (handheld, wearable, or implanted), for a particular purpose. LBS applications range from those that are mission-critical to those that are used for convenience, from those that are mandatory to those that are voluntary, from those that are targeted at the mass market to those that cater to the needs of a niche market. Location services can be implemented using a variety of access media including global positioning systems and radio-frequency identification, rendering approximate or precise position details.

The introduction of location-based services, which are growing in sophistication and complexity, has brought with it a great deal of uncertainty. Unaddressed topics include: accountability for the accuracy and availability of location information, prioritization and location frequency reporting, the user's freedom to opt-in and opt-out of services, caregiver and guardian rights and responsibilities, the transparency of transactions, and the duration of location information storage. Some of these issues are the focus of court cases across the United States, usually between service providers and disgruntled end-users or law enforcement agencies and suspected criminals.

While we can wait for the courts to set precedents and then take legislative action to learn about how we should act and what we should accept as morally right or wrong, this is only a small part in considering the emerging ethics of an innovation such as location-based services. Laws, similar to global technical standards, usually take a long time to enact. A more holistic approach is required to analyze technology and social implications. This article uses scenarios, in the form of short stories to summarize and draw out the likely issues that could arise from widespread adoption of LBS. It is a plausible future scenario, grounded in the realism of today's technological capabilities.

Role of Scenarios in the Study of Ethics

Articles on ethics in engineering and computing, for the greater part, have been about defining, identifying and describing types of ethics, and emphasizing the importance of ethics in the curriculum and the workplace. A small number of ethics-related studies more directly concerned with invention and innovation consider the possible trajectories of emerging technologies and their corresponding social implications [1], [2]. Within the engineering field, these studies commonly take on the guise of either short stories or case-based instruction [3], [4]. This article uses scenario planning to identify the possible risks related to location-based services in the context of security and privacy. While “day-in-the-life scenarios” have been popular in both human-computer interaction and software engineering studies, they have not been prevalent in the ethics literature [5].

When is a person sufficiently impaired to warrant monitoring?

The most well-known usage of stories related to ethical implications of technology have been constructed by Richard G. Epstein [6]. His 37 stories in the Artificial Intelligence Stories Web are organized thematically based on how the human experience is affected by the technology [7]. Of fiction, Epstein writes that it is “a great device to help one envision the future and to imagine new concepts and even applications” [8]. His Silicon Valley Sentinel-Observer's Series ran as a part of Computers and Society [9]. John M. Artz has written about the importance of stories advancing our knowledge when exploring areas where we do not fully understand a phenomenon [10]. Artz calls stories and our imagination “headlights” that allow us to consider what might lie beyond: “[c]onsider imagination as the creative capacity to think of possibilities. Imagination lets us see the world, not as it is, but as it could be. And seeing the world as it could be allows us to make choices about how it should be.” In 1988, Artz indicated the shortage in short stories in the field, and this paper addresses the shortage by focusing on LBS.

The definition of a scenario used in this paper is “[a]n internally consistent view of what the future might turn out to be” [11]. Scenarios can be used to combine various separate forecasts that pertain to a single topic [12], designed to provide an overall picture of a possible future, and to describe this future in such a way that it is accessible to a layperson in the subject. According to Godet a scenario “must simultaneously be pertinent, coherent, plausible, important and transparent” [13].

The Track, Analyze, Image, Decide, Act (TAIDA) scenario planning framework is used here with respect to LBS to i) identify aspects of the current situation that may have an impact on the future under consideration; ii) deliberate on the possible future consequences of the aspects identified in tracking; iii) approach possible changes intuitively to create a plausible future, “to create not only an intellectual understanding but also an emotional meaning,” iv) determine what should be done about a given scenario in response to issues raised, and v) offer recommendations that will address these issues [14]. Analysis of the future scenario presented will be conducted using deconstruction to draw out the social implications. Deconstruction is an approach to literary analysis that aims “to create an interpretation of the setting or some feature of it to allow people… to have a deeper understanding” [15].

The Roman philosopher Seneca said: “[t]here is no favorable wind for the man who knows not where he is going” [13]. There is certainly merit in exploring the potential effects of LBS before they occur. As Michael and Michael highlight: “[m]ost alarming is the rate of change in technological capabilities without a commensurate and involved response from an informed community on what these changes actually “mean” in real and applied terms, not only for the present but also for the future” [16]. “[T]oday's process of transition allows us to perceive what we are losing and what we are gaining; this perception will become impossible the moment we fully embrace and feel fully at home in the new technologies” [17].

The scenario “Control Unwired” continues five short stories and is set in Australia. The critical analysis that follows is also presented within a predominantly Australian context.

Control Unwired

Vulnerability-The Young Lady

The street appeared to be deserted. Kate wasn't surprised – this part of town always quieted down at night, especially on weekday evenings like this one. There wasn't much around except office buildings and coffee shops that served to provide a steady stream of caffeine to the office workers.

If a person's resistance is bypassed or circumvented, their adaptive capacities can be overloaded, inducing feelings of desperation and helplessness.

Kate fished her smart phone out of the pocket of her grey suit jacket [18], [19]. Pressing a few buttons, she navigated through the on-screen menu to the Services option, then to Call a Taxi [20]. The device beeped at her, flashing the message: No signal available [21].

Kate swore, shoving the PDA back into her bag. The surrounding buildings must have been blocking the GPS signal [22]. She knew she needed to get to a more open area.

What a pain, she thought. They overload me with cases, expect me to stay late, and then the gadget they give me to get home doesn't work.

Although Kate was irritated more than anything else, there was a niggling sort of apprehension in the pit of her stomach. She felt alone – very alone, and not at all comfortable being by herself, at eleven in the evening, in a deserted place.

Shaking off the uneasiness, she berated herself. Get a grip, Kate. You're not a child.

As Kate strode off, a dark shadow detached from a nearby alleyway. It followed, silently, at a distance, keeping out of the dim pools cast by the streetlights.

Unfortunately, Kate didn't know which direction she should go to find a clear space for her phone to get a fix on her location.

If I keep heading the same way, she thought, I'm bound to find somewhere sooner or later.

The surrounding structures were slightly lower here, the taller office blocks just down the road. As Kate walked, the shadow some way behind flickered in the wind, as though it were wearing a long coat. It followed stealthily, steadily decreasing the distance between itself and Kate.

Suddenly, Kate's phone bleeped for attention. Kate pulled it out of her bag again and read the message on the screen: Signal acquired.

“Finally,” she breathed. Quick fingers navigated back to the Call a Taxi command. The phone gave a comforting reassurance that a taxi was on its way, with an estimated arrival time of less than a minute [23].

The shadow hung back, unsure, watching.

Within thirty seconds of making the call, a taxi veered out of nowhere and pulled to an abrupt stop alongside Kate. She opened the door and slid into the back seat.

As the taxi pulled away, the shadow shifted slightly and melted back into the darkness.

Liberty-The Husband and His Wife

The next day, the sun filtered into an east-facing bathroom window, where a man stood studying himself in the mirror.

Slight lines crinkled the skin near his eyes and mouth. His hair was still quite thick and healthy, but flecked with the salt-and-pepper grey of an aging man. Although Colin was well past his sixtieth birthday, he could have easily passed for a man in his fifties.

Suddenly, the telephone rang. Colin paused for a moment, listening – the ring only sounded in the bathroom [24]. The kitchen, bedroom, and lounge room were all silent.

“Even the damn phone knows where I am,” he muttered, shaking his head. He touched the hard lump of the RFID tag that was stitched into the hem of his shirt [25], [26]. “Helen, not again!”

Colin stabbed at an unobtrusive button on the bathroom wall, [27] and his reflection instantly gave way [28] to the face of an attractive woman with bobbed blonde hair [29] – Helen, his wife, calling from the airport in Hong Kong.

“Oh sweetheart, you look tired.” Helen sounded concerned.

Colin shrugged. “I don't feel tired. I think I just need to get some fresh air.”

“Open the window, then. It might make you feel better.”

Colin thought that what would make him feel better was a nice long walk without his wife checking up on him every five minutes.

“You haven't been to the cupboard yet to take your morning medicines,” Helen said.

“Why don't you stop pussyfooting around and just inject me with one of those continuous drug delivery things?” [30], Colin frowned.

Helen smiled. “Great idea,” she teased. “We could put a tracking chip in it too. Two birds, one stone” [31].

“At least then I wouldn't have to wear this stupid bracelet [32]. They're made for kids [33], Helen.” Colin knew his wife was joking, but the truth was that he often did feel like a recalcitrant child these days.

“Well,” Helen replied, “If you didn't insist on being so pig-headed, you wouldn't have to wear it. I was terrified when you collapsed. I'm not going to let it happen again. This way I know you're not gallivanting about without someone to look after you.”

“Ever considered that I can take care of myself? I'm not a child.”

“No, you're not. And you're not a young man either,” Helen admonished. “You need to accept that with your condition, it's just not safe to be going off by yourself. What if something happened to you? Who would know? How would we find you?”

“I feel like a prisoner in my own home, Helen. I can't even take the thing off without you knowing about it. You know they use these for prisoners?”

“Parolees, dear. And they're anklets.” She leaned in closer to the screen. “Someone needs to take care of you, Colin. If you won't, I'll have to do it myself.”

