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

Location-Based Services: a vehicle for IT&T convergence

Katina Michael

School of Information Technology & Computer Science, University of Wollongong, Wollongong, Australia

Full Citation: Katina Michael, 2004, Location-Based Services: A Vehicle for IT&T Convergence, in eds. K. Cheng, D. Webb, and R. Marsh, Advances in e-Engineering and Digital Enterprise Technology, Professional Engineering Publishing United, London, UK.

* This chapter was a conference paper in the Proceedings of the Fourth International Conference on e-Engineering and Digital Enterprise Technology (e-ENGDET), Leeds Metropolitan University, UK, 1-3 September 2004. Supported by IMechE, IEE, EPSRC.

 

Synopsis

Location-based services (LBS), more than any other mobile commerce application area has served to bring together information technology and telecommunications (IT&T) industries. While much has been written on the potential of LBS, literature on how it is a catalyst for digital convergence is scant. This paper identifies and explores the various levels of converging technologies in mobile commerce by using three LBS case studies. Through literal replication the findings indicate that IT&T technologies are converging at the infrastructure, appliance and application level. It is predicted that mCommerce applications will increasingly rely on industry convergence to achieve their desired outcomes.

1 Introduction

Location-Based Services (LBS) is a branch of m-Commerce that has revolutionised the way people communicate with others or gather timely information based on a given geographic location. Everything living and non-living has a location on the earth’s surface, a longitude and latitude coordinate that can be used to provide a subscriber with a wide range of value added services (VAS). Subscribers can use their mobile phone, personal digital assistant (PDA) or laptop to find information relating to their current location. Typical LBS consumer applications include roadside assistance, who is nearest, where is, and personal navigation. LBS business applications differ in their focus and many are linked to core business challenges such as optimising supply chain management (SCM) and enhancing customer relationship management (CRM). Some of the more prominent LBS business applications include: fleet management (incorporating vehicle navigation), property asset tracking (via air, ship and road) and field service personnel management (i.e. people monitoring). The emergency services sector in the United States (US) was responsible for driving the first pin-point location service, demonstrating to the world the potentially life-saving functionality of the technology. As of October 2003, the Federal Trade Commission (FTC) enforced that wireless operators provide the Automatic Location Identification (ALI) of a caller to the emergency dispatcher. ALI standards designate that more than two-thirds of emergency calls received require the location of the individual to be accurate to within 50 metres, and 95 per cent of calls to within 150 metres. The technology is available for potential mass market deployment, how feasible it is however is a separate issue altogether. This paper provides an overview of the devices, applications and technologies used by three companies that offer LBS applications. The overall aim is to show the current state of development in leading edge LBS product innovations and to demonstrate that LBS have served to bring together information technology and telecommunications (IT&T) industries. The first section of the paper reviews previous literature and develops an analytical framework for the investigation; second each LBS product innovation will be examined; and third a discussion on the high-level effects LBS has had on IT&T convergence ensues.


2 Literature Review


2.1 Who, what, when, where & wi-fi?

The evolution of mobile location-based services has been well documented in a paper by Rao and Minakakis (1). This article summarises the platforms, technologies and standards of mobile LBS and does well to differentiate between the various techniques that can be used to determine an accurate location of an object or individual. These techniques include: cell identifier (cell ID), global positioning systems (GPS), assisted global positioning system (aGPS), and the broadband satellite network. Zeimpekis et al. (2) go into more explicit detail about each of these and identify a whole range of indoor and outdoor positioning techniques categorising these into “self positioning” and “remote positioning”. It should also be noted that location technologies can be classified as either handset-based or network-based. Cousins and Varshney (3) provide a brief overview of the location framework required for mobile location services whereas Varshney (4) goes into greater depth for each element in the framework. Balatseng and Hanrahan (5) specifically use the Global System for Mobile (GSM) to describe the logical architecture required to support mobile station positioning. Maass (6) can be credited with an implementation-level paper on location-aware mobile applications based on directory services. Varshney’s (4) paper however stands out from the rest of the literature in that he makes the important connection between the type of service offering and the level of accuracy required. He also includes the wireless LAN (wi-fi) network in the location management architecture, instituting radio frequency identification (RFID) as a significant technology embedded in the LBS framework.

In terms of target markets for LBS, Rao and Minakakis (1) identify three target markets including the consumer, niche consumer/ business, and industrial/ corporate. Cousins and Varshney (3) also separate state-driven applications from those that are business driven which is important when discussing the overall capabilities (present and future) of LBS (7). Typical services specified by most authors range from mapping, directory services, shopping, alerting, SCM, CRM, intelligent transportation, emergency and e-health. These can be applied in any given scenario- Business-to-Consumer (B2C), Business-to-Business (B2B) and even Citizen-to-Government (C2G) relationships. Interestingly the work of Burak and Sharon (8) on FriendZone is among the few analysing usage of a single LBS commercial application. The distinction between push and pull services is also important (4). The FriendZone service is a ‘push’ mode of operation allowing a subscriber to locate friends and acquaintances nearby, whereas checking on the next movie showing closest to a location is an example of a ‘pull’ mode of operation. Some of the more common revenue business models for LBS services include the traditional subscription-based model, pay-per-view, micropayments and application service provider (ASP) facilitator (1).

2.2 The gap in the literature

The gap in the literature is two-fold. First, a paper needs to be written showcasing cutting edge LBS product innovations that reveal the current state of development. A lot of sensational material exists in the popular media about what is possible with LBS but a candid view of billable applications that are being offered now is required. Second, a look at how LBS is spurring on convergence at various levels within IT&T needs to be demonstrated. Traditional telephone companies are no longer the typical service providers (SPs). New business models are changing the rules of engagement between established companies and new entrants who are looking for niche markets. The definite move toward a packet-based solution using Internet Protocol (IP) is also blurring the line between the once easily identifiable carrier-grade applications and enterprise-level offerings. The need to reduce the time-to-market (TTM) for opportune LBS was exemplified during the SARS outbreak in 2003. Hong Kong mobile telephone operator, Sunday, rapidly developed and launched an application that warned subscribers via short message service (SMS) about buildings with confirmed or suspected SARS cases within approximately one kilometre radius of their location.

3 Methodology

The research approach for this paper is exploratory. Multiple case studies will be used to gather evidence to satisfy the two main objectives stated above. The main unit of analysis is the product innovation, and the sub-unit of analysis is the LBS technology used to implement that product innovation. Three US companies have been chosen for this study, each with billable LBS market applications. AT&T Wireless (www.attwireless.com), Wherify Wireless (www.wherifywireless.com) and Applied Digital Solutions (www.adsx.com) offer product innovations that represent the diverse ways that LBS applications can be implemented. The case study protocol is composed of the following questions: What is the product innovation? What are the LBS applications the company can support? When were the company’s LBS services officially launched? Who is the target market? What kind of device(s) is/ are being used by the subscriber? What are the subscriber pricing plans (i.e. connection, monthly, usage fees)? Is it a carrier-grade or enterprise-level application? What is the level of accuracy when locating a subscriber? What do the LBS services require in terms of IT&T? It is the latter question that pertains to showing that LBS is a catalyst to IT&T convergence. In citing Kampas, Chen (9) provides a high-level framework for possible convergence at three separate layers occurring at the infrastructure, appliance and application levels. Chen also describes the notion of “colliding industries” including the communication, electronics, computing and information/ entertainment sectors.

