Loss-prevention technology, already a key element in reducing supermarket shrink levels, could have far broader applications, from increasing supply-chain efficiency to more effectively managing the in-store work force.
Retailers are discovering that point-of-sale monitoring software, a strong tool for dealing with theft by front-end employees, is most effective when it's combined with proactive management efforts and ongoing cashier training. Data gathered by these systems not only identifies cashier shrink but also details lane-by-lane and store-by-store item movement, building a valuable data warehouse.
In addition, radio frequency tags with the capability of having data "written" on them at various points in the supply chain could serve not only in electronic article surveillance applications but as an automated audit trail, detailing every move a product has made in its journey from the manufacturer's plant to the consumer's home.
Cashier software that monitors more than 40 transaction categories is being used by retailers including Bruno's, Birmingham, Ala.; G&R Felpausch Co., Hastings, Mich.; and the New York division of Fleming Cos., Oklahoma City.
Such software identifies not only potential shrink problems such as sliding but also basic errors such as coupon misredemption and scanning problems, as reported in SN.
Part of the training that accompanies such software installations includes having store managers counsel the three lowest-performing cashiers identified each week by the software, according to a source familiar with the system. Such involvement by executives -- all the way up to senior management -- is crucial to making loss-prevention technology work, sources told SN.
In addition, software is available that can monitor individual cashier performance not only against the store's averages but against other stores in the chain. This provides senior management with a picture of front-end sales activity that can be useful in areas such as labor scheduling and merchandising.
Besides improving cashier performance and customer service, such software addresses a key area where shrink occurs. According to the 1998 Security and Loss Prevention Issues Survey sponsored by the Food Marketing Institute, Washington, the largest percentage of employee theft by location, 39%, takes place at the cashier station.
Winn-Dixie Stores, Jacksonville, Fla., began testing front-end technology earlier this year that uses digital cameras to record and compare images of scanned items with a product information database. When the image and the scanned Universal Product Code don't match, the system automatically records the entire order, as reported in SN.
The loss-prevention uses of these and other systems may provide the "wedge" to get these advanced applications into the supermarket, and take advantage of their other labor- and cost-saving elements.
Many manufacturers and distributors agree that source tagging of products is the most effective way to employ EAS systems for loss prevention. Widespread implementation of source tagging has been stalled, however, over questions of technology compatibility and whether manufacturers or retailers should pay for placing the tags on products.
When these issues are addressed, technology experts believe source tagging, especially using RF tags with read/write capabilities, will provide advantages far beyond loss prevention. "These tags have multiple uses," said Don Vehlhaber, president of the consulting firm LogisTech Associates, Atlanta. "They provide a changing, dynamic database.
"If such a tag is put on at the source by the manufacturer, it could contain information on the components and origin of the product," Vehlhaber added. In addition, information added to the tag could indicate the product's transfer through various points in the supply chain.
"The ownership 'bit' could be changed to reflect the title change from the manufacturer to the distributor," he said. "It would provide an electronic audit trail of the life of the product. These things now are tracked using some manual and some automated systems, but the chip would be an integral part of the item itself," he noted.
"If everything had an RF tag, you could move a pallet through a reader zone and it would say 'I'm stockkeeping unit X in quantity Y,' " he added. "All this data could be updated in the manufacturer's inventory and then transferred to the trucking company's inventory, and so on."
Such use of source tagging applied to the "whole process of moving goods through the pipeline would lead to tremendous savings and add to consumer value," he said.
In addition, such widespread use of tags would lower per-tag costs to levels that would make sense for supermarkets' traditionally thin profit margins.
Unlike bar codes, RF tags don't need to be in the line of sight of a scanner to be read, an advantage in distribution centers using advanced, high-speed conveyer systems to move products. Such tagging would speed product throughput in a number of areas, and mitigate the problem of torn, dirty or otherwise unreadable bar codes.
Such tags could also simplify inventory-control processes. Retailers "could take inventories with a handheld reader or with one mounted in the store's ceiling, which would identify everything in the store and exactly how old it is," said a source familiar with the technology.
"There's a tremendous value in always having a real-time inventory, always knowing if stock is in transit, in the stockroom or on the sales floor," the source added.
In addition, with perishable products, the tag could serve as a date stamp "which could be read to check the freshness of a particular product," said the source. "Retailers could ensure that they're turning the merchandise properly, selling the batch that came in first before selling the others."
While Vehlhaber and other experts acknowledged that such industrywide applications currently make more sense for higher-ticket items such as apparel, he suggested a number of areas where knowing a product's exact origin and route would be helpful.
"Say there needs to be a recall of a certain shipment of beef because of E. coli contamination," said Vehlhaber. "Wholesalers are dealing with a tremendous volume of product, and it's easy to lose control of where it came from. In addition, a recall generally takes place after the product is sold at retail and consumed, so tracking that product in today's mode is virtually impossible.
"But if the product were source tagged, it could be tracked all the way through [the supply chain]," Vehlhaber added. "You'd know the dates and locations of the product's movements."