Colin sighed. “You just don't understand what it's like to be getting… older. Not being able to do everything you used to. Being betrayed by your own body. It's bad enough without you babying me along like some kind of octogenarian invalid.”

“Well, I guess that's the downside to marrying a woman almost twenty years younger than yourself,” Helen grinned.

“The only downside.” Colin smiled back at her, but his heart wasn't really in it. They had been through this argument countless times before.

He changed the subject. “Heard from our dear daughter lately? Or Scott?”

“Kate called me last night. She's doing well.”

“How's her new job?” Colin asked.

“Well, she says she enjoys it, but she's working very long hours,” Helen replied.

“And I bet you're worried about her being alone in the city at night for five minutes,” Colin said.

Helen gave a self-conscious smile. “It's not a very nice part of town. I'll feel much better about her working late when the firm moves closer to the inner city.”

“And Scott?”

“Haven't heard from him. He's back in Sydney now, though. I wish he'd call.”

“Maybe if you weren't always pestering him to marry his girl from Melbourne, he'd call more,” Colin grinned.

Helen glanced up, away from the screen.

“Sweetheart, I have to go – they've just given the final boarding call for my flight. Enjoy the rest of your day. I'll see you when I get home tonight.” She blew a rather distracted kiss at the screen, then it went blank.

Colin's shoulders sagged. Alone again.

He shuffled into the kitchen to make breakfast. Helen had left him skim milk and pre-packaged porridge oats.

“Wow,” he muttered. “Cosmic Blueberry or Bananarama? Such decisions.”

Just as Colin was finishing off the last few spoonfuls, the watch on his wrist emitted a low beep. He glanced at the screen: Low battery – critical.

Colin smiled. The device had been flashing low battery messages intermittently since yesterday evening. It had less than three days' standby time, and being on a business trip, Helen wasn't around to make sure it got recharged [34].

The screen on the little device winked out.

Munching on his porridge, Colin reached over to the cutlery drawer and took out the kitchen scissors. Very carefully, he snipped out a neat little rectangle from the hem of his shirt. The RFID tag came with it.

He swallowed down the rest of his breakfast and tossed the tag onto the counter.

Colin was going for a walk.

No alert went out to Helen. No neighbors came hurrying to see what he was doing. He reveled in the possibility of heading out without someone watching his every move [35].

Colin wandered off, his own man, if only for a morning.

Association-The Friends and Colleagues

“Hey Janet. Sorry I'm late.” Scott slid into the other seat at the table.

Janet sighed, pushing a latte and a sandwich towards him. She'd already finished her coffee. She gestured to her PDA. “These gadgets do everything. They compare our schedules, pick a place convenient to both of us, make sure there's something vegetarian on the menu for me, and book a table. Pity they can't get you here on time too.”

“I'm sure it's on the horizon,” Scott joked. “So how's life in the Sydney office?”

“All right. The weather makes a nice change. How about your parolees?”

Scott laughed. “There's a lot more of them. In Melbourne I had fifty or sixty cases at once. Now I've been allocated more than a hundred.” He bit into his sandwich. “With less parole officers able to handle more cases, I guess I'm lucky to have a job,” he continued with his mouth full [36].

Janet raised her eyebrows. “With a lot of women intolerant of bad table manners, you're lucky to have a girlfriend. I assume the workloads are greater because they use those chips here?”

“The caseload is greater, the workload is the same – yeah, because of the chips” [37]. He smiled. “It's crazy that New South Wales is already trialing these tracking implants, while Victoria's only recently got a widespread implementation of the anklets [38]. They've been around commercially for years. Mum's got Dad wearing a tracking watch now, for peace of mind after the whole angina scare.

“But the implants are much better,” Scott continued. “Who wants a chunky anklet or bracelet that makes you look like a collared freak? I'll bet it's really disconcerting having people stare at you suspiciously in the street, knowing that you're a criminal. It kind of defeats the purpose of parole – the idea is rehabilitation, reintegration under supervision. That's why the implants are so good – there's no stigma attached. No one can even tell you have one. And they're harder to remove, too.”

“I don't see what the big deal is,” Janet replied. “Why not just keep people under lock and key?”

“Resources. It costs a lot to keep someone imprisoned, but the cost drops significantly if you imprison them in their own home instead [39]. It's about overcrowding, too – jails everywhere have had an overcrowding problem for years [40].

Can it be considered reasonable to impinge upon the freedom of someone who is merely suspected of committing a crime?

“I also think electronic monitoring and parole are much better in terms of rehabilitation,” Scott went on. “People can change [41]. Often they've committed a fairly minor crime, then they go to prison, get mixed up with worse crowds [42]–[43][44]. It can be pretty rough in there. There is certainly a danger that by imprisoning people with ‘harder’ criminals, you run the risk of corrupting them further and exacerbating the problem [40].

“On parole, they can still go to work and earn money, be productive members of society, get their lives back [44], [45]. But they're watched, very closely – the tracking systems alert us if anything looks off. It's imprisonment without prisons.”

Janet smiled. “That's very Alice in Wonderland. When the Cheshire Cat disappears – how does it go? ‘I've often seen a cat without a grin, but a grin without a cat is the most curious thing I ever saw in all my life!'”

Scott laughed. “I suppose you could compare it to that.” He noted Janet's skeptical look. “It's not like we're sending people out of jails willy-nilly. There is a pretty thorough system in place to determine who gets paroled and who doesn't.”

“So how does that work?” asked Janet.

“Well, a while ago it was mainly based on crime-related and demographic variables. We're talking stuff like what sort of offense they're doing time for, the types of past convictions on their record, age, risk of re-offending” [46].

She nodded.

“Now a bunch of other things are looked at too,” he continued, finishing off his sandwich. “It's a lot more complex. Psychological factors play a big part. Even if someone displays fairly antisocial traits, they're still considered pretty low risk as long as they don't also show signs of mental illness” [47].

“So prisons are the new asylums?” Janet frowned.

“Not quite but I see your point,” Scott admitted.

“What about terrorists?” Janet argued. “How can you guarantee that there won't be another incident like the Brisbane rail bombings”[48]?

“Like I said, anyone considered really dangerous is still kept in a regular prison,” Scott said. “All the major landmarks and places people congregate in Sydney are tagged anyway [49]. There's no way a convicted terrorist would get within a hundred meters of anything worth attacking.”

Janet raised her eyebrows, unconvinced. She thought of the newspaper reports about security breaches of public places that had been linked to professional cybervandals. As far as she was concerned, no new technology was the silver bullet.

Scott continued, “And you know that governmental powers now allow ‘persons of interest’ to be implanted as well.”

Janet shook her head. “I'm all for preventing terrorist attacks. But implanting people who haven't committed a crime? How far will they take it? What if the government decided that they should just track everyone, to be on the safe side?”

Scott shrugged. “I guess we just need to find a nice balance between personal freedom and national security.”

He glanced at his watch and pushed his chair back. “I need to get back to work,” he said apologetically.

Policing-The Officer and the Parolee

Scott paused on the landing in front of Doug's apartment and steeled himself. Doug was his last visit of the day. Scott was a fairly likeable guy and had a rapport with most of his cases, but Doug, convicted of aggravated sexual assault, was different [50].

Scott knocked on the door.

A few seconds passed, then it opened a fraction and a stubbled face peered out. Doug wore a stained long-sleeved shirt and ratty jeans.

“Scott,” he sneered. “So nice of you to drop by.”

“Let's just do this, Doug.”

Scott followed Doug into the living room. He pulled out a small device and waved it up and down the man's left arm. It beeped and Scott checked the screen.

“Your chip seems fine,” he said. “Just a routine check – we like to do one every now and then to make sure everything's okay. Congratulations on your new job, by the way. How do you like house painting?”

“My true bloody calling,” Doug leered.

“Er… great. Keep it up then. With good behavior like this you'll be done in no time.”

Scott felt relieved that he would no longer have to sift through Doug's daily tracking logs.

Doug just smiled.

Duplicity-The Victim

Doug waited more than two hours after Scott left before removing his shirt. He peeled off the electrical tape covering an ugly, ragged scar on his upper arm [51]. The scar wasn't from the chip's implantation. It was created by the deep cut Doug's heavily pierced cyberpunk friend had made to remove it [52].

The tiny chip – smaller than a grain of rice – was stuck to the back of the tape. Gingerly, Doug set it on the table in front of the TV and smiled. His chip was having a night in.

He was going out.

Doug pulled his shirt back on and shrugged into a long coat.

He knew there would be a young woman in a grey suit leaving her office soon. She worked at the law firm that was hot stuff in the news. Stupid really, he thought, that she's not afraid to wander the streets in that part of town at night, alone. A Smart girl like that should know better.

The stairwell was quiet. He slipped out into the darkness, a shadow among the other shadows.

He wanted to pay that attractive little lawyer a visit before she caught her taxi home.

Critical Analysis

Legal and Ethical Issues

According to Ermann and Shauf, our “ethical standards and social institutions have not yet adapted… to the moral dilemmas that result from computer technology” [53]. This has a great deal to do with the way Helen uses the LBS technologies available to her. In Liberty, Helen obviously cares about her husband and wants what is best for his health. She is willing to “help” Colin look after himself by monitoring him and restricting the activities she allows him to participate in, especially when he is alone. It is not too difficult to imagine this happening in the real world if LBS becomes commonplace. It is also conceivable that, for some people, this power could be held by a hospital or health insurance company. However, Helen fails to balance her concern for her husband's physical welfare with his need to be an autonomous being. Although LBS technologies are readily available, perhaps she has not completely thought through her decision to use these technologies to monitor Colin, even if it is ostensibly for his own good. It could even be seen as selfish.