The data gathered by the researcher will be drawn completely from information provided on the company web sites published between the period of April 2002 and April 2004. The online documentation reviewed will typically include: company background, product briefs, application user guides, technical specifications and press releases. In this manner, the method of investigation can be considered wholly e-research (10). External validity is ensured given that the companies are registered on the New York Stock Exchange and must provide factual content to their present and potential subscriber base. The possibility of researcher bias is minimised in this paper given its intent is not to prove that one service is better than another, but to document the current state of development.

4 Case Studies

4.1 Product innovations

4.1.1 The versatile mMode

AT&T Wireless was the first mobile carrier to launch m-Commerce applications in the US in July 2001. Following the success of NTT Docomo’s i-mode and c-mode in Japan, mMode provided a value-added data-centric package to AT&T’s voice and SMS basic plans. Subscribers to mMode can use numerous devices to communicate including IP-enabled phones, PDAs, handhelds and even vertical devices such as the Panasonic Toughbook and Microslate Sidearm. The service is carrier-grade and is based on a GSM network architecture that uses new network elements, namely the Gateway Mobile Location Centre (GMLC), Serving Mobile Location Centre (SMLC), and the Location Measurement Unit (LMU). AT&T Wireless is now rolling out the general packet radio service (GPRS) network and EDGE technology, increasing bandwidth by targeting specific coverage areas as demand increases and it becomes economically justifiable to do so. The accuracy of the specific location-based applications is dependent upon the general location of the mobile transmission tower most recently contacted by the customer’s device. For example, the IP device could be right next to a tower or some fifteen kilometres away. In metropolitan areas the accuracy is greater given the number of base transceiver stations is higher than in less urbanised areas.

4.1.2 The wrist-worn GPS Personal Locator

mMode’s location identification is not pin-point such as in the Wherify Personal Locator solution that is based on a combination of GPS satellites and code division multiple access (CDMA) PCS network triangulation methods. The Personal Locator wrist-worn device is accurate within 30 metres of the wearer, possibly even as close as a metre. The GPS device can be controlled by both the subscriber and individual wearer, allowing the parent subscriber to track the wearer, and for the wearer to alert the parent subscriber and/or location centre headquarters in case of an emergency. Coverage is available throughout the US given the GPS capability but is dependent on the PCS network coverage footprint. The Wherify frequently-asked-questions (FAQs) page (11) states: “[i]f a GPS signal is received, but the Locator is outside the digital wireless coverage area or does not receive a digital wireless signal, no location report will be provided. If the Locator receives a digital wireless signal, but no GPS signal is available, a CDMA tower-based location report will be available for emergencies.” On December 30th 2003, Wherify unveiled its new GPS Universal Locator Phone which is targeted at all age groups of both the consumer and business market.

4.1.3 The VeriChip implant

While mMode requires the subscriber to carry a device, and the Personal Locator requires an individual to wear a device, VeriChip is radical in that it requires the subscriber to be implanted with a microchip (see table 1 for a comparison list of attributes). The campaign to Get Chipped was launched in early 2003, and the first person to do so formally was implanted in September of that year. The chipping procedure only lasts a few minutes. There are a number of Veri centres where the procedure can take place in the US and internationally. There is even a high-tech ChipMobile bus fully equipped to perform the implant procedure, ‘on the road’. Applied Digital Solutions (ADSX) initially invested heavily in another product they called the Digital Angel in 2002, which resembled the Personal Locator solution but aimed at a broader market base than just children. The Digital Angel wristwatch was more slim-line but required the user to carry an additional wallet with battery power. While remnants of the Digital Angel web site are still operational today, it is the VeriChip which has become the flagship product of the VeriChip Corporation (a subsidiary of ADSX). About the size of a grain of rice, the VeriChip is the world’s first subdermal radio-frequency identification (RFID) microchip. According to an ADSX press release (12): “[t]he standard location of the microchip is in the triceps area between the elbow and the shoulder of the right arm.” In theory an implantee could be identified in a wi-fi network, such as in a workplace or university campus. Whereas GPS has limitations in-building locations due to construction materials used, RFID thrives in a local area network (LAN) setting, allowing walkways and door entries to act as scanners. RF energy from the scanner triggers the dormant VeriChip and in turn sends out a signal containing the unique verification number. The exchange of data is transparent and seamless in the case of RFID, there is no need to physically stop to verify a biometric feature- the network is ubiquitous. In another scenario, an individual could be identified by the RFID implant, giving emergency services access to the implantee’s medical data and history that could be potentially life-saving. Unlike other fixed services, m-Commerce applications grant the subscriber access to services twenty-four hours a day, seven days a week. In the case of the VeriChip it is not only “always on” but “ever-present” inside the body of the subscriber. Unlike physical biometric attributes, the VeriChip is inconspicuous to the naked eye.

Table 1 LBS product innovations and their attributes

Table 1 LBS product innovations and their attributes

 

4.2 LBS applications

4.2.1 “My mMode: this time it's personal”

mMode is heavily oriented towards the consumer market, although AT&T Wireless also offer package deals to business users specifically for the purposes of email (plus attachments), web access, and remote access. mMode was marketed as the beginning of mLife, next generation services that ‘one could not live without’ (13). Among its mCommerce suite that includes news, music and finance services are a number of LBS solutions (a list of these can be found in table 2). mMode’s LBS applications are diverse- everything from a mobile traffic report to directions ‘to the nearest’ and find people nearby (14). Some of the more creative LBS are chat and date, and travel and dining. There are four plans subscribers can choose from including: mini, mega, max and ultra. The plans are charged monthly ranging from $2.99 to $19.99 USD and include a limited megabytes (MB) download. Additional usage fees are charged at between 2c and 0.6c per extra kilobyte (KB) received or sent, dependent on the plan. These fees do not include voice calls and SMS. The mMode service is bundled allowing the subscriber maximum personalisation to choose from any application they require. The myMode web site allows the subscriber to customise their preferences and settings.

4.2.2 Personal Locator “Just For Kids”

In contrast to AT&T Wireless, Wherify strategically chose to enter the market with a niche LBS application for a Personal Locator Just For Kids, specifically targeted at parents of children between the age of four and twelve. The device previously cost $399 USD but was recently slashed for a “back to school special” to $199. Monthly plans for the LBS application range from an average of $19.95 to $44.95 dependent on the plan chosen (liberty, independence or freedom). There is a one-time activation fee of $35 USD plus usage fees related to additional page requests above the included locates, additional operator assistance calls and subsequent emergency calls. Wherify makes it clear that it is looking to diversify to other niche applications including Alzheimer’s and law enforcement, even though the Locator for Kids is the only marketable application demoed on the web site at the present time (15).

