anti theft source protection roadmap ecr workgroup jos joos, practice leader consumer industrial...

Anti Theft Source Protection Roadmap

ECR Workgroup

Jos Joos, Practice Leader

Consumer Industrial & Technology MarketsJan Somers

ECR Belgium

© 2005 BearingPoint, Inc. 2

Summary

Start WG

Aim/ Deliverable WG

Who is involved?

Different phases to work on …

Next Steps

Questions


Start WG & Deliverable

The trigger was FEDIS (Federation of Distributors)

Within the ECR Belgium WG was then decided to start a sub WG in anti-theft

Kick-off meeting on the 28th of April 2006 of the ANTI-THEFT SOURCE PROTECTION PROJECT

Aim/deliverable of the WG : an Anti-Theft Roadmap/Protocol (recommendation at least on national level, if possible on European level)


Who is involved?

Retailers : security and lost prevention managers/risk management

CARREFOUR Belgium – Colruyt – Cora - Delhaize Group – Makro - HUBO Belgium

(DO-IT-YOURSELF) - FEDIS

Manufacturers : security/logistics managers

DHL – Henkel - L’Oreal - P&G/Gillette

Solution Providers : solution managers/ technical advisors

Checkpoint Benelux – TYCO ADT Sensormatic – BearingPoint (management & technology consulting)


Different phases to work on ...

PHASE 1 : Clarify business needs & requirements of all nodes in the Supply Chain

Define scope incl. product categories (f.e CD, alcohol, textile, razors, ...)

Size the business opportunity (gathered data, quantified losses, ...)

Current Situation (measures taken and efficiency, pain points, ...)

Brainstorming about TO-BE situation (what has to change?, info needs, ...)

PHASE 2 : Evaluate technical solutions

Define services/functionalities around required information per node in the SC

Overview/evaluation of potential technologies

Benchmark existing SW solutions

Evaluation of implications for implementation (technical issues, process changes, integration of captured information, public issues, cost & benefits sharing, ...)


Different phases to work on ...

PHASE 3 : Pilot

Proof of concept

Test on a selected number of products with the selected technologies, evaluate SW

Evaluate the results before and after

PHASE 4 : Deployment

Validate rules for deployment

Agree on scope for deployment

Apply learnings from pilots

Propose Roadmap

PHASE 5 : Extension towards traceability beyond theft

Evaluate applicability to track and tracing in general


PHASE 1 : Clarify business needs & requirements of all nodes in the Supply Chain

I. Definition Anti-theft

according to ECR Europe Shrinkage Report

definitions in Charter DIY/Protocol FEDIS

II. Gathering data anti-theft, quantify losses, ...

III. Define product categories

IV. Current situation (current protocols, ...)


PHASE 1 : definition ant-theft/ gathering data anti-theft / product categories/ current situation

Process Failures

Out-of-date products

Incorrect pricing

Product identification errors

Scanning errors

...

Inter-company fraud

Delivering/returning fewer goods than agreed

Vendor and contractor fraud

...

Taking the definition for Shrinkage as a starting point…

Internal Theft

Staff theft

Collusion staff/customers

Employees eating stock

Deliberate manipulation of prices

...

External Theft

Incidents of shoplifting

Fraudulent return of goods

Till snatches

Burglary

...Source: ECR Europe Shrinkage Report


The costs are tremendous

€ 465 million per week in FMCG Europe

or € 2.8 million per hour in FMCG Europe

Taking into account the razor-thin margins in the sector, it is clearthat the pressure to reduce stock loss is high

Costs for Stock Loss are tremendous

DANTE Consulting




Shrinkage – Best Estimates on Causes of Loss

Primary Causes

External theft Process failures Inter-company fraud Internal theft

ECR Europe 2004 38% 27% 7% 28%

Checkpoint Theft Barometer 48% 16% 7% 29%

University of Florida 2003 32% 15% 5% 48%

ECR Australia 2002 35% 29% 11% 25%

Note: Surveys all asked loss prevention professionals to estimate the Contribution of each root cause to the total loss within their organisation



Retailer’s Missed Profit Opportunity

0%

1 %

2 %

3 %

4 %

5 %

Current Potential

Ave

rag

e R

etai

ler

Mar

gin

AverageRetailer

Net Profit 3%

1.8%

AverageRetailerShrinkMargin

4.8%60% M

argin Growth

Source: Cranfield University



Unizo Top List of Theft Sensitive Product Categories

Perfumery 62.7%

Drinks 47.8%

Clothing 36.4%

Digital cameras 34.0%

GSM 33.0%

Dry Grocery 31.3%

Cigarettes, ... 17.9%

Cosmetics 16.7%

DANTE Consulting



The same exercise has been done in the Belgian WG anti-theft.