The current climate is indicative of individuals' willingness to relinquish their privacy (or at least someone else's) for the sake of impenetrable security.

Consideration of legal issues is also important – it does not appear that there is any specific Australian legislation that covers the unique possibilities of LBS tracking. One situation that is likely to appear with more frequency is people using LBS technologies to monitor loved ones “for their own good.” Several issues are raised here. When is a person sufficiently impaired to warrant such monitoring? Should their consent be necessary? What if they are considered to be too impaired to make a rational decision about monitoring?

Autonomy is an important part of a person's identity. Resistance to a situation is often unconsciously employed to “preserve psychically vital states of autonomy, identity, and self-cohesion from potentially destabilizing impingements” [54]. If a person's resistance is bypassed or circumvented, their adaptive capacities can be overloaded, inducing feelings of desperation and helplessness. The natural reaction to this is to exert an immediate counterforce in an attempt to re-establish the old balance, or even to establish a new balance with which the individual can feel comfortable [54].

These ideas about autonomy, identity and resistance are demonstrated in Liberty through Colin. He experiences feelings of helplessness and vulnerability because of his loss of autonomy through constant LBS monitoring. His unsupervised walk can be seen as an attempt to redress the balance of power between himself and Helen. With these issues in mind, perhaps the kindest and least disruptive way to implement a monitoring program for an aging individual is to develop a partnership with that person. In this sort of situation, LBS tracking can be a joint process that “is continually informed by the goal of fostering… autonomy” [54].

Another significant legal and ethical issue is that of monitoring people such as those suspected of being involved in terrorist activities. As hinted at in Association, this is not mere fancy – the Australian Government, for example, has passed new anti-terrorism laws that, among other things, would give police and security agencies the power to fit terror suspects with tracking devices for up to 12 months [55].

This kind of power should give rise to concern. Can it be considered reasonable to impinge upon the freedom of someone who is merely suspected of committing a crime? For tracking implants especially, do governments have the right to invade a personal space (i.e., a person's body) simply based on premise?

Criminals give up some of their normal rights by committing an offense. By going against society's laws, freedoms such as the right to liberty are forfeited. This is retributivism (i.e., “just deserts”). The central idea is proportionality: “punishment should be proportionate to the gravity of, and culpability involved in, the offense” [40]. With no crime involved, the punishment of electronic monitoring or home detention must be out of proportion.

The threat of terrorist attacks has led the Australian Government to propose giving itself extraordinary powers that never could have been justified previously.

With measures such as those in Australia's counter-terrorism laws, there is obviously a very great need for caution, accountability, and review in the exercise of such powers. Gareth Evans, the former Australian Labor foreign minister, commented on the laws by saying:

“It is crucial when you are putting in place measures that are as extreme in terms of our libertarian traditions as these that there be over and over again justification offered for them and explanations given of the nature and scale of the risk and the necessity… it is a precondition for a decent society to have that kind of scrutiny” [56].

 

The July 2005 London subway bombings are the justification offered repeatedly by Australian Prime Minister John Howard for the new laws, reinforced by Australian Secret Intelligence Organization (ASIO) director-general Paul O'Sullivan. However, this “justification” ignores the reality that “the London bombers were ‘clean skins' who had escaped police notice altogether” [57]. Tagging suspicious people cannot keep society completely safe.

We do not make a judgment on whether pre-emptive control legislation is proper or not. We suggest, however, that the laws recently enacted by the Australian Federal Government (and agreed to by the Australian States) could be indicative of a broader trend.

John Howard said that “in other circumstances I would never have sought these new powers. But we live in very dangerous and different and threatening circumstances… I think all of these powers are needed” [58]. Could the same argument be used in the future to justify monitoring everyone in the country? If pre-emptive control is a part of government security, then widespread LBS monitoring could be the most effective form of implementation.

Without suggesting the potentially far-fetched Orwellian scenario where draconian policies and laws mean that the entire population is tracked every moment of their lives, there is an argument to be made that the current climate is indicative of individuals' willingness to relinquish their privacy (or at least someone else's) for the sake of impenetrable security.

Social Issues

Control emerges as a significant theme in the scenario Control Unwired. Even in LBS applications that are for care or convenience purposes, aspects of control are exhibited. The title reflects the dilemma about who has control and who does not. For example, in Vulnerability, Kate experiences a loss of control over her situation when her GPS-enabled smart phone does not work the way she wants it to work, but a sense of control is restored when it is functioning properly again. Helen has control over Colin in Liberty, and in turn Colin has little control over his own life. In both Association and Policing we see how Scott uses LBS every day as a control mechanism for parolees. Finally, in Duplicity, the question arises whether faith in this sort of control is fully justified.

Trust is a vitally important part of human existence. It develops as early as the first year of life and continues to shape our interactions with others until the day we die [59]. In relationships, a lack of trust means that there is also no bonding, no giving, and no risk-taking [60]. In fact, Marano states:

“[w]ithout trust, there can be no meaningful connection to another human being. And without connection to one another, we literally fall apart. We get physically sick. We get depressed. And our minds… run away with themselves” [59].

An issue that arises in Liberty is that of trust, recalling Perolle's notion of surveillance being practiced in low-trust situations and the idea that the very act of monitoring destroys trust [61]. We can see this happening in the Colin/Helen relationship. Helen does not trust Colin enough to let him make his own decisions. Colin does not trust Helen enough to tell her he is going out by himself, without any kind of monitoring technology. He resents her intrusion into his day-to-day life, but tolerates it because he loves his wife and wants to avoid upsetting her. Their relationship could be expected to become increasingly dysfunctional if there is a breakdown of trust. It is near impossible to predict the complex effects of LBS when used to track humans in this way, especially as each person has a different background, culture, and upbringing. However, if Perolle [61] and Weckert [62] are agreed with, these types of technological solutions may well contribute to the erosion of trust in human relationships – what would this entail for society at large? Freedom and trust go hand-in-hand. These are celebrated concepts that have been universally connected to civil liberties by most political societies.

Technological Issues

There is a widely held belief that it is how people use a technology, not the technology itself, that can be characterized as either good or bad. People often see technology as neutral “in the sense that in itself it does not incorporate or imply any political or social values” [63]. However, there are other researchers who argue that technology is not neutral because it requires the application of innovation and industry to some aspect of our lives that “needs” to be improved, and therefore must always have some social effect [63]. The LBS applications in the scenario all appear to show aspects of control. This would suggest that the technology itself is not neutral – that LBS are designed to exercise control.

Control Unwired seems to echo Dickson's argument that technology is not neutral because of its political nature: “dominating technology reflects the wishes of the ruling class to control their fellow men” [63]. We can certainly see elements of this idea in the scenario. All of the LBS functions depicted are about control, whether it be control over one's own situation (Vulnerability), caring control of a loved one (Liberty), or forced control over parolees (Association, Policing, and Duplicity). These situations imply that LBS is not neutral, and that the technology is designed to enhance control in various forms.

Some believe that technology is the driving force that shapes the way we live. This theory is known as technological determinism, one of the basic tenets of which is that “changes in technology are the single most important source of change in society” [64]. The idea is that technological forces contribute to social change more than political, economic, or environmental factors. The authors would not go so far as to subscribe to this strongest sense of technological determinism doctrine. The social setting in which the technology emerges is at least as important as the technology itself in determining how society is affected. As Braun says: “[t]he successful artifacts of technology are chosen by a social selection environment, [like] the success of living organisms is determined by a biological selection environment” [65]. Technologies that fail to find a market never have a chance to change society, so society shapes technology at least as much as it is shaped by technology. In this light, Hughes's theory of technological momentum is a useful alternative to technological determinism: similar in that it is time-dependent and focuses on technology as a force of change, but sensitive to the complexities of society and culture [66].

Technological potential is not necessarily social destiny [67]. However, in the case of LBS, it is plausible to expect it to create a shift in the way we live. We can already see this shift occurring in parents who monitor their children with LBS tracking devices, and in the easing of overcrowding in prisons through home imprisonment and parole programs using LBS monitoring.

As described previously, the threat of terrorist attacks has led the Australian Government to give itself extraordinary powers that never could have been justified previously. In this situation, LBS has enabled the electronic monitoring of suspicious persons; however, it is not the technology alone that acts as the impetus. Pre-emptive electronic tracking could not be put in place without LBS. Neither would it be tolerated without society believing (rightly or not) that it is necessary in the current climate.

The scenario also demonstrates that technology and society evolve at least partially in tandem. In Association, through the conversation between Scott and Janet, we learn that LBS tracking implants were not introduced simply because they were technically feasible. The reasons for their use were to reduce overcrowding in prisons and to mitigate the burden of criminals on the ordinary taxpayer. Social and economic factors, as well as technological ones, contributed to this measure being taken.