Table 2- Present and future LBS applications as stated on the company web site

Table 2- Present and future LBS applications as stated on the company web site

4.2.3 “Get Chipped” with VeriChip: “technology that cares”

There is little information on the ADSX web site about the pricing of the VeriChip, however it is stated that the global VeriChip subscriber (GVS) registry subscription fee is $9.95 USD monthly. There is a cost for the implant medical procedure as well, although this is not provided. In 2002 the first one hundred pre-registered persons were granted a $50 USD discount on the chipping procedure (16). The pricing for the new VeriPay and VeriGuard services has yet to be published on the WWW and probably will not be given these are typically targeting business-to-business-to-consumer (B2B2C) solutions which are highly complex in design. The “Trusted Traveller” and residential security programs (i.e., prisoners serving their sentence from home) are two examples of VeriGuard LBS applications. One desirable feature of VeriGuard is that it could operate in conjunction with other auto-ID technologies like smart cards and biometrics, rendering customer legacy systems reusable.

4.4 Information technology and telecommunications (IT&T) requirements


4.4.1 mMode: how does it work?

Using the “find people nearby” service, the GSM/ GPRS network works as follows to determine a subscriber’s approximate location. An application request is made by a subscriber. The application server subsequently makes a location request to the gateway mobile location centre (GMLC). The GMLC in turn queries the home location register (HLR) and then contacts the appropriate mobile switching centre (MSC). Another location request is generated to identify the base station controller (BSC) where the mobile is currently using the serving mobile location centre (SMLC). The BSC then can use the location measurement unit (LMU) alongside the appropriate base transceiver stations (BTS) to determine the location of the subscriber by using the uplink time distance of arrival (UTDOA). The location information is then sent back via the above-mentioned pieces of hardware/ software until the message reaches the application server and a response is given to the subscriber. The AT&T Wireless web site provides an excellent facility to aid external developers of mobile solutions (17). Freely available for download are whitepapers, style guides, software development kits (SDK), programming guides, sample code and emulators. In table 3 can be found the major building blocks of the mMode technical solution.

Table 3. The mMode Building Blocks

Table 3. The mMode Building Blocks

AT&T Wireless differs significantly from Wherify and Applied Digital Solutions, given it owns much of its network infrastructure. AT&T Wireless also has a large existing customer base that is used to an excellent quality of service (QoS) and certain level of post sales support. Launching LBS applications nation-wide with potentially tens-of-thousands of new subscribers joining daily, requires equipment that can handle data traffic levels and systems that have been thoroughly tested for faults. mMode contains diverse LBS services- ensuring that each of these works properly and is interoperable with a range of media devices is a labour-intensive activity which is one reason why they have decided to outsource as well.

4.4.2 Personal Locator: all the bits and pieces

Wherify’s location service centre (LSC) is at the heart of its current and pending product innovations. A carrier-class server and software hub, the LSC manages and presents location-based information. Unlike mMode, Wherify utilises wireless data and aGPS. Consider the following scenario where a parent wants to be reassured that their child made it to school alright after missing the bus. The parent requests a location report via the Internet using a Microsoft IE browser (or ringing the toll-free telephone number). The LSC contacts the child’s Personal Locator via the PCS network (if within the footprint), and then downloads the current GPS data and requests a location. Using the data from the LSC, the device that is identified by an electronic serial number (ESN), finds the closest satellite and then computes the longitude and latitude coordinates of the child’s location. The Personal Locator then communicates location information to the LSC and the LSC generates a location report for the parent via the Internet. The whole process from request to report takes about sixty seconds. The parent is able to look at the report visually on a scalable map which shows streets and other feature points in a vector or aerial view, using geographic information systems (GIS) capabilities. Each report requested by the parent is logged in the customer’s event file database for billing and subscriber profiling. The location database includes a time stamp along with the longitude/ latitude coordinates. The wearer’s profile is also stored including: age, gender, height, weight and features.

Wherify make no secret of their technology partners. They include an impressive list of companies: SiRF who provide the GPS chipset that is integrated into the Personal Locator based on a-GPS; Qualcomm for the CDMA chipset; Baldwin Hackett & Meeks who are applications developers, Conexant who provide the RF board; Advanced Micro Systems who specialise in flash memory; Compaq for the server technology; Intrado for emergency communications; and GlobeXplorer Online for the component of aerial photography. Security firewalls are paramount in the Personal Locator system as is redundancy and fault tolerance. During an emergency situation for instance, the LSC is even able to interact with public safety answering points (PSAP) through Wherify’s emergency operation service. There are customer care representatives available 24x7x365.

4.4.3 VeriChip made very easy

The least complex of the three case studies in terms of technology requirements is the VeriChip. RFID networks are usually small in scale when compared to nation-wide or global networks. They include the following components: the RFID transponder, a reader that captures information, an antenna that transmits information, and a computer which interprets or manipulates the information gathered. In the case of VeriChip, there is a requirement that each subscriber registers their personal details (and other relevant information they desire) on the GVS database. At this stage all the transponders issued by VeriChip are passive but it is likely that active transponders will be issued in the future, despite the fact that they require on-board battery power to operate internal electronics. When an individual passes an associated scanner, information is read and sent to the computer via an antenna. Dependent on the application, a log may be retained or the implantee’s location updated a predefined number of times in a set period. Given global standards are an issue for debate in RFID, proprietary systems are used.

5. Discussion


5.1 Defining Convergence

Convergence means different things to different people and is usually loosely applied to denote the coming together of two distinct technologies, i.e. the merging of several products into a single good. The 2003 Penguin Concise Dictionary states that convergence is a “jargon term” and gives examples of the merging of the television (TV) and computer, or telephone and computer, or TV and WWW. To anyone who has studied technological trajectories at any length, convergence is far from being a jargon term, but a well-constituted concept in the field of innovation (18, 19, 20). Terms like “digital convergence”, “technological convergence”, “application convergence” and “industry convergence” have been used interchangeably in some instances, and in others each has carried a loaded meaning. For example, Covell (18) states: “(d)igital convergence is the merging of these improved computing capabilities, new digital multimedia technologies and content, and new digital communications technologies. This combination of computing power and functionality, digital networked interconnectedness, and multimedia capability enables new forms of human interaction, collaboration, and information sharing.” Greenstein and Khanna (20) on the other hand, distinguish between “convergence in substitutes” and “convergence in complements”. The distinction of these ‘kinds’ of convergence finally puts an end to the debate over usage. Convergence thus can occur at any level of detail, in any part of the subsystem.