Hot product categories to be focused on have been agreed upon and figures collected.

Grocery (wine & spirits, chatka/salmon/truffles, confectionary, tobacco, drinks, meat, …)

Health & Beauty Care (razor blades, cosmetics, sun protection, body care/face care/make –up, haircare/ colouring, perfumes & aftershave, …)

Home Entertainment (CD/DVD/Film/books, digital cameras, GSM accessories, PC accessories, PC software, batteries, play station, MP3, toys, ink cartridges & supplies, pet accessories, photo paper, auto accessories, sport articles, kitchen accessories, …)

Clothing (woman's underwear, sunglasses, jewellery, wallet/leader, woman's clothing, sportswear, …)


PHASE 1 : definition ant-theft/ gathering data anti-theft / current situation

What consensus and/or proposals have already been made?

DIY sector in Belgium and France opted for the E.M. technology as a standard for anti-theft source protection

BDA has published a charter for the sector



FEDIS has drafted a proposal… pure Belgian proposal still to be completed and approved.

PROTOCOLE PROTECTION A LA SOURCE

CONTENU

I. GENERALII. OBJECTIFIII. DEFINITIONSIV. CHOIX DE LA TECHNOLOGIEV. POLITIQUE PROTECTION A LA SOURCEVI. EXIGENCESVII. ECHANGE DE DONNEES



Vol à l’étalage : impact financier annuel le plus important.

Proposition d’usage d’un système EAS. De préférence des éléments de protection

invisibles

Objectif : communiquer à tous les acteurs la position des parties signataires concernant la

politique de la protection à la source + choix des technologies arrêter les règles lors de l’utilisation de cette solution

(responsabilité partagée entre distributeurs et fournisseurs)

Définitions : Application d’un élément de protection de manière intégrée et invisible sur ou dans l’article ou sur ou dans

l’emballage par le producteur ou l’emballeur avant que l’article ne parvienne dans le centre de distribution des points de vente

Technologie RF : élément de protection RF qui réagit à un signal à radiofréquence, émis et reçu par une antenne, à moins qu’il ne soit désactivé

Autres technologies:• EM (électromagnétique)• AM (acoustique magnétique)



Choix de la technologie : La technologie de protection à fréquence radio de 8.2 Mhz choisie en raison de

• bon rapport coût-efficacité• application simple dans différentes chaînes de production • la radiofréquence s’impose comme la technologie majoritaire dans les magasins en Belgique

Exigences Eléments de protection utilisées doivent pourvoir être désactivés et ne pourront être réactivés Fournisseur devra fournir une fiche de renseignements (localisation) Éléments de protection à signal RF de 8.2 Mhr +/-5%

Fournisseurs/producteurs ont le choix du fournisseur des éléments de protection Magasins équipés d’antennes de détection doivent être simultanément équipés de systèmes de désactivation

…

DANTE Consulting


PHASE 2 : Evaluate technical solutions

I. Comparing different anti-theft solutions

Expectations of consumers (study CARREFOUR GROUP – GFK)

II. Source Tagging : different technologies on the market :

EM

AM

RF

(RFID/EPC with EAS functionality in the future)

IIV. Functionalities / SW analysis of each technology

IV. Usage of EAS technologies in the market (national/European/international level)

V. Evaluation of implications for implementation (technical issues, process changes, integration of captured information, public issues, cost & benefits sharing, ...)