Although technology is not the sole factor in social change, and arguably not the most important, LBS are gaining momentum and are likely to contribute to a shift in the way we live. This can be seen both in the scenario and in real-life examples today. Throughout Control Unwired we can see LBS becoming an integral part of daily life. If this does happen, consideration must be given to what will happen if the technology fails – which it inevitably will. No technology is completely perfect. There are always shortcomings and limitations.

Examples of deficiencies in LBS technologies can be found scattered throughout the scenario. In Vulnerability, Kate appears to be over-reliant on LBS (why does she not simply call a taxi from her office before leaving?) and when the technology fails, it creates a potentially dangerous situation. Even more dangerous circumstances occur in Duplicity. Doug, a convicted sex offender, is able to break his curfew without anyone knowing. Perhaps measures could be implemented to stop such breaches from going undetected, but that would not stop them from happening altogether. One U.S. study found that about 75 percent of electronically monitored “walk offs” were re-apprehended within 24 hours [45]. That means a quarter went free for more than a day – plenty of time to commit other offences. And, although the offender may be caught and punished, it is difficult to remedy the damage done to an individual who is robbed or assaulted.

And no technology is completely fail-safe. Even electricity, a mainstay of daily life, can suddenly fail, with socially and economically devastating effects. Most of Auckland, New Zealand, went without power for five weeks during a massive blackout in 1998 [68]. A 1977 electricity outage in New York led to widespread looting, arson and urban collapse [69]. If we become as reliant on LBS as we have become on other technologies like electricity, motor vehicles, and computers, we must be prepared for the consequences when (not if) the technology fails.

Risk to the Individual Versus Risk to Society

Any technology can be expected to have both positive and negative effects on individuals and on the wider community. Emmanuel Mesthane of Harvard's former Technology and Society Program wrote: “[n]ew technology creates new opportunities for men and societies and it also generates new problems for them. It has both positive and negative effects and it usually has the two at the same time and in virtue of each other” [70]. From Table I, it is obvious that there is an inherent trade-off between the interests of the individual and the interests of society as a whole: the privacy of the individual is in conflict with the safety of the broader community. As G.T. Marx reflects, “[h]ow is the desire for security balanced with the desire to be free from intrusions” [71]? This work is certainly not the first to allude to this issue. For example, Kun has said that “perhaps one of the greatest challenges of this decade will be how we deal with this theme of privacy vs. national security” [72].

  Table I  Positives and negatives of LBS for different user types

Table I Positives and negatives of LBS for different user types

The original contribution of this article is that the dilemma has been related specifically to LBS, under the privacy-security dichotomy [73]. Here, each side of the dichotomy is divided into three key components that combine to greatly magnify risk. Removing one or more components for each set decreases the privacy or security risk. Where more elements are present in conjunction, the risk is increased.

Significant privacy risk occurs when the following factors are present (Fig. 1):

 Fig. 1 Privacy Risk

Fig. 1 Privacy Risk

  • Omniscience — LBS tracking is mandatory, so authorities have near-perfect knowledge of people's whereabouts and activities.

  • Exposure — security of LBS systems is imperfect, leaving them open to unauthorized access.

  • Corruption — motive exists to abuse location-related data. This includes unauthorized or improper changes, thus compromising content integrity.

It is not difficult to see why the danger in this privacy-risk scenario is so great. A nation with “all-knowing” authorities means that a large amount of highly sensitive information is stored about all citizens in the country. Security of electronic systems is never foolproof. And, where there is something to be gained, corrupt behavior is usually in the vicinity. The combination of all three factors creates a very serious threat to privacy.

Significant security risk occurs with the following conditions (Fig. 2):

  • Limitedness — authorities have limited knowledge of people's activities.

  • Vulnerability — security of individuals and infrastructure is imperfect.

  • Fraudulence — motive exists to commit crimes.

 Fig. 2 Security Risk

Fig. 2 Security Risk

This security-risk dimension is a life situation that people have to contend with in the present day: limitedness, vulnerability, and fraudulence. Law enforcement authorities cannot be everywhere at once, nor can they have instant knowledge of unlawful activity. Security of infrastructure and people can never be absolute. In addition, there are always individuals willing to commit crimes for one reason or another. These factors merge to form a situation in which crimes can be committed against people and property relatively easily, with at least some chance of the perpetrator remaining unidentified.

As mentioned above, the security-risk half of the dichotomy typifies our current environment. However, the majority of society manages to live contentedly, despite a certain level of vulnerability and the modern-day threat of terrorism. The security-risk seems magnified when examined in the context of the LBS privacy-security dichotomy. LBS have the potential to greatly enhance both national and personal security, but not without creating a different kind of threat to the privacy of the individual. The principal question is: how much privacy are we willing to trade in order to increase security? Is the privacy-risk scenario depicted above a preferable alternative to the security-risk society lives with now? Or would society lose more than it gains? And how are we to evaluate potential ethical scenarios in the context of utilitarianism, Kantianism, or social contract theory?

Major Implications

The issues of control, trust, privacy and security are interrelated (Table II). As discussed above, increased control can impair or even destroy trust; i.e., there is no need to be concerned with trusting someone when they can be monitored from afar. In contrast, increased trust would normally mean increased privacy. An individual who has confidence in another person to avoid intentionally doing anything to adversely affect them, probably does not feel the need to scrutinize that person's activities.

  Table II  Unanswered questions in LBS

Table II Unanswered questions in LBS

Privacy requires security as well as trust. A person's privacy can be seriously violated by a security breach of an LBS system, with their location information being accessed by unauthorized parties. The other effect of system security, however, is that it enhances control. A secure system means that tracking devices cannot be removed without authorization, therefore, control is increased. Of course, control and privacy are mutually exclusive. Constant monitoring destroys privacy, and privacy being paramount rules out the possibility of LBS tracking. These relationships are summarized in Fig. 3.

4135773-fig-3-small.gif

The most significant implication of the work presented here is this: the potential for LBS to create social change raises the need for debate about our current path and consideration of future probabilities. Will the widespread application of LBS significantly improve our lives? Or will it have negative irreversible social effects?

Technological progress is not synonymous with social progress. Social progress involves working towards socially desirable objectives in an effort to create a desirable future world [65]. Instead of these lofty ideals, technological progress is based on what is technically possible. However, there is a difference between what can be done and what should be done – the relentless pursuit of technological advancement for its own sake is arguably a pointless exercise. Do we really need more electronic gadgets in our daily lives? As Kling states:

“I am struck by the way in which the news media casually promote images of a technologically rich future while ignoring the way in which these technologies can add cost, complexity, and new dependencies to daily life” [74].

In the Association section of the scenario, Janet's comment about Alice's Adventures in Wonderland can be seen as more than just a superficial remark. In the book, Alice has the following conversation with the Cat:

“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don't much care where—” said Alice.
“Then it doesn't matter which way you go,” said the Cat [75].

Martin Gardner says that John Kemeny, author of A Philosopher Looks at Science, compares Alice's question and the Cat's answer to the “eternal cleavage between science and ethics” [75]. The same could be said of LBS technologies and possible future applications. New technologies provide exciting opportunities, but human decision-making based on social and ethical considerations is also needed in determining the best path to follow. Technology merely provides us with a convenient way to reach the destination. Without a sense of direction, where might we find ourselves? And where is the logic behind a “directionless” destination? There is clearly a serious need for thought and discussion about how we want LBS to be used in the wider context of its potential application.

Besides developing a sense of purpose for the use of LBS, we need to examine very carefully the possibility of the technology having unintended side effects such as the breakdown of trust and abuse of its application. Certainly, the potential effect of unplanned consequences should not be underestimated. According to Jessen:

“The side effects of technological innovation are more influential than the direct effects, and they have the rippling effect of a pebble hitting water; they spread out in ever enlarging concentric circles throughout a society to transform its behavior, its outlook, and its moral ethic” [76].

Of course not all secondary effects can be foreseen. However, this does not mean that deliberating on the possible consequences is without some genuine worth. Surely some form of preparation to deal with adverse outcomes, or at least to notice them before they become irreversible, is better than none at all.

The scenario Control Unwired has demonstrated the potential of LBS to create social change. It has also shown that the use of LBS may have unintended but long-term adverse effects. For this reason the major recommendations are cross-disciplinary debate and technology assessment using detailed scenario planning. We need to critically engage with LBS, its potential applications, and possible side-effects instead of just blindly hurtling along with the momentum of technology-push.

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Acknowledgment

The authors would like to acknowledge the significant contribution of Dr. M.G. Michael, Honorary Fellow at the School of Information Systems and Technology at the University of Wollongong and a member of the IP Location-Based Services Research Program.

Keywords

Privacy, Security, Ethics, Technological innovation, Social implications of technology, Animals, Mission critical systems, Radio frequency, Radiofrequency identification, Uncertainty, security of data, data privacy, mobile computing, privacy-security dichotomy, location-based services, scenario planning, security risk, privacy risk

Citation: Laura Perusco, Katina Michael, "Control, trust, privacy, and security: evaluating location-based services", IEEE Technology and Society Magazine, Vol. 26, No. 1, Spring 2007, pp. 4 - 16.

Lend Me Your Arms: Use and Implications of RFID Implants

Abstract

Recent developments in the area of RFID have seen the technology expand from its role in industrial and animal tagging applications, to being implantable in humans. With a gap in literature identified between current technological development and future humancentric possibility, little has been previously known about the nature of contemporary humancentric applications. By employing usability context analyses in control, convenience and care-related application areas, we begin to piece together a cohesive view of the current development state of humancentric RFID, as detached from predictive conjecture. This is supplemented by an understanding of the market-based, social and ethical concerns which plague the technology.