5.2 LBS: a catalyst for IT&T convergence

Throughout this paper, technologies at the appliance, application and infrastructure level have been shown for each of the LBS cases. What can be seen is a coming together of what were once somewhat unrelated technologies. Most obvious perhaps is the convergence of wireless capabilities and the Internet as depicted in the mMode case. For example, IP-based phones can already receive voice, text and multimedia. And as for the vertical devices mentioned, many of these are converged technologies in themselves (e.g. the wireless PDA that is also a phone and MPEG3 player). In the case of Wherify, the traditional wristwatch has now been turned into a Personal Locator with the aid of a GPS chipset. And chip implants have found there way under the skin of human beings to converge with living tissue- chips once as big as bricks, now smaller in size than a grain of rice.

Yet it is not only at the device level that convergence is occurring. A whole suite of new applications are being created using content from syndicates, once considered to be unrelated. The Yellow Pages directory for instance, used to “find the nearest”, or “the best 10 nightlife” locations as well as providing “shopping discount alerts”. And geographic information systems once used for computer-aided design (CAD), now used to visually represent the geographic location trail of a child, using high resolution aerial photography once synonymous with superior defence intelligence systems. There are even applications like VeriPay that are forecasted to change the way that humans interact with other technologies like automatic teller machines (ATMs). Who needs to carry a card at all? Applications once used solely for businesses purposes, now permeating the consumer market given their cross-functional nature.

At the infrastructure level also, multiple network technologies are being used in tandem to locate subscribers including PCS with aGPS. Another example provided, was the VeriGuard system that will have the capability to incorporate other automatic identification (auto-ID) reader equipment belonging to smart card and biometrics. Even at the protocol level, the very essence of traditional voice calls will be packetised, i.e. voice will be data. It is obvious through the evidence provided in this paper that convergence in complements is occurring, given the products are working better together than separately (20). LBS has shown itself to also involve a diverse range of businesses from vertical and horizontal industries- from independent software vendors (ISVs) developing the applications, to third party suppliers building enabling technologies and platforms, toindustry bodies setting the appropriate standards for communications, to marketing consultants invited to develop and spearhead brand awareness campaigns. LBS brings not only the industries but the technologies to increasingly work together to form larger and larger systems (20).

6 Conclusion

Location-based services are pulling together a vast array of digital technologies like never before. The convergence between technologies is a cultural-changing force. Miniaturisation in design in particular is allowing for once separate technologies to be fused. From handset phones to smart watches to implants, the more invasive the technologies are becoming, the greater the precision for locating the subscriber or wearer or implantee. The question now, that all this technology can be used in an integrated fashion, is how far will entrepreneurs take LBS in the future? How many different players can become involved in offering LBS specifically before the state of affairs becomes too cluttered and confused? Do content providers reach mutually exclusive agreements with service providers (SPs) so that there is minimal conflict of interest? And if so, does this not limit the number of SPs to a few large players that can actually deliver LBS? And how many different types of LBS can one service provider practically offer? Looking at the dilemma from another perspective- will consumers require subscription to mMode, the Personal Locator and the VeriChip solution and carry with them a PDA, wear a GPS watch and be implanted with a chip, to circumvent a variety of limitations of each technology? Or are future directions set on a trajectory of even greater convergence proportions between all of the technologies discussed in this paper. For instance, will one device be able to cater for the needs at each level of accuracy- global, national, regional, local and in-building or will service providers amalgamate their networks to offer super-LBS services from satellite-based to network-based to LAN-based and PAN-based. Whatever the outcome, we are surely entering into a period where pervasive computing will become a dominant force in the way we live, work, and interact with one another.

7 References

(1) B. Rao & L. Minakakis, 2003, “EVOLUTION of Mobile Location-Based Services”, Communications of the ACM, 46(12), December, pp. 61-65.

(2) V. Zeimpekis et al., 2003, “A Taxonomy of Indoor and Outdoor Positioning Techniques for Mobile Location Services”, Journal of ACM SIGecom Exchanges, 3(4), pp. 19-27.

(3) K. Cousins & U. Varshney, 2001, “A Product Location Framework for Mobile Commerce Environment”, Proc. ACM 1st International Conference on Mobile Commerce, pp. 43-47.

(4) U. Varshney, 2003, ‘Location Management for Mobile Commerce Applications in Wireless Internet Environment’, ACM Transactions on Internet Technology, 3(3), August, pp. 236-255.

(5) O.E. Balatseng & H.E. Hanrahan, 2002, ‘MS Positioning for the Support of Mobile Location Services’, [http://www.ee.wits.ac.za/~comms/output/satnac02/balatseng.doc, 2004].

(6) H. Maass, 1998, ‘Location-aware Mobile Applications Based on Directory Services’, Mobile Networks and Applications, 3, pp. 157-173.

(7) H.M. Deitel et al., 2001, e-Business and e-Commerce for Managers, Prentice Hall, New Jersey, p. 168-170.

(8) A. Burak & T. Sharon, 2003, ‘Analysing Usage of Location Based Services’, CHI 2003: New Horizons, April 5-10, Florida, USA, pp. 970-971.

(9) S. Chen, 2001, Strategic Management of e-Business, John Wiley and Sons, New York, pp. 5-7.

(10) T. Anderson & H. Kanuka, 2003, E-research: methods, strategies, and issues, Allyn and Bacon, Boston.

(11) Wherify, 2004, “Frequently Asked Questions”, Wherify Wireless, [http://www.wherifywireless.com/faq.asp, Last Accessed: 15 April 2004].

(12) ADSX, 21 November 2003, “Applied Digital Solutions’ CEO Announces “VeriPay™” Secure Subdermal Solution for Payment and Credit Transactions at ID World 2003 in Paris”, Applied Digital Solutions, [http://www.adsx.com/news/2003/112103.html, Last Accessed: 15 April 2004].

(13) B. McDonough, 17 April 2002, “AT&T Wireless Pushes mLife with mMode”, CIO Today, [http://cio-today.newsfactor.com/perl/story/17307.html, Last Accessed: 6 April 2004].

(14) AT&T, 2003, “Feature and Services User Guide”, AT&T Wireless, [http://www.attwireless.com/personal/features/mmode/mmode_guide.jhtml, Last Accessed: 15 April 2004], pp. 1-39.

(15) Wherify, 2003, “Wherify Wireless GPS Locator For Kids”, Wherify Wireless, [http://www.wherifywireless.com/prod_watches.htm, Last Accessed: 15 April 2004], pp. 1-120.

(16) ADSX, 2003, “Implantable Personal Verification Systems”, Applied Digital Solutions, [http://www.adsx.com/prodservpart/verichip.html, Last Accessed 15 April 2004], pp. 1-2.

(17) AT&T, 2003, “Developer Tools”, AT&T Wireless, [http://www.attwireless.com/ developer/tools/, Last Accessed: 15 April 2004].

