IKEA and RFID Technology

cribabsurdElectronics - Devices

Nov 27, 2013 (3 years and 10 months ago)

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IKEA and RFID Technology

Improving the Level of Service

27/03/07 Mikael Blomberg

CSE 6002R


Introduction Services Science, Management and Engineering

Final Paper Presentation

Agenda


Introduction, Scope of the Paper


IKEA


What is RFID Technology?


RFID and IKEA


Conclusion



Introduction


Effective use of modern IT can be seen as a
requirement to succeed in the markets


...although IT system is not a shortcut to success



IT system needs to be implemented on the needs
of business



The final paper concentrates on the problems in
IKEA’s business and presents possible solutions



The focus of the paper is in the end of the supply
chain, in the interaction between IKEA and the
final customer

IKEA (1)


IKEA sells low
-
price home products,
including furniture, accessories,
bathrooms and kitchens



The chain has 251 stores in 34
countries



On year 2006 IKEA opened globally
16 new stores

IKEA (2)


One of the fundamental innovations made
by IKEA is definitely the concept of self
service


It requires lots from the system that is
built around it


RFID technology can be seen as a part of
the system that supports the self service



Observations have been made during
numerous visits in IKEA’s retail store in
Espoo, Finland



RFID Technology (1)


RFID (Radio
-
frequency Identification) is an
automatic identification method



RFID tags are used to store and remotely retrieve
information



The RFID tag has an antenna which responds to
the transponder (reader) and sends the
information



The information in the tag can be read many times



In some tag types the information in the tag can
also be rewritten

RFID Technology (2)


The main division of RFID tags is between
active and passive tags



RFID tags operate using different
frequencies


Low frequency tags (30
-
300 kHz)


High frequency tags (3
-
30MHz)


Ultra
-
high frequency
(300MHz
-
1GHz)



Most likely the suitable tag type for IKEA
would be passive HF tags (13.56MHz)


Problem 1: Long queues


Long queues increase the amount of
misplaced products, and decrease
customer satisfaction and gained revenue


Products may be big


Products may be difficult to handle


Solution: RFID equipped cash desks


Problem 2: Difficulties with self service
warehouses


Customers need to search for the correct
product from the huge warehouse


Certain customers may get frustrated


IKEA needs to hire employees to help
customers to find the correct product




Solution:



”Smart shelves” and Personal Shopping
Assistant (PSA)



Problem 3: Sharing accurate availability
information


Customers do not want to come to the
store just to notice that the product they
wanted is out of stock



“Showrooms” may contain some
interesting product but the customer
cannot know if the product is really
available


Solution:


More visible stock information and


Electronic Price Labels (EPC)

Problem 4: Effective home delivery


One IKEA retail store usually serves a
wide area the distances can be long and
locations scattered



IKEA retail store needs to have effective
transportation system




Solution:


Tighter connection between the IT system and
home deliveries through RFID technology

Problem 5: Theft Prevention


IKEA’s product selection includes products
which are small but still relatively
expensive




Solution:


RFID tags working as a part of Electronic Article
Surveillance (EAS) system



Problem 6: Recycling


In the future environmental regulations
will become stricter



Companies may need to accept the used
product back and recycle it



Solution:


RFID tags containing the recycling information


Conclusion


Product level tags will be reality in the
near future



RFID technolgy could give several
benefits for IKEA



The importance of careful planning and
patience to develop the system cannot be
underestimated



RFID technology will require lots from the
supporting service and IT infrastructure