1. Introduction

Over the past three decades, Radio-frequency identification (RFID) systems have evolved to become cornerstones of many complex applications. From first beginnings, RFID has been promoted as an innovation in convenience and monitoring efficiencies. Indeed, with RFID supporters predicting the growth of key medical services and security systems, manufacturers are representing the devices as ‘life-enhancing’. Though the lifestyle benefits have long been known, only recently have humans become both integral and interactive components in RFID systems. Where we once carried smart cards or embedded devices interwoven in clothing, RFID technology is now at a point where humans can safely be implanted with small transponders.

This paper aims to explore the current state of development for humancentric applications of RFID. The current state is defined by the intersection of existing development for the subjects and objects of RFID – namely humans and implants. The need for such a study has been identified by a gap in knowledge between present applications and future possibility. This study aims to overcome forecast and provide a cohesive examination of existing humancentric RFID applications. Analysis of future possibility is outside the scope of this study. Instead, a discussion will be provided on present applications, their feasibility, use and social implications.

2. Literature review

The literature review is organized into three main areas – control, convenience, and care. In each of these contexts, literature will be reviewed chronologically.

2.1. The context of control

A control-related humancentric application of RFID is any human use of an implanted RFID transponder that allows an implantee to have power over an aspect of their lives, or, that allows a third party to have power over an implantee. Substantial literature on humancentric control applications begins in 1997 with United States patent 5629678 for a ‘Personal Tracking and Recovery System’. Though the literature scientifically describes the theoretical tracking system for recovery of RFID-implanted humans, no further evidence is available to ascertain whether it has since been developed. Questions as to feasibility of use are not necessarily answered by succeeding literature. Reports of the implantation of British soldiers [1] for example lack the evidentiary support needed to assuage doubts. Further, many articles highlight the technological obstacles besieging humancentric RFID systems. These include GPS hardware miniaturization [2] and creating active RFID tags capable of being safely recharged from within the body. Further adding to reservation, much literature is speculative in nature. Eng [3], for example, predicts that tags will be melded into children to advise parents of their location.

Despite concerns and conjecture, actual implementations of humancentric control applications of RFID have been identified. Both Murray [4] and Eng documented the implantation of Richard Seelig who had tags placed in his hip and arm in response to the September 11 tragedy of 2001. This sophisticated technology was employed to provide security and control over personal identification information. Wilson [5] also provides the example of 11-year old Danielle Duval who has had an active chip (i.e. containing a rechargeable battery) implanted in her. Her mother believes that it is no different to tracking a stolen car, simply that it is being used for another more important application.

2.2. The context of convenience

A convenience-related humancentric application of RFID is any human use of an implanted RFID transponder that increases the ease with which tasks are performed. The first major documented experiment into the use of human-implantable RFID was within this context. Sanchez-Klein [6] and Witt [7] both journalize on the self-implantation of Kevin Warwick, Director of Cybernetics at the University of Reading. They describe results of Warwick’s research by his having doors open, lights switch on and computers respond to the presence of the microchip. Warwick himself gives a review of the research in his article ‘Cyborg 1.0’, however this report is informal and contains emotive descriptions of “fantastic” experiences [8].

Woolnaugh [9], Holden [10], and Vogel [11] all published accounts of the lead-up to Warwick’s second ‘Cyborg 2.0’ experiment and although Woolnaugh’s work involves the documentation of an interview, all three are narrative descriptions of proposed events rather than a critical analysis within definitive research frameworks. Though the commotion surrounding Warwick later died down, speculation did not with Eng proposing a future where credit card features will be available in implanted RFID devices. The result would see commercial transactions made more convenient.

2.3. The context of care

A care-related humancentric application of RFID is any human use of an implanted RFID transponder where function is associated with medicine, health or wellbeing. In initial literature, after the Cyborg 1.0 trial, Kevin Warwick envisioned that with RFID implants paraplegics would walk [7]. Building incrementally on this notion then is the work of Kobetic, Triolo and Uhlir who documented the study of a paraplegic male who had muscular stimuli delivered via an implanted RFID controlled electrical simulation system [12]. Though not allowing the mobility which Warwick dreamt of, results did include increased energy and fitness for the patient.

Outside the research sphere, much literature centers on eight volunteers who were implanted with commercial VeriChip RFID devices in 2002 trials. Murray [13], Black [14], Grossman [15] and Gengler [16] all document medical reasons behind the implantation of four subjects. Supplemented by press releases however, all reports of the trials were journalistic, rather than research-based. In contrast, non-trivial research is found in the work of Michael [17]. Her thesis uses a case study methodology, and a systems of innovation framework, to discuss the adaptation of auto-ID for medical implants.

2.4. Critical response to literature

More recent publications on humancentric RFID include the works of Masters [18], Michael and Michael [19], Perusco and Michael [20], Johnston [21], and Perakslis and Wolk [22]. Masters approaches the subject from the perspective of usability contexts, while Perusco and Michael use document analysis to categorise location services into tag, track and trace applications. Johnston uses content analysis to identify important themes in the literature, supplemented by a small-scale sample survey on the social acceptance of chip implants. Perakslis and Wolk also follow this latter methodology. Of the other (earlier) landmark studies, the majority are concerned with non-humancentric applications. Gerdeman [23], Finkinzeller [24] and Geers [25] all use case studies to investigate non-humancentric RFID and hence our methodological precedent is set here. The bulk of the remaining literature is newstype in nature and the absence of research frameworks is evident. The few exceptions to this include Woolnaugh [9] who conducted an interview and Murray [13] and Eng [3]who provide small case studies. In further criticism the news articles do not demonstrate technological trajectories but speculate on utopian implementations unlikely to be achieved by incremental development in the short to medium-term. Thus, any real value in these news articles can only be found in the documentation of events.

3. Research methodology

Several modes of academic inquiry were used in this study, though usability context analyses were the focal means of research. These analyses are similar to case studies as they investigate “a contemporary phenomenon within its real life context when the boundaries between phenomenon and context are not clearly evident” [26]. They also similarly use multiple sources of evidence, however are differentiated on the basis of the unit of analysis. In a usability context analysis methodology, units are not individuals, groups or organizations but are applications or application areas for a product, where ‘product’ is defined as “any interactive system or device designed to support the performance of users’ tasks” [27]. The results of multiple analyses are more convincing than a singular study, and the broad themes identified cover the major fields of current humancentric RFID development.

Further defining the research framework, the primary question to be answered – ‘what is the current state of application development in the field of humancentric RFID devices?’ – is justifiably exploratory. It entails investigation into contemporary technology usage and seeks to clarify boundaries within the research area. As such, this is a largely qualitative study that uses some elements of descriptive research to enhance the central usability context analyses. The usability context analyses are also supplemented by a discussion of surrounding social, legal and ethical ambiguities. By this means, the addition of a narrative analysis to the methodology ensures a thorough investigation of usage and context.

4. Usability context analysis: control

The usability context analysis for control is divided into three main sub-contexts – security, management, and social controls.

4.1. Security controls

The most basic security application involves controlling personal identification through identifying data stored on a transponder. In theory, the limit to the amount of information stored is subject only to the capacity of the embedded device or associated database. Further, being secured within the body, the loss of the identifier is near impossible even though, as has occurred in herd animals, there are some concerns over possible dislodgement. Accordingly, the main usability drawback lies with reading the information. Implanted identification is useless if it is inaccessible.

Numerous applications have been proposed to assist individuals who depend solely on carers for support. This group consists of newly-born babies, sufferers of mental illness, persons with disabilities and the elderly. One use involves taking existing infant protection systems at birthing centres and internalizing the RFID devices worn by newborns. This would aid in identifying those who cannot identify themselves. Further, when connected to security sensors and alarms, the technology can alert staff to the “unauthorized removal of children” [28]. The South Tyneside Healthcare Trust Trial in the UK is a typical external-use example case. Early in 1995, Eagle Tracer installed an electronic tagging system at the hospital using TIRIS electronic tags and readers from Texas Instruments. Detection aerials were hidden at exit points so that if any baby was taken away without authorisation, its identity would be known and an alarm raised immediately. The trial was so successful that the hospital was considering expanding the system to include the children’s ward. [29] Notably, a number of other institutions have already begun targeting RFID applications toward adolescents. In Japan students are being tagged in a bid to keep them safe. RFID transponders are being placed inside their backpacks and are used to advise parents when their child has arrived at school [30]. A similar practice is being conducted in California where children are being asked to “wear” RFID tags around their necks when on school grounds [31].

Commentators are using this lack of objection to external electronic tagging for minors to highlight the idea that a national identity system based on implants is not impossible. Some believe that there will come a time when it will be common for different groups in the population to have tags implanted at birth. In Britain, chip implantation was suggested for illegal immigrants, asylum seekers and even travellers. Smet [32] argued the following, “[i]f you look to our societies, we are already registered from birth until death. Our governments know who we are and what we are. But one of the basic problems is the numbers of people in the world who are not registered, who do not have a set identity, and when people move with real or fake passports, you cannot identify them.”