(18) A. Covell, 2000, Digital Convergence: how the merging of computers, communications, and multimedia is transforming our lives, Aegis Publishing Group, Rhode Island, p. 14.

(19) T.F. Baldwin et al., 1996, CONVERGENCE: integrating media, information & communication, Sage Publications, California, p. 209.

(20) S. Greenstein & T. Khanna, 1997, “What Does Industry Convergence Mean?” in D.B. Yoffie (ed.), Competing in the Age of Digital Convergence, Harvard Business School Press, USA, pp. 204.

8 Acknowledgements

The author is currently involved in collaborative work with Nortel Networks on the theme of the Mobile Location Centre (MLC).

The importance of conducting geodemographic market analysis on coastal areas: a pilot study using Kiama Council

Katina Michael, School of Information Technology and Computer Science, University of Wollongong, NSW, Australia, 2500

Full Citation: Katina Michael, 2003, The importance of conducting geodemographic market analysis on coastal areas: a pilot study using Kiama Council, eds. Colin Woodroffe, Ronald A. Furness, Coastal GIS 2003: an integrated approach to Australian coastal issues, Proceedings of the Workshop, University of Wollongong, 7-8 July 2003, Wollongong Papers on Maritime Policy No 14, pp. 481-496.

Abstract

In February of 2003 Kiama Council launched a preliminary survey to gather community attitudes on the future growth of Werri Beach and Gerringong, NSW (Nelson). The survey focused primarily on what actions Council should take to manage population growth within existing neighbourhoods. This paper aims to support the preliminary survey by proposing that a geodemographic market analysis be conducted to complement the findings of the study published in May 2003 (Wiggins). The use of a Geographic Information System (GIS) can add great value to the strategic decision-making process and it is the recommendation of this paper that GIS should become an integral component of Council’s day-to-day planning function. This type of analysis does not negate the requirement for community participation in local issues rather it enhances the planner’s ability to make more informed decisions using a holistic approach throughout the lifetime of a given project. The findings of this paper indicate that GIS is an important element of any coastal assessment. The process outlined here could be adopted by councils located all along the Australian coastline.

Introduction

Kiama Council covers a surface area of 256 square kilometres. Within its bounds is the rapidly expanding coastal town of Gerringong, located within the post code 2534. Gerringong is known for its picturesque rolling hills, lush evergreen dairy farms, and famous surf beach (Werri Beach), all of which make it a popular holiday destination and ideal for residential settlement. However, so many attractions undoubtedly place pressure on the environment as increasing numbers of tourists visit, and demand for housing continues to rise. Council is left with the challenging task of catering for the diverse range of needs both of the permanent local and temporary populations. This paper will identify the need to conduct geodemographic market analysis using a variety of statistical and spatial sources from different data suppliers, including the Australian Bureau of Statistics (ABS). It will explore how GIS could be applied by Kiama Council to better plan for the future growth of Werri Beach/ Gerringong and Gerroa and finally offer some preliminary findings. Throughout the paper space will also be dedicated to some of the more practical issues that the GIS analyst could be faced with in conducting such a study.

Background

Kiama Council is typical of most local councils. It has a small planning team and a defined annual budget for information technology (IT) requirements. In 2002 the need for Council to invest in a state-of-the-art GIS was investigated and several platforms evaluated. As a result GIS software and support hardware was purchased in 2003 and a newly-established GIS team was formed. Council is actively trying to incorporate GIS into a range of functions because it foresees positive flow-through effects through this type of inter-departmental collaboration. However, in the short-term resource constraints mean that specific applications of GIS pertaining to the planning function may be delayed, in preference to other core council requirements. One of the problems identified by the planning team was actually defining those important applications that would help them do their work more efficiently and effectively. This is a common hurdle that non-GIS professionals face as they are trying to come to terms with the value the software can bring to their organisation and more specifically, to their job role. The very positive attitude the planners have toward one day integrating GIS into their existing processes and practices means that successful implementation is likely. The following pilot study is representative of what is possible in the future.

Methodology

A semi-structured interview was conducted with one of Kiama Council’s strategic planners to ensure that a gap was being filled with the proposed pilot study. The interview was open-ended and probing questions were asked to determine the current state of GIS practice within the planning department in the Council. A subsequent literature review found the link between geodemographic market analysis and coastal issues to be severely lacking. Some of the more relevant publications included Maguire et al. (1991), Grimshaw (1994), Goss (1995) and Birkin et al. (1996). As an outcome of the interview and literature review it was decided to document the high level process required to build a GIS for geodemographic purposes and outline how spatial analysis could be used to aid Council’s strategic planning function. The contribution of this paper is not in its statistical output but in demonstrating the value of GIS for strategic planning in coastal areas. Admittedly one of its limitations is that it does not take into consideration longitudinal trends and patterns, but it does illustrate the power of GIS to represent cross-sectional demographic data.

Process

A work-in-progress custom GIS was created using the MapInfo Professional application with supporting data sets from a variety of suppliers and vintages. The following steps were taken to build the GIS:

(1)  understand the various spatial units of analysis and determine which level(s) of detail are appropriate and useful for Council;

(2)  identify and acquire the separate layers of spatial data required to conduct meaningful research and consider how these could be used in prospective applications (e.g. roads, parks, rivers and other features);

(3)  gather demographic data for residential and business market segments (either internally or externally available to the Council, and of primary or secondary research sources);

(4)  geo-reference demographic data to designated spatial units;

(5)  determine how the custom GIS can be used to shed light on issues of human geography and the environment; and

(6)  conduct geodemographic analysis using structured query language (SQL) and thematic mapping to uncover specific trends and patterns.

Spatial Units of Analysis

Prior to building a GIS for a specific area the planner must be able to identify all those important units of analysis that are relevant and meaningful to the study. Depending on the scope of the study, one may choose to start their analysis at a coarse level of detail, such as a local government area (LGA) unit and work their way down to a census collection district (CCD) level. The top-down approach is to be preferred in large-scale projects like the Comprehensive Coastal Assessment (CCA) initiative proposed by the Department of Infrastructure Planning and Natural Resources. Only in this manner can planners prioritise responses to pressing issues over a variety of locations. What is paramount, independent of the scope of the study is that recognized spatial units are used in the GIS, such as those defined in the Australian Standard Geographical Classification (ASGC) hierarchical list (Castles 1993). In the case of the Kiama Council pilot study, which focused on the post office area (POA) of Gerringong, planners specifically requested the need to use CCD level information, and if possible, to perform an even more granular investigation. This especially posed a challenge to the author, particularly because the public availability of demographic data at the street or dwelling unit (cadastral level) is very limited, save for internal Council intelligence information. Provided that strict controls were placed upon the access and use of the latter, Council would be adhering to Australia’s Information Privacy Principles.

