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Why are some of Wal-Marts Suppliers Resistant to the use of RFID?

Due to globalization, supply chains can be very long and involve many partners located in different places. Lack of logistics infrastructure prevents goods from reaching destinations on time. Radio frequency identification (RFID) tags are attached to or embedded in objects, animals, or humans. RFID’s use radio waves to communicate with a reader to identify the object or transmit data and/or storing information about the object. RFID track items using Electronic Product Codes and they have 96-bit EPC with a Global Trade Identification Number, an international standard. In the start of 2005, Wal-Mart required its top suppliers to place high frequency tags on cartons and pallets shipped to its stores and warehouses (Arundale, 2007).

The reason why suppliers have been resistant to the use of RFID is because of issues such as who will pay for the RFID tagging of supplies and technical problems such as UHF (ultra high frequency) interference with other RFID readers, even from a distance of a few kilometres (Arundale, 2007). There is also lack of a RFID standard, as well as different regulation about radio frequency use. Poirier & McCollum (2006) says that Wal-Mart supplies met RFID technology with resistant because of concerns about the higher costs compared to bar coding and the need to engage in reengineering and restructuring the existing systems.

The primary argument against the use of RFID begins when opponents point out the near universal use of bar coding as an accepted practice (Poirier & McCollum, 2006). In addition, concerns have been raised from a technical viewpoint regarding the limitations of RFID systems for global applications because of various frequency ranges, the absence of regulation and standards, and interference from residual radio frequency sources. This implies that there is a need for complementary technologies to keep pace. Poirier & McCollum (2006) says that “a greater concern of the suppliers is for the interference with reading tags in difficult media, like metal and water, which could slow down movement in some important areas” (p. 15).

In addition, Wal-Mart suppliers are concerned with what will happen with large-scale adoption and the sudden presence of large volumes of new data (Poirier & McCollum, 2006). The main reasons for resistant raised by Wal-Mart suppliers include determining the correct application for such a wide variety of possible uses and dealing with concern for privacy, which becomes more transparent with wide RFID usage (Poirier & McCollum, 2006). Also, Poirier & McCollum (2006) say that the suppliers are worried about the hurdles they will face in integrating the technology in a logical and economical manner with current business practices.

Some of the issues raised against the use of RFID include high cost, environmental restriction to read RFID tags, different levels of read accuracy at different points. There are also concerns over customer privacy, difficult to upgrade later on agreeing on universal standards and the issue of connecting RFIDs with existing IT systems.

The diagram below shows how Wal-Mart uses RFID tags to align its supply chain management

Retrieved from: Tan, C (n.d) Electronic Commerce & Applications.Kaplan

Suggest to Wal-Mart Three Good Ways of Using RFID Other than its Current Usage. Also explain why you think these Three Ways are Good.

Wal-Mart can use RFID technology in special shelves to read the RF waves emitted by products sitting on them (Jilovec, 2004). Shelves with RFID technology will be able to scan their own contents and automatically notify store employees and possibly the distribution center and even the vendor when they detect that the supply of a certain item is running low. Jilovec (2004) says that they could even be useful is detecting theft. Jilovec (2004) also indicated that “Wal-Mart will be able to give manufacturers rough inventory-level information, opening the door for true vendor managed inventory” (p. 106). Jung, Chen & Jeong (2007) say that the main purpose of smart shelves will be to prevent out-of-stock situations (OOS) from occurring at the shelf. In addition, a timely alert to store personnel from a smart shelf could prevent this out-of-stock situation and thus prevent a sale from being lost (Jung, Chen & Jeong, 2007).

RFID promote vendor-managed inventory (VMI). This makes suppliers to be responsible for determining when and how much to order enables collaborative planning, forecasting, and replenishment (CPFR). Suppliers and retailers use RFID’s to collaborate in planning and forecasting to optimize flow of materials in supply chain. Wal-Mart can use RFID to track products throughout the supply chain from supplier delivery to warehouses and points of sale (Dolgui & Proth, 2010). This will increase competitiveness by faster response to customer demands and production problems, reduction of delivery disputes and reduction of uncertainty on factors causing fluctuations in process. Dolgui & Proth (2010) says that the store will improve the readability of the quantity and quality of items produced, improvement of safety especially reduction of counterfeiting and reduction of waste and theft. Dolgui & Proth (2010) says that “through the use of the technology, a product arriving in a storage facility will be identified through RFID and its placement is fixed automatically, therefore avoiding misplacement” (p. 183). Dolgui & Proth (2010) also noted that, with a precise knowledge of the state of Wal-mart supply chain, it will simplify warrantee-claim management.