4.2. Management controls

Many smart card access systems use RFID technology to associate a cardholder with access permissions to particular locations. Replacing cards with RFID implants alters the form of the ‘key’ but does not require great changes to verification systems. This is because information stored on a RFID microchip in a smart card can be stored on an implanted transponder. Readers are similarly triggered when the transponder is nearby. This application would have greatest value in ‘mission critical’ workplaces or for persons whose role hinges upon access to a particular location. The implanted access pass has the added benefit of being permanently attached to its owner.

Access provision translates easily into employee monitoring. In making the implanted RFID transponder the access pass to certain locations or resources, times of access can be recorded to ensure that the right people are in the right place at the right time. Control in this instance then moves away from ideals of permission and embraces the notion of supervision. A company’s security policy may stipulate that staff badges be secured onto clothing or that employees must wear tags woven into their uniforms. Some employers require their staff to wear RFID tags in a visible location for both identification purposes and access control [33]. In this regard, Olivetti’s “active badge” was ahead of its time when it was first launched [34].

4.3. Social controls

In the military, transponders may serve as an alternative to dog tags. Using RFID, in addition to the standard name, rank and serial number, information ranging from allergies and dietary needs to shoe size can be stored. This purports to ease local administrative burdens, and can eliminate the need to carry identification documents in the field allowing for accurate, immediate identification of Prisoners-Of-War.

Just as humancentric applications of RFID exist for those who enforce law, so too do applications exist for people who have broken it. The concept of ‘electronic jails’ for low-risk offenders is starting to be considered more seriously. In most cases, parolees wear wireless wrist or ankle bracelets and carry small boxes containing the vital tracking technology. Sweden and Australia have implemented this concept and trials are taking place in the UK, US, Netherlands and Canada. In 2002, 27 American states had tested or were using some form of satellite surveillance to monitor parolees [14]. In 2005 there were an estimated 120,000 tracked parolees in the United States alone [35]. Whilst tagging low-risk offenders is not popular in many countries it is far more economical than the conventional jail. Social benefits are also present as there is a level of certainty involved in identifying and monitoring so-called ‘threats’ to society. In a more sinister scenario in South America, chip implants are marketed toward victims of crime rather than offenders. They are seen as a way “to identify kidnapping victims who are drugged, unconscious or dead” [36].

5. Usability context analysis: convenience

The usability context analysis for convenience is divided into three main sub-contexts – assistance, financial services and interactivity.

5.1. Assistance

Automation is the repeated control of a process through technological means. Implied in the process is a relationship, the most common of which involves linking an implantee with appropriate data. Such information in convenience contexts can however be extended to encompass goods or physical objects with which the implantee has an association of ownership or bailment. VeriChip for example, a manufacturer of human-implantable RFID transponders, have developed VeriTag for use in travel. This device allows “personnel to link a VeriChip subscriber to his or her luggage… flight manifest logs and airline or law enforcement software databases” [37]. Convenience is provided for the implantee who receives greater assurance that they and their luggage will arrive at the correct destination, and also for the transport operator who is able to streamline processes using better identification and sorting measures.

Advancing the notion of timing, a period of movement leads to applications that can locate an implantee or find an entity relative to them [38]. This includes “find me”, “find a friend”, “where am I” and “guide me to” solutions. Integrating RFID and GPS technologies with a geographic information systems (GIS) portal such as the Internet-based mapquest.com would also allow users to find destinations based on their current GPS location. The nature of this application lends itself toward roadside assistance or emergency services, where the atypical circumstances surrounding the service may mean that other forms of subscriber identification are inaccessible or unavailable.

5.2. Financial services

Over the last few decades, world economies have acknowledged the rise of the cashless society. In recent years though, alongside traditional contact cards, we have seen the emergence of alternate payment processes. In 2001, Nokia tested the use of RFID in its 5100-series phone covers, allowing the device to be used as a bank facility. RFID readers were placed at McDonalds drive-through restaurants in New York and the consumer could pay their bill by holding their mobile phone near a reader. The reader contacted a wireless banking network and payment was deducted from a credit or debit account. Wired News noted the convenience stating, “there is no dialing, no ATM, no fumbling for a wallet or dropped coins” [39]. These benefits would similarly exist with implanted RFID. Ramo has noted the feasibility, commenting that “in the not too distant future” money could be stored anywhere, as well as “on a chip implant under [the] skin” [40]. Forgetting your wallet would no longer be an issue.

It is also feasible that humancentric RFID eliminates the need to stand in line at a bank. Purely as a means of identification, the unique serial or access key stored on the RFID transponder can be used to prove identity when opening an account or making a transaction. The need to gather paper-based identification is removed and, conveniently, the same identification used to open the account is instantly available if questioned. This has similar benefits for automatic teller machines. When such intermediary transaction devices are fitted with RFID readers, RFID transponders have the ability to replace debit and credit cards. This is in line with Warwick’s prediction that implanted chips “could be used for money transfers, medical records, passports, driving licenses, and loyalty cards” [41].

5.3. Interactivity

On August 24, 1998 Professor Kevin Warwick became the first recorded human to be implanted with an RFID device. Using the transponder, Warwick was able to interact with the ‘intelligent’ building that he worked in. Over the nine days he spent implanted, doors formerly requiring smart card access automatically opened. Lights activated when Warwick entered a room and upon sensing the Professor’s presence his computer greeted him. Warwick’s ‘Project Cyborg 1.0’ experiment thus showed enormous promise for humancentric convenience applications of RFID. The concept of such stand-alone applications expands easily into the development of personal area networks (PANs) and the interactive home or office. With systems available to manage door, light and personal computer preferences based on transponder identification, further climate and environmental changes are similarly exploitable (especially considering non-humancentric versions of these applications already exist) [42].

Given the success of interacting with inanimate locations and objects, the next step is to consider whether person-to-person communication can be achieved using humancentric RFID. Such communication would conveniently eliminate the need for intermediary devices like telephones or post. Answering this question was an aim of ‘Project Cyborg 2.0’ with Warwick writing, “We’d like to send movement and emotion signals from one person to the other, possibly via the Internet” [43]. Warwick’s wife Irena was the second trial subject, being similarly fitted with an implant in her median nerve. Communicating via computer-mediated signals was only met with limited success however. When Irena clenched her fist for example, Professor Warwick received a shot of current through his left index finger [44]. Movement sensations were therefore effectively, though primitively, transmitted.

6. Usability context analysis: care

The usability context analysis for care is divided into three main sub-contexts – medical, biomedical and therapeutic.

6.1. Medical

As implanted transponders contain identifying information, the storage of medical records is an obvious, and perhaps fundamental, humancentric care application of RFID. Similar to other identification purposes, a primary benefit involves the RFID transponder imparting critical information when the human host is otherwise incapable of communicating. In this way, the application is “not much different in principle from devices… such as medic-alert bracelets” [16]. American corporation VeriChip markets their implantable RFID device for this purpose. Approved for distribution throughout the United States in April of 2002, it has been subject to regulation as a medical device by the Food and Drug Administration since October of the same year.

Care-related humancentric RFID devices provide unparalleled portability for medical records. Full benefit cannot be gained without proper infrastructure however. Though having medical data instantly accessible through implanted RFID lends itself to saving lives in an emergency, this cannot be achieved if reader equipment is unavailable. The problem is amplified in the early days of application rollout, as the cost of readers may not be justified until the technology is considered mainstream. Also, as most readers only work with their respective proprietary transponders, questions regarding market monopolies and support for brand names arise.

6.2. Biomedical

A biosensor is a device which “detects, records, and transmits information regarding a physiological change or the presence of various chemical or biological materials in the environment” [45]. It combines biological and electronic components to produce quantitative measurements of biological parameters, or qualitative alerts for biological change. When integrated with humancentric RFID, biosensors can transmit source information as well as biological data. The time savings in simultaneously gathering two distinct data sets are an obvious benefit. Further, combined reading of the biological source and measurement is less likely to encounter the human error linked with manually correlating data to data sources.

Implantable transponders allowing for the measurement of body temperature have been used to monitor livestock for over a decade [25]. As such, the data procurement benefits are well known. It does however give a revolutionary new facet to human care by allowing internal temperature readings to be gained, post-implantation, through non-invasive means. In 1994 Bertrand Cambou, director of technology for Motorola’s Semiconductor Products in Phoenix, predicted that by 2004 all persons would have such a microchip implanted in their body to monitor and perhaps even control blood pressure, their heart rate, and cholesterol levels.[46] Though Cambou’s predictions did not come to timely fruition, the multitude of potential applications are still feasible and include: chemotherapy treatment management; chronic infection or critical care monitoring; organ transplantation treatment management; infertility management; post-operative or medication monitoring; and response to treatment evaluation. Multiple sensors placed on an individual could even form a body area network (BAN).

An implantable RFID device for use by diabetes sufferers has been prototyped by biotechnology firm M-Biotech. The small glucose bio-transponder consisting of a miniature pressure sensor and a glucose-sensitive hydrogel swells “reversibly and to varying degrees” when changes occur in the glucose concentrations of surrounding fluids [47]. Implanted in the abdominal region, a wireless alarm unit carried by the patient continually reads the data, monitoring critical glucose levels.

