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The India IT Industry is considered at par with the best in any part of the world and some of major players engaged in providing retail solutions, some Indian and some multinational, have the distinction of being a global sourcing hub in their respective fields of expertise. Some of the major names include SAP India, Wipro, Infosys, IBM, HCL Technologies, Cisco Retail Solutions, TCS, Hughes Escorts Communications Ltd, Zensar Technologies (Oracle-Retek), Satyam Computers, Sify, Polaris, and so on.

Sify, for example, is one of the fastest growing companies with the run rate revenue of Rs.400 crore per year. “We have developed the 'FORUM' platform for small retailers,” explains Sify president & CEO George Zacharias: “It will reduce inventory levels, reduce costs and significantly improve efficiency. It is a comprehensive sales and distribution management software that will make your business more profitable, and will assist you in automatically collating stock and sales information from your branch offices, distributors and retail outlets by means of a simple, user friendly, seamless and online process.”

Infosys Technologies Ltd combines its thorough domain expertise and rich technology capabilities with world-class IT and Business Consulting services to the retail business. “With the Distributed Order Management solution, necessary support to build and leverage a multi-tiered distribution structure is provided,” explains Girish A Ramachandra, project manager, Infosys Technologies Ltd.

“The Infosys Lead Time Optimization (LTO) solution takes supply-and-demand forecasting off the spreadsheets and integrates it across supply chain. This can help dramatically reduce the losses in revenue that may occur due to markdowns and stock-outs. The Infosys (RFID) solution helps enterprises to improve the visibility of supply network and automate labour-intensive processes. By closely linking the measurement of key business performance metrics to the overall business strategy, the Infosys Enterprise Performance Reporting solution raises the level of decision support and enhances organisational performance. These are some of the integral retail sector solutions offered at Infosys, aimed at increasing predictability for our clients,” explains Ramachandra.

The Infosys Solution for RFID adoption leverages the company's leadership in enterprise solutions for industry verticals and expertise in Radio Frequency technology. The solution addresses the key challenges to RFID adoption enabling clients to evaluate the technology in their business context, build a business case, and develop a roadmap for phased adoption.

In its efforts to provide value-added services, Polaris has taken a step forward and started undertaking packaged one-day value delivery exercise with top management of retail chains for identifying areas where considerable values are locked up and configuring its application accordingly for releasing locked-up value to give significant gains to customer.

Apart from large corporate chains, PRIL has started working with small and medium size retailers in its efforts to empower them by providing pre-configured, easy-to-use application having built in best retail practices. It is setting up a separate sales and support network to address the requirements of this segment. “At the strategic level, PRIL is associated with various retailers associations, where it is raising the issues faced by the retail industry and providing inputs to the retailers on how to improve their productivity and profitability,” says Mukesh Mathur, director, PRIL.

Another major IT player in India is the RPG Group's Zensar Technologies, which represents Oracle and Retek. For quite some time SAP was on the prowl to acquire Retek but the deal was finally clinched by its archrival Oracle in mid April 2005. The acquisition of Retek is said to have benefited Oracle's business as Retek has deep expertise in retail, something that's hard to find, Charles Phillips, President, Oracle is reported to have said. Over the past two years, the IT market has been consolidating quickly with big players trying to take over smaller specialists. In mid-2003, PeopleSoft bought J.D. Edwards, another ERP vendor, and at the end of 2004, Oracle, acquired PeopleSoft.

Future Technologies: RFID

RFID (Radio Frequency Identification) is now the buzzword in retail. It is real time tracking of every single product, from manufacture to checkout and compared to universal product code (UPC) bar coding, which RFID promises to replace, RFID proactively transmits information, eliminating the manual point-and-read operations needed with bar coding. This enhanced visibility could significantly decrease warehouse, distribution, and inventory costs; increase margins; and enhance customer service.

This technology was first used to identify with IFF or Identify Friend or Foe for tracking the aircrafts. The auto-identification method is run on EPC (Electronic Product Code), a numbering system. RFID makes use of auto-identification technology whereby the reader using radio waves captures the data encoded in the tag. These tags are either active (self-powered battery) or passive (without battery). Passive tags are lighter, cheaper and operationally longer in life, whereas the active tags have higher read-range suitable for railroad car tracking and automated toll collection. They also can be read only, read/write only or a combination wherein some information is fixed and some can be altered or updated.

The RFID tags are also called as smart labels wherein a silicon chip is embedded inside the tag inlay, making it flexible for pre-coded data. The reader is a transmitter that is controlled by a microprocessor that can be placed in a fixed position, can be movable as in the case of a mobile computer or embedded in electronic equipment also.

The macro-areas where RFID can be utilised are:

• EAS (Electronic Article Surveillance) systems: The use of tags and antennas usually inside a retail setting for tracking articles.

• Portable Data Capture systems: portable RFID systems that can be used anywhere.

• Networked systems: fixed position readers those are directly connected to centralised information management system, while transponders are placed on moveable items.

• Positioning systems: Used for automated location identification of tagged items or vehicles.