RFID technology can be used by Wal-Mart to improve inventory accuracy. Jung, Chen & Jeong (2007) stated that inventory accuracy refers to the difference between logical and physical inventory. Logical inventory refers to the amount of inventory on record in the computer system. Jung, Chen & Jeong (2007) noted that, on the other hand, physical inventory refers to what actually is in stock. In a real sense, the logical and physical inventory quantities are equal but for a variety of reasons such as shrinkage, input errors, loss of goods, misplacement, and quantities may be quite different. In ideal situations, logical inventory shown in computer systems is larger than physical inventory. RFID will help Wal-Mart to improve logical inventory records due to automation of the scanning process (Jung, Chen & Jeong, 2007).

Wal-Mart can benefit from added visibility through the use of RFID technology. Jung, Chen & Jeong (2007) say that RFID will introduce inventory control policy that uses knowledge about the location and timing of replenishment orders in the resupply channel to make decisions on placing additional orders from a different supplier if the existing orders are held up for some reason. Jung, Chen & Jeong (2007) state that it is expected that, with the spread of RFID installations, Wal-Mart will benefit from many more sophisticated policies that will emerge to control supply chain activities in an automated way based on RFID visibility.       

In e-commerce law, database right has been recognized recently. Explain why database is considered an intellectual property.

E-commerce refers to the process of buying, selling, or exchanging products, services, or information via computer networks. E-commerce is defined in the perspective of business processes and services. The three legal issues identified in e-commerce include responsibility, trust and ownership. In e-commerce a database is defined as a collection assembly or compilation in any form of works, data or other materials arranged in a systematic or methodical way (Davison, 2003). A broader definition of e-commerce is not just buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within organization. E-commerce applications are supported by five support services: people, public policy, marketing and advertising, support services and business partnerships.

The fast development of e-commerce created new legal problems. Internet laws were in place till mid-1990s. E-commerce laws were to handle issues like contracts negotiation for design and management of Web sites; regulation of technology-assisted sales and purchases, protection of intellectual property in creative and technical works, protection of business identity. Database right often involves customer lists, business contacts or other marketing related information and such information typically has privacy implications. Hedley (2006) says that collections of data have a slightly curious status within copyright law. Data protection concerns, responsibility of organizations that hold data on individuals not to let that data be misused nor accessed by more people than necessary (Tan, n.d).

In e-commerce law, it is obvious that the individual data items in these cases are often predictable hence database as a whole is worthy of protection because of the effort taken to compile it and its practical utility. The e-commerce law goes a long way towards protecting websites, not just because they contain databases, but also because all but the simplest site fall within the legal definition of a database (Hedley, 2006). Database intellectual property right was to handle issues like database protection of privacy and protection of individuals from obscenity, and from offensive and damaging materials about themselves or others (Tan, n.d).

Database intellectual property entails the right of individuals not to have personal data used or communicated without their consent or to a wider audience than is necessary. In e-commerce law databases are protected. Hedley (2006) says that anything that is original in the design or arrangement of a database is protected by copyright. A database can be assigned or licensed to others; the rules are the same as for assignment and licensing of copyright. Hedley (2006) noted that licensing of database use is subject to elaborate regulation, just as licensing of copyright hence unfair licensing practice can be challenged both under this regulation and unfair competition law. This database intellectual property right goes a great deal of the way towards making a database a substantial asset which can readily be sold or used as collateral for loan, though there are still technical problems (Hedley, 2006).

E-commerce law takes care of the online marketplace where buyers and sellers meet to exchange goods, services, money, or information. In this context, database remedies are described by borrowing the provisions on copyright and applying them to database right (Hedley, 2006). This implies that remedies are available against anyone who infringes database right or authorizes another person to infringe it. Also, criminal penalties, damages, seizure and forfeiture of infringing databases are allowed. Hedley (2006) says that this allows the database maker to pursue extracts from the database in a copied format. The e-commerce law grants database makers rights of extraction, use and re-use. Database intellectual property prohibits the systematic extraction, use or re-use of insubstantial parts of the database that cumulatively conflict with the database owner’s normal exploitation of the database, or adversely affect its actual or potential market (Davison, 2003).