6.3. Therapeutic

Implanted therapeutic devices are not new; they have been used in humans for many years. Alongside the use of artificial joints for example, radical devices such as pacemakers have become commonplace. The use of RFID with these devices however has re-introduced some novelty to the remedial solution [48]. This is because, while the therapeutic devices remain static in the body, the integration of RFID allows for interactive status readings and monitoring, through identification, of the device.

There are very few proven applications of humancentric RFID in the treatment usability sub-context at current if one puts cochlear implants [49] and smart pills aside [50]. Further, of those applications at the proof of concept stage, benefits to the user are generally gained via an improvement to the quality of living, and not a cure for disease or disability. With applications to restore sight to the blind [51] and re-establish normal bladder function for patients with spinal injuries already in prototyped form however, some propose that real innovative benefit is only a matter of time [52]. Arguably the technology for the applications already exists. All that needs to be prototyped is a correct implementation. Thus, feasibility is perhaps a matter of technological achievement and not technological advancement.

7. Findings

The choice of control, convenience and care contexts for analysis stemmed from the emergence of separate themes in the literature review; however the context analyses themselves showed much congruence between application areas. In all contexts, identification and monitoring are core functions. For control, this functionality exists in security and in management of access to locations and resources. For convenience, identification necessarily provides assistance and monitoring supports interactivity with areas and objects. Care, as the third context, requires identification for medical purposes and highlights biological monitoring as basic functionality.

Table 1. High level benefits and costs for humancentric RFID

With standard identification and monitoring systems as a basis, it is logical that so many humancentric applications of RFID have a mass target market. Medical identification for example is not solely for the infirm because, as humans, we are all susceptible to illness. Similarly, security and convenience are generic wants. Combined with similarities between contextual innovations, mass-market appeal can lead to convergence of applications. One potential combination is in the area of transportation and driver welfare. Here the transponder of an implanted driver could be used for keyless passive entry (convenience), monitoring of health (care), location based services (convenience), roadside assistance (convenience) and, in terms of fleet management or commercial transportation, driver monitoring (control).

Despite parallels and a potential for convergence, development contexts for humancentric RFID are not equal. Instead, control is dominant. Though care can be a cause for control and medical applications are convenient, it is control which filters through other contexts as a central tenet. In convenience applications, control is in the power of automation and mass management, in the authority over environments and devices. For care applications, medical identification is a derivative of identification for security purposes and the use of biosensors or therapeutic devices extends control over well-being. Accordingly, control is the overriding theme encompassing all contexts of humancentric RFID in the current state of development [53].

Alongside the contextual themes encapsulating the usability contexts are the corresponding benefits and costs in each area (Table 1). When taking a narrow view it is clear that many benefits of humancentric RFID are application specific. Therapeutic implants for example have the benefit of the remedy itself. Conversely however, a general concern of applications is that they are largely given to social disadvantages including the onset of religious objections and privacy fears.

7.1. Application quality and support for service

For humancentric RFID, application quality depends on commercial readiness. For those applications being researched, the usability context analyses suggest that the technology, and not the applications, present the largest hurdle. In his Cyborg 1.0 experiments for example, Professor Kevin Warwick kept his transponder implanted for only nine days, as a direct blow would have shattered the glass casing, irreparably damaging nerves and tissue.

Once technological difficulties are overcome and applications move from proof of concept into commercialization, market-based concerns are more relevant. Quality of data is a key issue. In VeriChip applications, users control personal information that is accessible, though stored in the Global VeriChip Subscriber Registry database, through their implanted transponder. The system does not appear to account for data correlation however, and there is a risk of human error in information provision and in data entry. This indicates the need for industry standards, allowing a quality framework for humancentric RFID applications to be created and managed.

Industry standards are also relevant to support services. In humancentric applications of RFID they are especially needed as much usability, adjunct to the implanted transponder, centers upon peripherals and their interoperability. Most proprietary RFID readers for instance can only read data from similarly proprietary transponders. In medical applications though, where failure to harness available technology can have dramatic results, an implantee with an incompatible, and therefore unreadable, transponder is no better off for using the application. Accordingly, for humancentric RFID to realize its promotion as ‘life-enhancing’, standards for compatibility between differently branded devices must be developed.

Lastly, the site of implantation should be standardized as even if an implanted transponder is known to exist, difficulties may arise in discerning its location. Without a common site for implantation finding an implanted RFID device can be tedious. This is disadvantageous for medical, location-based or other critical implementations where time is a decisive factor in the success of the application. It is also a disadvantage in more general terms as the lack of standards suggests that though technological capability is available, there is no social framework ready to accept it.

7.2. Commercial viability for the consumer

A humancentric application of RFID must satisfy a valid need to be considered marketable. This is especially crucial as the source of the application, the transponder, requires an invasive installation and, afterwards, cannot be easily removed. Add to this that humancentric RFID is a relatively new offering with few known long-term effects, and participation is likely to be a highly considered decision. Thus, despite many applications having a mass target market, the value of the application to the individual will determine boundaries and commercial viability.

Value is not necessarily cost-based. Indeed, with the VeriChip sold at a cost of $US200 plus a $10 per month service fee, it is not being marketed as a toy for the elite. Instead, value and application scope are assessed in terms of life enhancement. Therapeutic devices for example provide obvious remedial benefit, but the viability of a financial identification system may be limited by available infrastructure.

Arguably, commercial viability is increased by the ability of one transponder to support multiple applications. Identification applications for example are available in control, convenience and care usability contexts. The question arises however, as to what occurs when different manufacturers market largely different applications? Where no real interoperability exists for humancentric RFID devices, it is likely that users must be implanted with multiple transponders from multiple providers. Further, given the power and processing constraint of multi-application transponders in the current state of development, the lack of transponder portability reflects negatively on commercial viability and suggests that each application change or upgrade may require further implantation and bodily invasion.

7.3. Commercial viability for the manufacturer

Taking VeriChip as a case study, one is led to believe that there is a commercially viable market for humancentric applications of RFID. Indeed, where the branded transponder is being sold in North and South America, and has been showcased in Europe [54], a global want for the technology is suggested. It must be recognized, however, that in the current state of development VeriChip and its parent, Applied Digital Solutions have a monopoly over those humancentric RFID devices approved for use. As such, their statistics and market growth have not been affected by competition and there is no comparative data. The difference between a successful public relations campaign and reality is therefore hard to discern.

Interestingly, in non-humancentric commercial markets, mass rollouts of RFID have been scaled back. Problems have arisen specifically in animal applications. The original implementation of the 1996 standards, ISO 11784: ‘Radio-frequency identification of animals – Code structure’ and ISO 11785: ‘Radio-frequency identification of animals – Technical concept’ for example, were the subject of extensive complaint [55]. Not only did the standards not require unique identification codes, they violated the patent policy of the International Standards Organization. Even after the ISO standards were returned to the SC19 Working Group 3 for review, a general lack of acceptance equated to limited success. Moreover, moves have now been made to ban the use of implantable transponders in herd animals. In a high percentage of cases the transponder moved in the fat layer, raising concerns that it might be later consumed by humans. Further, the meat quality was degraded as animals sensing the existence of an implanted foreign object produced antibodies to ‘attack’ it [18].

8. Discussion

8.1. Personal privacy

Given its contactless nature and non-line-of-sight (nLoS) capability, RFID has the ability to automatically collect a great deal of data about an individual in a covert and unobtrusive way. Hypothetically, a transponder implanted within a human can communicate with any number of readers it may pass in any given day. This opens up a plethora of possibilities, including the ability to link data based on a unique identifier (i.e. the chip implant), to locate and track an individual over time, and to look at individual patterns of behaviour. The severity of violations to personal privacy increase as data collected for one purpose is linked with completely separate datasets gathered for another purpose. Consider the use of an implant that deducts programmed payment for road tolls as you drive through sensor-based stations. Imagine this same data originally gathered for traffic management now being used to detect speeding and traffic infringements, resulting in the automatic issue of a fine. Real cases with respect to GPS and fleet management have already been documented. Kumagi and Cherry [56] describe how one family was billed an “out-of-state penalty” by their rental company based on GPS data that was gathered for a completely different reason. Stanford [57] menacingly calls this a type of data use “scope creep” while Papasliotis [58] more pleasantly deems it “knowledge discovery”.

These notions of ‘every-day’ information gathering, where an implantee must submit to information gathering practices in return for access to services, offends the absolutist view of privacy and “an individual [having] the right to control the use of his information in all circumstances” [59]. Indeed, given their implantation beneath the skin, the very nature of humancentric transponders negates the individual’s ability to ‘control’ the device and what flows from it. Not only do the majority of consumers lack the technical ability to either embed or remove implants but they naturally lack the ability to know when their device is emitting data and when it is not. There is also a limited understanding of what information ‘systems’ are actually gathering. This becomes a greater danger when we note that laws in different jurisdictions provide little restraint on the data mining of commercial databases by commercial entities. In this instance, there would be little to stop RFID service providers from mining data collected from their subscribers and on-selling it to other organisations.

Moreover, even where ethical data usage is not questioned, intellectual property directives in Europe may hamper the promise of some service providers to keep consumer data private. According to Papasliotis [58] “… the proposed EU Intellectual Property (IP) Enforcement Directive includes a measure that would make it illegal for European citizens to de-activate the chips in RFID tags, on the ground that the owner of the tag has an intellectual property right in the chip. De-activating the tag could arguably be treated as an infringement of that right”.