Spatial Layers of Information

The three categories of layers in the pilot study included: natural features, non-natural features and government-defined spatial boundaries. The vector layers are represented as region, line or point objects dependent on what they are depicting. Natural features included layers like rivers, lakes, the coastline, parks and reserves, while non-natural features included layers like roads, bridges, railways, residential and business dwellings, and public amenities. As a general rule, the more layers of spatial information one can acquire for a particular study, the richer the results. Important to note however, is the scale of the map layer in question, its currency (in terms of lifetime), its quality, and its purpose to a given GIS project.

MapInfo (among many other suppliers, like ESRI) develop and supply spatial layers that proved to be useful in this pilot study. The first are the ASGC administrative spatial boundaries as defined by the ABS in the CDATA2001 product; everything from LGAs to CCDs, including POAs. The second is the detailed road network that is available in the StreetPro® Australia product that contains street addressing and an additional fourteen layers of data. The third is the MapInfo® CadastralPlus product that contains individual land parcels from which centroid longitude and latitude locations can be extracted. And finally the MapMarker® Australia product, which includes an intelligent address parser, and can be used to pinpoint dwelling locations using either internal Council address information or external sources like Brylar’s Australia on Disc (AOD) database. MapMarker’s capabilities differ significantly from the Cadastral spatial layer, in that the former allows for residential and business names to be geo-referenced to a street address (i.e. a longitude and latitude location). Apart from vector-based data, raster data like aerial photographs could also be used to enhance the planner’s perspective of a given problem. Other spatial data, like hardcopy building approval plans could be scanned and geo-referenced, although such a process would be time-consuming and expensive, it would in the longer-term pay for itself.

Demographic Data

There is usually a plethora of demographic data available at high levels of granularity, such as at the statistical local area (SLA) and POA levels. While the data at this level is considered coarse, by most regional Councils, the overall key indicators are helpful in establishing a background setting for the study. There are also two broad categories of demographic data that can be acquired; these are either primary or secondary in nature. In general, secondary data is usually a lot more affordable than primary research data. Examples of secondary data used in this study include: ABS CensusData and the Australian Business Register (ABR). Additional data sources that would prove useful include: the ABS Integrated Regional Database (IRDB), the ABS Socio-Economic Indexes for Areas (SEIFA), Salmat’s MarketFind database and Dun & Bradstreet’s Marketing List. The specific fields of data included in the above-mentioned sources are too many and varied to list, even in a tabular format- the CensusData data source alone would fill several pages. However the demographics can be categorised as pertaining to either the residential or business market segment.

Residential data that can be obtained includes (aggregated down to the CCD level) attributes like: the number of people, the number of household dwellings, resident age and background, the average individual/ household income, the number of employed/ unemployed persons, the qualification level reached by residents and their occupation, housing status and level of ownership. Other residential-specific databases aim at providing predefined target groups based on the level of income earned or other economic or education-based indicators. For example, Salmat’s Marketfind tool distinguishes 24 demographic profile types, ranging from the ‘Prestige’ category to ‘Suburban Welfare’ and also brings together customer lifestyle and attitudes profiles. Specific AC Nielsen data can be added to this as well, if required. Business data that can be obtained (down to the POA level) includes the size of business, in terms of the number of employees or annual turnover amount in dollars. The type of business, based on the Australian and New Zealand Standard Industry Code classification (ANZSIC) can be obtained at either the industry division (17 categories) level or subdivision (53 categories) level. At the individual company level, the industry classification can be acquired (as specified in the Australian Yellow Pages), including full postal address and telephone/ fascimile details, as well as a web site and email address if provided. The Dun and Bradstreet Marketing List also includes a contact name for each company, the line of business, revenue, exact number of employees and more.

As for internal intelligence sources, these were not obtained for the pilot study but it is assumed, that if Council adopted the findings of this paper, that they would be able to use appropriate internal data to further enhance the GIS. The attributes that would be useful, among others, include ratepayer information per dwelling/ land parcel, land-use zoning information (such as residential, commercial, industrial categories), specific building regulation constraints and the number of temporary versus permanent residents (for instance during public and school holiday periods).

Geo-referencing Demographic Data to Spatial Units

One of the fundamental uses of GIS is to bring spatial data together with aspatial data. Potentially this also presents the GIS administrator with one of the greatest challenges- how to integrate two or more sets of aspatial data sources that are not 100 per cent compatible with the designated spatial layers. While the use of ASGC boundaries has been encouraged in this paper, planners should be aware that boundaries like SLAs and CCDs are variable in nature, depending on the growth or decline of a given area over time. For instance, the 1996 and 2001 Australian SLA boundaries differed in number and in name. A SQL statement could easily identify the discrepancies in the spatial layers from year-to-year but this still does not resolve the problem of matching databases of various vintage successfully to base spatial layers. And this is not only a problem limited to ABS-defined boundaries; this same problem is recurrent in natural and non-natural spatial layers. Consider the case where new roads are added to a town as a result of a new housing estate being established, among many other examples. GIS users need to think about how their organisation will overcome ungeocoded records (i.e. those records that remain unlinked using a given primary key), without compromising the overall accuracy of the results. The ideal situation is to continue to upgrade data sources as they become available, although this becomes an expensive exercise and is not always feasible given that some databases do not follow a periodic release schedule. Whatever solution is sought, what is certain is that guidelines need to be drawn and implemented. These guidelines may also vary dependent on the type and size of database being geocoded. Sometimes manual manipulation is plausible, other times it is not. For example, hit rates for the geocoding of telemarketing information to street addresses commonly range between 60-70 per cent of total records dependent on the intelligent addressing product in question and how clean the database being geocoded is (Drummond 1995; Holloway 1998). Checking one hundred ungeocoded street address records manually (one-by-one) may be a manageable exercise, while one hundred thousand would be unacceptable.

Council Applications of GIS

Once a GIS inventory has been created and appropriate data sources geocoded to spatial locations, an organisation can begin to program automated applications, in order of priority. The planning function at Kiama Council has been identified as being made up of mainly routine tasks. GIS applications lend themselves well to such tasks, allowing for automated reports to be generated periodically that show results not only in tabular and graphical views but also in spatial ways as well. The spatial element, in a digital form, can add a lot of value to decision-making processes as it grants the planner an additional perspective to the problem(s) at hand. GIS can also be used for non-routine tasks that require specific inquiries to take place as requested by council members. The applications that may be considered for implementation by Kiama Council are described below.

§  Basic geodemographic profile: defining discrete places within Gerringong which are meaningful to Council planners and extracting demographic data based on these areas, such as “Gerringong Central Business District” (CBD) and “Werri Beach”. The statistics should incorporate both residential and business information over time. Forecasts of these figures should be calculated as well using appropriate types of trend analysis.

§  Re-evaluating land-use zoning development controls: the ability to consider whether a given area should be classified as a particular type of zone (e.g. residential or light industrial).

§  Considering building proposals: Council has the ability to either accept or reject a building proposal based on evidence provided in the GIS (using both raster and vector spatial layers of information). Geographic data such as the area of the dwelling in proportion to the rest of the block, the gradient of the driveway, the aspect the dwelling faces (i.e. energy-saving measures), even the distance between one dwelling and the next, can all be factored in to preserve the local character of the location in question.