In UK & Europe the e-commerce law or restriction on organizations is to maintain customer data on the basis that personal data shall not be transferred to a country or territory outside the European, economic area, unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data (Tan, n.d). In e-commerce law, an inclusive definition of conduct would conflict with the normal exploitation of the database or adversely affect the actual or potential market for the database (Davison, 2003). Davison (2003) thus says that accessing a database without the permission of the database owner conflicts with the database owner’s normal exploitation of the database. In database intellectual property rights, the database owner should demonstrate the conflict between the defendant’s actions and the owner’s normal exploitation of the database (Davison, 2003). Because the United States has dominated more than 50 percent of the commercial database market in the world and database protection models in various nations, traditional copyright laws are only limited to the protection of the format and structure of the database (Tian, 2008).

 E-commerce law deals with the second generation of Web services that let people collaborate and share information online in new ways such as social networking sites, wikis, and communication tools. The United States database is considered as an intellectual property because the law states that any copying from a protected compilation was generally held to be an infringement. Tian (2008) says that the scope of e-commerce database intellectual property protection under ‘sweat of the brow’ doctrine is clearly much broader than that of existing international treaties. In order to avoid an infringement, an e-commerce competitor should go to the original sources and compile the material independently when establishing a new database. In this context, Tian (2008) says that database intellectual property law is essentially used as a means of policing unfair competition in e-commerce.

Online credit card payment is said to be safer than physical credit card payment. Explain what this statement means.

Online payments are supported by web 2.0 which describe the changing trends in the use of web to enhance creativity, communications, secure information sharing, collaboration and functionality of the web. These types of payments enable transactions between businesses conducted electronically over the Internet, extranets, intranets, or private networks. Online payment methods electronically transfer money from a buyer to the seller. These forms of payment have become increasingly popular especially for electronic auction payments (Morley & Parker, 2010). The online credit card payment appeals to many online shoppers because they enable the shopper to pay for purchases via a credit card. They allow shoppers to dispute charges via the credit card company if a problem arises with a transaction without showing the credit card number to the merchant (Morley & Parker, 2010). The online credit card payment is safer because each time an online credit card transaction is made; the bank obtains the money from the issuing credit card company and transfers it to the merchant account (Morley & Parker, 2010). Online credit card payments are transacted between buyer and seller or transacted via an online intermediary a third party that brokers a transaction online between a buyer and a seller.

Online credit card payment methods provide general information about a transaction and customer in reserving and purchasing tickets such as accommodations and entertainment. Online payments depend on digital signatures which enable transactions to accompany a digitally encoded transaction which can be ascertaining both the originator of the message. It proves that the message has not been modified since it left the originator. Unlike physical credit card payment, online credit card payment alleviates shoppers concerns about supplying credit card information that might then be used for fraudulent transactions if the information is obtained by a hacker (Morley & Parker, 2010). In online credit card payment some virtual account numbers can be used until the cardholder cancels them in which the majority is essential for a single transaction only. Physical credit card payment is used with smart card readers to authorize e-commerce transactions. This authorization mostly uses passwords, biometric characteristic or other access control features (Morley & Parker, 2010).

Online credit card payment is widely used in online auction web such as e-Bay with millions of unique auctions in progress. In this case over 500,000 new items added each day and the initial business model was to provide a website for customer to customer auctions. On eBay, people can buy and sell anything through online credit card payment.  E-Bays generate its revenues through a submission fees upfront a percentage of the sale amount. Transactions involving online credit card payment enable a consumer to provide a conventional credit card number online either directly or through an intermediary (Fazlollahi, 2002). Subsequently, Fazlollahi (2002) indicated that “the transmitted number is usually secured either by SSL (Secure Sockets Layer) an encryption protocol that is included in browser software or SET (Secure Encryption Technology) a security standard that is promoted by MasterCard or Visa” (p. 225).

This mode of online payment is more secure than physical method because SSL provides for secure transmission of data, while SET adds a digital certificate that authorizes the consumer, merchant and bank. Fazlollahi (2002) noted that “online credit card payments whether directly secured via SSL, SET or via an intermediary offer one plus in the United States” (p. 225). This is because of the buyer protection features that most credit card companies offer. As a result, a consumer is only liable for the first 50 dollars of charges if a card is lost or stolen. Fazlollahi (2002) says that SET requires a lengthier consumer registration process than is necessary for other payment mechanisms. In addition when doing online transactions the supplier must give the following information in writing available the consumer:  conditions and procedures for exercising the right to cancel the contract; information about after-sales services where to address complaints.