8.2. Data security

Relevant approaches to RFID security in relation to inanimate objects have been discussed in the literature. Gao [60] summarises these methods as “killing tags at the checkout, applying a rewritable memory, physical tag memory separation, hash encryption, random access hash, and hash chains”. Transponders that are embedded within the body pose a different type of data security requirement though. They are not in the body so they can be turned off, this being a circumvention of the original purpose of implantation. Instead, they are required to provide a persistent and unique identifier. In the US however, also thwarting an original purpose, a study has shown that some RFID transponders are capable of being cloned, meaning the prospect of fraud or theft may still exist [61]. One possibility, as proposed by Perakslis and Wolk [22], is the added security of saving an individual’s feature vector onboard the RFID chip. Biometrics too, however, is fraught with its own problems [62]. Despite some moves in criminal justice systems, it is still controversial to say that one’s fingerprint or facial image should be held on a public or private database.

Unfortunately, whatever the security, researchers like Stanford believe it is a “virtual certainty” that tags and their respective systems “will be abused” by some providers [57]. Here, the main risk for consumers involves third parties gaining access to personal data without prior notice. To this end, gaining and maintaining the trust of consumers is essential to the success of the technology. Mature trust models need to be architected and implemented, but more importantly they need to be understood outside of an academic context. Though it is important that trust continues to grow as an area of study within the e-commerce arena, it will be the practical operation of oversight companies like VeriSign in these early days of global information gathering which will allow consumers to create their own standards and opinions.

Outside of clear ethical concerns regarding third-party interests in information, another temptation for service providers surrounds the use of data to target individual consumer sales in value-added services and service-sets relying on location information. Though not an extreme concern in itself, we note that any such sales will face the more immediate concern of deciding on a secure and standard location for implants. For now live services place the implant in the left or right arm but the problems with designating such a zone surround the possibility of exclusion. What if the consumer is an amputee or has prosthetic limbs? Surely the limited space of the human body means that certain things are possible, while others are not. Thus, recognizing the limitations of the human body, will service providers brand transponders and allow multifunctional tags for different niche services? Which party then owns the transponder? The largest service provider, the government or agency acting as an issuer, or the individual? Who is responsible for accuracy and liable for errors? And more importantly, who is liable for break-downs in communication when services are unavailable and disaster results?

8.3. Ethical considerations

Molnar and Wagner [63] ask the definitive question “[i]s the cost of privacy and security “worth it”?” Stajano [64] answers by reminding us that, “[t]he benefits for consumers remain largely hypothetical, while the privacy-invading threats are real”. Indeed, when we add to privacy concerns the unknown health impacts, the potential changes to cultural and social interaction, the circumvention of religious and philosophical ideals, and a potential mandatory deployment, then the disadvantages of the technology seem almost burdensome. For the present, proponents of emerging humancentric RFID rebuke any negatives “under the aegis of personal and national security, enhanced working standards, reduced medical risks, protection of personal assets, and overall ease-of-living” [22]. Unless there are stringent ethical safeguards however, there is a potential for enhanced national security to come at the cost of freedom, or for enhanced working standards to devalue the importance of employee satisfaction. The innovative nature of the technology should not be cause to excuse it from the same “judicial or procedural constraints which limit the extent to which traditional surveillance technologies are permitted to infringe privacy” [58].

Garfinkel et al. [61] provide a thorough discussion on key considerations in their paper. Though their main focus is on users of RFID systems and purchasers of products containing RFID tags, the conclusions drawn are also relevant to the greater sphere of humancentric RFID. Firstly, Garfinkel et al. begin by stipulating that a user has the right to know if the product they have purchased contains an RFID tag. In the current climate of human transponder implant acceptance, it is safe to assume that an individual who has requested implantation knows of their implant and its location. But, does the guardian of an Alzheimer’s patient or adult schizophrenic, have the right to impose an implant on behalf of the sufferer for monitoring or medical purposes [65]?

Secondly, the user has the right to have embedded RFID tags “removed, deactivated, or destroyed” [61] at or after purchase. Applied to humancentric implantation, this point poses a number of difficulties. The user cannot remove the implant themselves without some physical harm, they have no real way of finding out whether a remaining implant has in fact been ‘deactivated’, and destroying an implant without its removal from the body implies some form of amputation. Garfinkel et al.’s third ethical consideration is that an individual should have alternatives to RFID. In the embedded scenario users should then also have to ability to opt-in to new services and opt-out of their current service set as they see fit. Given the nature of RFID however, there is little to indicate the success or failure of a stipulated user requested change, save for a receipt message that may be sent to a web client from the server. Quite possibly the user may not be aware that they have failed to opt out of a service until they receive their next billing statement.

The fourth notion involves the right to know what information is stored on the RFID transponder and whether or not this information is correct, while the fifth point is “the right to know when, where and why a RFID tag is being read” [61]. This is quite difficult to exercise, especially where unobtrusiveness is considered a goal of the RFID system. In the resultant struggle between privacy, convenience, streamlining and bureaucracy, the number of times RFID transponders are triggered in certain applications may mean that the end-user is bombarded with a very long statement of transactions.

8.4. The privacy fear and the threat of totalitarianism?

Mark Weiser, the founding father of ubiquitous computing, once said that the problem surrounding the introduction of new technologies is “often couched in terms of privacy, [but] is really one of control” [59]. Indeed, given that humans do not by nature trust others to safeguard our own individual privacy, in controlling technology we feel we can also control access to any social implications stemming from it. At its simplest, this highlights the different focus between the end result of using technology and the administration of its use. It becomes the choice between the idea that I am given privacy and the idea that I control how much privacy I have. In this regard, privacy is traded for service.

Fig. 1. The privacy-security trade-off.

What some civil libertarians fear beyond privacy exchange though is a government-driven mandatory introduction of invasive technologies based on the premise of national security. While the safety and security argument has obviously paved the way for some technologies in response to the new environment of terrorism and identity fraud [38], there is now a concern that further advancements will begin to infringe on the freedoms that security paradigms were originally designed to protect. For invasive technology like humancentric RFID, the concerns are multiplied as the automated nature of information gathering means that proximity to a reader, and not personal choice, may often be the only factor in deciding whether or not a transponder will be triggered. Though most believe that government-imposed mandatory implantation is a highly unlikely outcome of advancements in humancentric RFID, it should be recognised that a voluntary implantation scheme offers negligible benefits to a government body given the incompleteness of the associated data set. This is equally true of private enterprises that mandate the use of transponders in employees, inmates or other distinct population groups.

Where the usability context of control then becomes the realm of government organizations and private enterprise, RFID regulation is increasingly important. Not only is regulation necessary for ensuring legitimacy in control-type applications, it is also needed to prevent the perversion of convenience and care-related uses. For example, many of those implanted with RFID transponders today might consider them to be life-saving devices and the service-oriented nature of these applications means they must clearly remain voluntary (Table 2). If the data collected by the device was also to be used for law enforcement or government surveillance purposes however, users may think twice about employing the technology. In regulating then we do not want to allow unrestricted deployment and unparalleled capabilities for commercial data mining, but nor should we allow a doomsday scenario where all citizens are monitored in a techno-totalitarian state [61]. Any scope for such design of regulations must be considered in light of the illustrated privacy/security trade-off (Fig. 1). Taking any two vertices of the government – service provider – consumer triangle, privacy or security (which can often be equated with ‘control’) will always be traded in relation to the third vertex. For example, where we combine government and service providers in terms of security regulations and the protection of national interests, the consumer is guaranteed to forgo certain amounts of privacy. Similarly, where we combine government and the consumer as a means of ensuring privacy for the individual, the service provider becomes limited in the control it holds over information gathered (if indeed it is still allowed to gather information).

Table 2. Mapping contexts to the environment

9. Conclusion

In the current state of humancentric development, stand-alone applications exist for control, convenience and care purposes, but as control is the dominant context its effects can be seen in other application areas. Applications are also influenced by power and processing confines, and as such, many functions have simple bases in identification or monitoring. Application usage is made more complex however, as a need for peripherals (including readers and information storage systems) is restrained by a lack of industry standards for interoperability. Though the technology has been deemed feasible in both research and commercially approved contexts, the market for humancentric applications of RFID is still evolving. Initial adoption of the technology has met with some success but, as research continues into humancentric applications of RFID, the market is still too niche for truly low-cost, high-quality application services. Any real assessment of the industry is further prejudiced by commercial monopoly and limited research into the long-term effects of use. Coupled with security and privacy concerns, then the long-term commercial viability for humancentric applications of RFID is questionable. In the short- to medium-term, adoption of humancentric RFID technology and use of related applications will be hindered by a lack of infrastructure, a lack of standards, not only as to interoperability but also as to support for service and transponder placement, and the lack of response from developers and regulators to mounting ethical dilemmas.

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Keywords: Radio-frequency identification, Transponders, Chip implants, Humancentric applications, Usability context analysis, Location tracking, Personal privacy, Data security, Ethics

Citation: Amelia Masters and Katina Michael, "Lend me your arms: The use and implications of humancentric RFID, Electronic Commerce Research and Applications, Vol. 6, No. 1, Spring 2007, Pages 29-39, DOI: https://doi.org/10.1016/j.elerap.2006.04.008