PHASE 2 : Evaluation technical solutionsI. comparing anti-theft solutions

Example of Anti-Theft Measures and Solutions in Use

Cash protection equipment, safes, caches (84%)Intruder alarm systems (84%)Live closed circuit televistion (77%)Mystery shoppers (74%)Electronic Article Surveillance equipment (EAS) (71%)Employee integrity checks (71%)Plain clothes store detectives (71%)Safer cases or protector boxes (71%)Automated store stock ordering system (68%)Random till checks (68%)Checking stock deliveries at the store (at SKU level) (65%)Regular counts on vulnerable lines (65%)Staff searches (65%)Analysis of EPOS data/ data mining (61%)Stock loss database (61%)Uniformed security goards (61%)External security measures shutters, bollards, fences (58%)Unique PIN numbers for till operators (58%)Dummy closed circuit television (55%)Process review team (55%)Specialist display equipment (fixed) (48%)EPOS/CCTV linkage software (45%)Dummy cards/Empty boxes on display (39%)GPS on delivery lorries (32%)Full time stock loss analysis (26%)


PHASE 2 : Evaluation technical solutionsI. comparing anti-theft solutions

European consumers expectations on anti-theft solutions (study CARREFOUR GROUP – GFK)


PHASE 2 : Evaluate technical solutionsI. comparing anti-theft solutions

The ideal anti-theft solution ‘Musts’ for European Consumers

Accessibility & Non DamagingSystem are equally important for Clothes & Sport Shoes


Anti-theft solutions do prevent purchase in some casesBase : All countries

* Could this protection system prevent you from buying the product…? (On 5 pts scale Top 2 Boxes Scores (total of respondents answering ‘all the time’ and ‘most of the time’’)

When being asked about protection systems if they ever prevent them from buying a product, Europeans gave us positive answers regarding:

• 72% for Cosmetics in Closed-Window Shelf

• 61% for Spirits in Closed-Window Shelf

• 48% for Mobile Phones, in Closed-Window Shelf

• 41% for Cosmetics with Plastic Safer

• 15% for Clothes with Hard Tag

• 12% for Spirits with Locker

As a matter of fact, Germans, French and English are particularly intolerant to closed window shelves.




Conclusions

• Consumers do have expectations on Protection Systems, these expectations being, in some cases, fundamental and acting as purchase facilitators or barriers.

• The most important dimensions an Anti-Theft Solution must deliver against are:

• ACCESSIBILITY: Key dimension for all category of goods• NOT DAMAGING: Particularly determining on Textile and Shoes• NOT TIME WASTING: Especially true for Clothes, Cosmetics & Spirits

purchases

• From a consumer point of view, the protection system is integrated in the mix, as an extension of the packaging. Just like any other part of the pack, it impacts consumers perception of the product.

=> For all these reasons, Invisible Protection Systems, such as Source Tagging, should definitely be prioritized, being only perceived positively by consumers.


PHASE 2 : Evaluate technical solutions II. Source tagging : different technologies on the market

The EAS technologies on the market today are the following

RF works at 8,2 MHz Radiofrequency signal Frequency variation is between 7,2 – 9,0 MHz Other frequencies exist but disappear 8,2 MHz is the worldwide standard for source tagging in RF

EM works with a low frequency electromagnetic field signal Frequency variation between 5 – 12,5 KHz Different types of EM technology co - exist which are not fully compatible

AM works with an electromagnetic field signal at 58 KHz . Based on principle of causing vibration of two metal plates inside the target (called magneto strictive

effect and which is picked up ‘ acoustically’ ) Frequency variation is very small


PHASE 2 : Evaluate technical solutions II. Functionalities/ SW analysis of each technology

Performance of main EAS technologies per key criteria

Technologies Labels Aisle Width Detection Integrity Deactivation Total

AM 3 5 4 3 15

EM (Harmonic) 2 2 2 1 7EM (Barkhausen) 3 2 3 1 9EM (Intermodulation) 5 3 4 2 14

RF (Swept) 4 3 3 4 14RF (P/L) 4 4 4 5 17

=> Source tagging: fast & reliable deactivation is key


Carrefour: all hypermarkets go NDRF (globally)

Source tagging program

Metro Group global (C&C, Real , Media Markt): decision taken to go NDRF

Source tagging & migration path to RFID

AHOLD: (Albert Heyn, HyperNova, AHOLD USA etc) NDRF

Deactivation reliability & source tagging

Tesco in Asia goes NDRF

Deactivation reliability & source tagging

Auchan, CORA: go bitechnology RF – EM due to:

Alignment with source tagging in RF + small items tagging at store level in EM

Delhaize Group has also chosen RF

Major market shifts in EAS technology since 2005. Who has recently

chosen for NDRF and why?