§  Calculating the dwelling height: the ability to calculate the heights of existing dwellings within a given area and to determine whether proposed structures meet height restrictions (e.g. careful design of buildings that does not lead to overly dominant structures).

§  Considering residential redevelopment proposals: Council can consider residential subdivision, dual occupancy development, integrated housing and villa homes, based on perspectives offered by the GIS. Additional layers acquired from utilities would also be helpful, including water, sewerage and electricity pipeline locations.

§  Choosing areas suitable for housing development: Council can determine the most suitable location for a new housing estate and comply with current standards without compromising, despite the pressure for more land parcels to be made available to prospective residents on permanent housing waiting lists. The size of the block for instance, should remain as close as possible to the existing average land parcel. Roads and pathways as well as reserves should be intelligently scoped into new housing estate areas. For example, the new Elambra Estate (see figure 1).

§  Approving local business opportunities: considering the needs of local residents and acting according to these needs. For instance, the approval of the Independent Grocer’s Association (IGA) supermarket.

§  Ensuring adequate commercial and industrial floor space: calculating the availability of business floor space for particular types of companies, as increasing numbers of people reside in Gerringong.

§  Protecting the coastal strip: Council can ensure that development within the coastal strip meets all rules and regulations. The distance from the coastline can be measured precisely and appropriate action taken in a given scenario. For example, preserving the character of Werri Beach, despite the obvious opportunities to invest in high-rise apartments, such as on the southern headland.

§  Services to the community: identifying areas where particular services to the community are required and targeting those clients, dependent on the service. For example “meals on wheels”, or the possibility of a local high school or police station. The relocation of Gerringong Primary School to Greta Street is another example.

§  Demand for public amenities: understanding the need for amenities such as public pools, barbecues, toilets and bins in key locations or pathways leading to the beach to ensure that sand loss does not occur. For instance, the decision to rebuild the local surf club and associated bowling club on Pacific Avenue.

§  Catering to increasing traffic pressures: the consideration of adequate parking facilities that meld into the surrounding streetscape.

§  Sewerage and drainage schemes: identifying those residents that are yet to connect to the new Gerringong-Gerroa sewerage scheme and those areas that are prone to flooding after heavy rainfall.

§  Sustaining the needs of increasing numbers of visitors and temporary residents: determining whether there is enough temporary housing such as caravan parks and hotels as well as parks and reserves.

§  Affordable housing: determining the mix of housing available and planning for a range of options in terms of affordability.

Figure 1 New housing estate areas: Using the GIS to assess prospective locations for new housing estate areas and planning for development that is in accordance with the local character. For example, Elambra Estate in southern Gerringong comprises of 250 sites with a range of land and house size and style options, including duplex and integrated sites. Elambra Estate is considered to be an environmentally responsible land development project initiated by Kiama Council.

Figure 1 New housing estate areas: Using the GIS to assess prospective locations for new housing estate areas and planning for development that is in accordance with the local character. For example, Elambra Estate in southern Gerringong comprises of 250 sites with a range of land and house size and style options, including duplex and integrated sites. Elambra Estate is considered to be an environmentally responsible land development project initiated by Kiama Council.

Summary Facts and Figures

Reports that have been commissioned by Council, such as those compiled by Wiggins (2003) and ESD (2002) would be aided by the use of a GIS. Not only could qualitative outcomes from the reports be captured spatially for future re-use by Council planners but quantitative data could also be extracted to enhance report outcomes with accurate facts and figures (both current and forecasted). The following is a summary of some of the fundamental cross-sectional data that was captured by the work-in-progress GIS for the post code of Gerringong (2534). The extracted data is shown by unit of analysis and should be considered in light of the GIS applications proposed above. While these figures do not depict clusters of typologies, nor consumer behaviour or attitudinal patterns, they do indicate the vital demographics any planner should be aware of before drilling down further. Only when a planner is comfortable with the high-level numbers, after laying the foundations of a basic GIS, can they fully appreciate the implications of particular geodemographic trends (Schensul 1999).

Post Code Analysis

The post code 2534 covers a surface area of about 86 square kilometers. There are 9 suburbs in the post code including: Gerringong, Gerroa, Werri Beach, Foxground, Toolijooa, Broughton, Omega, Rose Valley and Broughton Village. In 1996, the ABS census recorded 1458 residences and a total population of 4047. According to the ABS ABR, in 1998 there were 145 businesses operating in the post code and in 2001 there were 433 Australian Business Numbers (ABN) registered in the post code.

Collection District Analysis

There are 10 collection districts in post code 2534 which cover a surface area of about 82 square kilometers. The residential and business dwelling count per CCD can be found in a graduated thematic map in figure 2. In 1996, the median age was 40 years old and the median household income was between $500 and $699. Save for the United Kingdom and New Zealand, a very small proportion of persons residing in Gerringong were born outside Australia.

Figure 2 Demographic distribution analysis: Understanding the distribution of residential and business dwellings by Census Collection District (CCD). Above can be seen a graduated thematic map (green dots) overlayed against a ranged thematic map (shades of red). This visual representation allows the planner to consider where there is peak demand for public amenities.

Figure 2 Demographic distribution analysis: Understanding the distribution of residential and business dwellings by Census Collection District (CCD). Above can be seen a graduated thematic map (green dots) overlayed against a ranged thematic map (shades of red). This visual representation allows the planner to consider where there is peak demand for public amenities.

Roads Analysis

There are 129 roads in post code 2534 stretching a total of 80 kilometres in length. Seventy-five percent of residential dwellings are located in 30 roads and streets. Four streets have over 100 residential dwellings each, including Belinda Street, Renfrew Road, Fern Street, and Stafford Street. Forty percent of businesses are located on three roads, including Fern Street, Belinda Street and Rowlins Road. The respective graphs representing these statistics can be found in figure 3.

Figure 3 Targeting populated places: The graphs above depict the density profile of Gerringong by street. Typical of a regional coastal town in Australia, 50 per cent of residential and business dwellings are located in only about 10 per cent of roads. Viewing residential and business counts graphically in order of their prominence, such as in the above line graphs, can help the planner identify areas of peak traffic (both pedestrian and vehicle).

Figure 3 Targeting populated places: The graphs above depict the density profile of Gerringong by street. Typical of a regional coastal town in Australia, 50 per cent of residential and business dwellings are located in only about 10 per cent of roads. Viewing residential and business counts graphically in order of their prominence, such as in the above line graphs, can help the planner identify areas of peak traffic (both pedestrian and vehicle).

Dwelling Analysis

As of 2002 there were approximately 2000 residential dwellings in post code 2534, which equates to approximately 5200 permanent residents. Over 225 businesses are located in the area. Eight-four percent of businesses employ less than 5 employees. Over 50 per cent of business can be categorized as ANZSIC type Construction, Manufacturing or Retail.