The specific functions can be viewed as under:

• Tracing Apparel - Marks & Spencer has begun using RFID technology in clothes and Wal-Mart is busy listing compliance from all of its vendors.

• Tracking Packaged goods - Wal-Mart, Gillette and Tesco have started implementation with testing of RFID enabled shelves that would lead in real-time tracking of the packaged goods.

• Tracing currency - The European Central Bank has plans to embed RFID tags as thin as a human hair into the fibers of Euro notes. The tags would be able to trace the currency at each level of transaction.

• Tracing patients - Severe Acute Respiratory Syndrome (SARS) was the reason for Alexandra Hospital in Singapore to start a tracking system in its Accident and Emergency (A&E) department. All patients, staff and the visitors are provided with RFID-enabled cards.

• Payment systems- It is already being used as a consumer payment device at the gasoline pump or fast-food restaurants. The Mobil Speedpass and E-Z Pass highway toll collection system are powered by RFID.

• Locating luggage - British Airways tested Philips' I·CODE radio frequency identification technology to identify 75,000 suitcases travelling with passengers from Munich, Germany and Manchester, UK, to London's Heathrow airport. This technology would be helpful to identify luggage, increase security and reduce missing baggage.

Surely the technology is not cost friendly; it would take another 5-10 years for making it affordable for the common retailer. As per Mani Subramaniam, principal consultant (Retail & CPG), Wipro Technology, “In an area of 1500 sq.ft, for a common retailer it would cost somewhere around Rs.10 crore, today. But at the same time this technology substantially eliminates of the store execution cost, approximately 33 per cent at case level and 50 per cent at the item level.”

A member of the EPC since 2003, Wipro also provides solutions for companies interested in the technology, with end-to-end e-business solutions, data warehousing and infrastructure technology. The company has developed a RFID system calculator for easy handling by the users.

Several of the most prominent suppliers and retailers are already taking advantage of this new technology; Wal-Mart and the US Department of Defense (DOD) are among the most visible. As adoption accelerates, the cost per tag, which is an obstacle today, will also lessen. Companies that invest early will have a serious advantage over competing companies, which will be scrambling to catch up with this new “best practice.”

Rewards for Early Adopters of RFID

RFID holds promise for significant bottom-line benefits, including

• Reduced warehouse and distribution labour costs: Warehouse and distribution costs typically represent 2 to 4 per cent of operating expenses for retailers. Replacing point-and-read, labour-intensive operations with sensors that track pallets, cases, cartons, and individual products anywhere in the facility can significantly reduce labour, resulting in 30 per cent or more savings.

• Reduced point-of-sale labour costs: Using RFID at the product level can help retailers reduce the labour costs and service fees of regular stock management and store shelf inventory. With RFID-enabled products, the current “scan-it-yourself” checkout can be improved with increased self-service adoption, shortened checkout times, and reduced fraud.

• Inventory Savings: Accurate inventory eliminates write-downs. RFID reduces inventory errors, ensuring that the inventory reported is indeed available. By tracking pieces more exactly, companies can more accurately detail what has sold in the past twenty-four hours, and improve the accuracy of their forecasts about what inventory is actually needed.

• Reduced Theft: Theft costs retailers more than USD30 billion yearly, and is conservatively estimated at 1.5 per cent of overall sales. With RFID, products can be tracked through the supply chain to pinpoint where a product is at all times, and eliminate inventory oversights that can cause shipments to “go missing”. RFID has already been successfully deployed in stores, particularly on higher-margin or costly items.

• Reduced out-of-stock conditions: When an item is out-of-stock, disappointed customers often buy from a competitor, resulting in fewer sales per customer visit. Grocery stores lose as much as 4 per cent of revenue.

A recent report on RFID and the Electronic Product Code (EPC) from global management consulting firm A.T. Kearney has estimated the cost-benefit involved and says the cost of EPC and RFID adoption to retailers is estimated at USD400,000 per distribution centre and USD100,000 per store, with an additional USD35 to USD40 million needed for systems integration across the entire organisation.

The story for manufacturers is quite different depending on the type of product they make. They will incur the same one-time charges for RFID readers and systems integration as retailers. But they will also get hit with the recurring charge of placing RFID tags on their pallets and cases (as mandated by Wal-Mart).

The report breaks manufacturers into two categories, the cost of tagging varying significantly across the two types:

• High-impact manufacturers who sell lower volumes of expensive products and experience significant out-of-stocks and shrinkage (generally drug and general merchandise manufacturers).

• Low-impact manufacturers who sell high volumes of less expensive goods and experience limited shrinkage (food and grocery manufacturers).

Bluetooth^TM and RFID

Two technologies with the potential to change retailing dramatically are BluetoothTM and RFID. BluetoothTM is a low-cost, short-range wireless specification for connecting mobile devices such as phones and personal digital assistants (PDAs). A consortium of 3,600 companies in telecommunications, computing and other industries, is developing it.

“I would personally predict that within three years there will be a critical mass of consumers using devices that are Bluetooth-enabled,” says Dan Hopping. By creating what BluetoothTM calls a “personal area network”, the technology's retail promise lies in communication between retailers and customers.