PHASE 2 : Evaluate technical solutions IV. Usage of EAS technologies in the market


PHASE 2 : Evaluate technical solutions IV. Usage of EAS technologies in the marketSurvey in Belgium by Fedis in Sept 2006

In total, 34 respondants (cross sector)

6 companies with source tagging in use already

• Sport, Brico, Electro, Food (C4, DLL, Metro)

23 companies with source tagging in the future

• 4 companies foresee source tagging on all products (Brico, Electro, Textile, Computer)

• 8 companies do not foresee explicitly source tagging in the future


PHASE 2 : Evaluate technical solutions IV. Usage of EAS technologies in the marketSurvey in Belgium by Fedis in Sept 2006

Technology long term

RFID : electro, computer, food

Current technology choice = 23

RF : shoes, textile, food (C4, DLL, Metro, Match) > 10

EM : brico, sport, books, textile, computer > 8

AM : electro, garden, textile, perfume > 5

Future technology choice = 23

RF : shoes, textile, perfume, electro, food (C4, DLL, Metro, Match) > 14

EM : brico, sport, books, textile, computer > 6 (2 to RF)

AM : electro, garden, textile > 3 (2 to RF)


PHASE 2 : Evaluate technical solutions V. Evaluation of implications for implementation

EAS does not solve everything:

Like all good technology it depends on:

Reliability of the equipment

Consistency in your processes and the 20 / 80 rule (ECR: sell more, lose less)

A balanced combination between

• automated processes ( like source tagging )

• human interaction (understanding how it works, alertness, deterrence) and enforcement (compliance and vigilance when alarming)

Labour cost management

• Low operation costs

• Maximizing people’s efficiency

EAS is not a stand alone solution, implementation procedures need to be taken into account to make it a real success.

But using EAS in a right way can make a big € difference !


PHASE 2 : Evaluate technical solutions VI. Cost Benefits Analysis/Benefits Sharing

• Costs• 15 to 45 € per 1.000 tags• 30.000 € for an applicator (20.000 labels/min) if no use yet for promotions• Blisters or adaptations of packaging but depending on technology, information needs, marketing

• Benefits WIN-WIN-WIN• Retailer: no manual handling, less theft• Supplier: less out of stocks, better (open) merchandising and visibility• Consumer: less out of stocks, better merchandising and visibility, better availability (less waiting)• General: open merchandising = 30% sales increase (pilots USA)

• Cost sharing on the basis of 50/50 between retailer and supplier since both win or invoicing of additional cost (cfr Scandinavian model)


Next Steps

PHASE 3: Pilot and measure

• Share information (Fedis, ECR database?) at a detailed level and focus on a very limited number of hot items per Product Category that really cause the problem

•Alcohol: •Johnny Walker 75cl red label, J&B 75cl, Gordon Gin 75cl, Smirnoff 75cl white, Bacardi 75cl white, Laurent Perrier 75cl brut

•L’Oreal:• top 5 products

•Gillette:• top 5 products

•Duracell and Energizer: • AA batteries

•DIM•Cartridges HP•DVDs:

• top 10 sellers for the moment and their loss percentages

• Set up a pilot between 1 retailer - 1 supplier for an item that is in closed merchandising• Set up a pilot between 1 retailer - 1 supplier for an item that is not source tagged but in open merchandising• Measure results and describe procedures, Best Practices


Next Steps

PHASE 4: Deployment

• Design the Roadmap:

• technology,

• list products,

• timeframe,

• cost/benefits,

• procedures,

• international standards


Questions & Answers

anti theft source protection roadmap ecr workgroup jos joos, practice leader consumer industrial...

Documents

roadmap n phase

definition antitheft

data antitheft

wg deliverable n

n retailers

antitheft n kickoff

fedis n manufacturers

definition anttheft