Figure 4 Household dwelling distribution: The thematic map above shows the distribution of households by road. The thicker the road segment and darker the shade of red, the more households are located on that street. This thematic map can help planners to strategically place parks, reserves and rest areas in positions that will be utilised by the neighbouring population.

Figure 4 Household dwelling distribution: The thematic map above shows the distribution of households by road. The thicker the road segment and darker the shade of red, the more households are located on that street. This thematic map can help planners to strategically place parks, reserves and rest areas in positions that will be utilised by the neighbouring population.

Conclusion

Local councils are beginning to understand the power of geographical information systems (GIS). While GIS is not a new concept, many councils are only now adopting the technology. Spatial analysis provides a whole new dimension to the strategic planning process that can aid in producing a holistic perspective rather than a piecemeal approach to solving real and anticipated problems. A top-down analysis of a given scenario is always to be preferred to gain a macro to micro perspective, without accidentally omitting pieces of information, important to making a particular decision. Councils located in coastal areas in particular can benefit from using GIS for both human geography and environmental geography issues. Considering both of these aspects together is paramount for the preservation and conservation of a given area. GIS can incorporate both qualitative and quantitative data and capture patterns and trends more readily than any other information system. While this pilot study was cross-sectional in nature (i.e. a snapshot), an ideal study would incorporate a longitudinal view and forecast population growth rates that were sustainable for the area based on Council parameters. The most important outcome of the study was demonstrating the need for Council to quickly adopt GIS into its planning practices. While the cost of acquiring the data sources and spatial boundaries identified throughout this paper would total in excess of one hundred thousand dollars (i.e., for a single user license for the area covered by Kiama Council alone), the investment would have positive long-term implications.

Figure 5 Pinpointing company locations: The MapMarker® Australia product allows for intelligent address matching. In this pilot study, telemarketing business records from Brylar’s Australian on Disc (AOD) product were geocoded to street address locations. Council planners can query individual company records in the GIS or extract data to analyse the various types of businesses that are located in Gerringong. It can also help planners in re-zoning land parcels for re-development based on local business and employment demands.

Figure 5 Pinpointing company locations: The MapMarker® Australia product allows for intelligent address matching. In this pilot study, telemarketing business records from Brylar’s Australian on Disc (AOD) product were geocoded to street address locations. Council planners can query individual company records in the GIS or extract data to analyse the various types of businesses that are located in Gerringong. It can also help planners in re-zoning land parcels for re-development based on local business and employment demands.

References

Birkin, M., Clarke, G., Clarke, M. and Wilson, A. 1996. Intelligent GIS: Location Decisions and Strategic Planning. GeoInformation International, Cambridge.

Castles, I. (ed.) 1993. CDATA91: Data Guide. 1991 Census of Population and Housing. Australian Bureau of Statistics, Canberra.

Drummond, W.J. 1995. Address matching: GIS technology for mapping human activity patterns. Journal of American Planning Association 61: 240-251.

Ecologically Sustainable Design [ESD] (ed.) 2002. The Charrette Report. Kiama Council, New South Wales.

Goss, J. 1995. We know who you are and we know where you live: the instrumentality of geodemographic systems. Economic Geography 71(2): 171-198.

Holloway, G. (ed.) 1998. The Math, Myth & Magic of Name Search and Matching. SearchSoftwareAmerica, Connecticut.

Maguire, D., Goodchild, M., and Rhind, D. 1991. Geographical Information Systems: Principles and Applications. Wiley, New York.

Nelson, P. (ed.) 2003. Preliminary Survey: Community Participation Process, Place-based residential Strategies for the Future Growth of Werri Beach/ Gerringong & Gerroa. Kiama Council, New South Wales.

Schensul, J.J., LeCompte, M.D., Trotter, R.T., Cromley, E.K., and Singer, M. 1999. Mapping Social Networks, and Spatial Data, & Hidden Populations. Sage Publications, London.

Wiggins, D. (ed.) 2003. Final Report: May 2003. Kiama Council Community Participation Process, Place-based Residential Strategies for the Future Growth of Gerringong and Gerroa. Kiama Council, New South Wales.

Suggested Resources for Spatial and Aspatial Data

ABS. 2003. 1353.0 Integrated Regional Data Base (IRDB), Australia. http://www.abs.gov.au/Ausstats/abs%40.nsf/ca79f63026ec2e9cca256886001514d7/b27b00a2b3a79c42ca2568a900143de1!OpenDocument.

ABS. 2003. 1369.0.55.001 Australian Business Register - Counts of ABNs. http://www.abs.gov.au/ausstats/abs@.nsf/0/CCF2C8379B1EC773CA256B87008134D5?Open&Highlight=0,ABR.

ABS. 2003. CadastralPlus — Overview. http://www.mapinfo.com/au/products/Overview.cfm?productid=866.

ABS. 2003. CDATA 2001 – Brochure. http://www.abs.gov.au/websitedbs/D3110124.NSF/24e5997b9bf2ef35ca2567fb00299c59/1bfc550a6d37a700ca256bd600063d37!OpenDocument.

ABS. 2003. Socio-Economic Indexes for Areas 96 (SEIFA). http://www.abs.gov.au/websitedbs/D3110142.NSF/654f973dc0676ad3ca2566ac001ffe93/29ce159bcbb882d3ca2566ad0002229e!OpenDocument.

Data Dependables Data. 2003. Brylar’s Australia on Disc. http://www.australiaondisc.com.au/.

Dun & Bradstreet Australia. 2003. D&B Australian Marketing Lists. http://www.dnb.com/AU/dbproducts/ProdDesc.asp?id=175&ver=481.

MapInfo. 2003. CDATA 2001 - Detailed Base Map — Overview. http://www.mapinfo.com/au/products/Overview.cfm?productid=1675.

MapInfo. 2003. MapInfo Professional® — Overview. http://www.mapinfo.com/au/products/Overview.cfm?productid=1044.

MapInfo. 2003. MapMarker® Australia — Overview. http://www.mapinfo.com/au/products/Overview.cfm?productid=152.

MapInfo. 2003. StreetPro® Australia — Overview. http://www.mapinfo.com/au/products/Overview.cfm?productid=138.

Salmat. 2003. Marketfind. http://www.salmat.com.au/Services/Customer_Contact/CustomerTargeting.html.

Acknowledgements

I would like to thank sales representative Brinda Rabi of MapInfo Australia who supplied free GIS software and associated spatial databases to the Faculty of Informatics at the University of Wollongong for research purposes in 2002. I would also like to thank the University of Wollongong who funded a New Researcher, and Start-up Researcher grant for the Spatial Database National Australia (S-DNA) project to the total value of $7,500 of which this study is a part of. Strategic planner, Peter Nelson, of Kiama Council was also helpful in establishing the scope for this GIS pilot study.