With physical credit card payment, Lee, Wang & Dagon (2007) say that merchants can steal credit card information and manually process fake transactions. In these online purchases where a buyer and a seller do not meet face to face before purchase certain information must be made available to online customers prior to purchase. It is not also practical to give every consumer a credit card processing terminal to attach to the computer to process transactions (Lee, Wang & Dagon, 2007). In physical credit card payment, consumers enter in their credit card information, and perhaps some other personal information and a transaction is approved. On the other hand, online transactions entail an individual to know enough information (Lee, Wang & Dagon, 2007).

Compared to online credit card payment, physical credit card payment is faced with the challenge of authentication. Lee, Wang & Dagon (2007) noted that “if a person knows the correct 16-digit credit card number with CVV2 number, the correct login and password, and address of the victim, an attacker can make transactions in the name of the victim” (p. 118). With physical credit card payment many banks only require a username and password and balance transfers or online bill payment services can be accessed. Lee, Wang & Dagon (2007) mentioned that “this leaves a system where fraudulent financial transactions can be made by an attacker who happens to get enough information” (p. 118).

Physical credit card payment is prone to key-loggers built-in software which allows attackers to steal credit card information, usernames and passwords or potentially any other information they want (Lee, Wang & Dagon, 2007). Online credit card payment, which uses SET or SSL, has the ability to issue instructions to the consumers that can change their configurations at any time when there is a potential threat.

Explain how secure socket layer (SSL) helps people who do not have private and public keys enjoy data security

Secure Sockets Layer (SSL) is a web protocol used for network security like collection of credit card information by websites. SSL ensures secure transmission of information and was developed by Netscape to provide confidentiality, integrity and authentication to any Application layer protocol that support it (Solomon & Chapple, 2005). It is used mostly to secure communication between web browser clients and web servers. Solomon & Chapple (2005) indicated that “SSL works by enabling the exchange of digital certificates between systems” (p. 155). The most important element of SSL is that the server must send a digital certificate to the client to provide a public key and confirm its identity (Solomon & Chapple, 2005). When the client ascertains to the authenticity of the certificate via an automated process conducted by the browser software, the two hosts may begin communicating using encrypted communications (Solomon & Chapple, 2005). SSL’s are useful were there are no physical stores and they enable firms to sell directly to consumers over internet without a physical sales channel. They also facilitate company to sells in multiple marketing channels simultaneously in both physical and online stores.

In addition, SSL allows the client to provide a digital certificate to the user in order to prove the client identity. Solomon & Chapple (2005) verified that “this optional component of SSL is not commonly used because very few individuals have their own SSL certificates” (p. 155). Kizza (2009) says that, for people who do not have private and public keys, SSL helps them to secure and authenticate data paths between servers and clients. These objectives are achieved through several services, which include data encryption, server and client authentication and message integrity (Kizza, 2009).

Through data encryption, SSL protects data in transport between the client and the server from interception and could be read only by the intended recipient. SSL authenticates the clients to the server by showing the possession of a particular private key.Kizza (2009) also says that through the server and client authentication, the SSL protocol uses standard public key encryption to authenticate the communicating parties to each other. Kizza (2009) mentioned that people using SSL can ensure message integrity, which is achieved through the use of session keys so that data cannot be either intentionally or unintentionally tampered with.

SSL ensures server authentication. Server is authenticated to client by showing the possessing of particular private key. Schäfer (2003) established that “before any communication between client and server, an authentication exchange is performed to confirm the identity of the peer entity either only to the client or also to the server” (p. 244). SSL ensures people confidentiality of user data. According to Schäfer (2003), if it accepted during the establishment of the SSL session, the user data is encrypted. SSL offers a range of algorithms for this purpose such as IDEA, RC4, DES and 3DES (Schäfer, 2003). In the entire process, SSL uses the concept of sessions that was already anchored in the OSI model. Schäfer (2003) says that “before actual communication, client and server establish a session in which the parameters for securing the communication are negotiated” (p. 244). This implies that for people without private and public keys to enjoy data security through the use of SSL.           

It is observed that many companies in China do not purchase the Enterprise Resource Planning (ERP) systems from western countries. Analyze the main reason

Enterprise resource planning (ERP) systems are expensive and time-consuming hence once they are implemented the management should evaluate whether they are successful and deliver the promised benefit (Gundlach, 2009). Successful implementation of ERPs in China is tightly coupled with the predetermined goals. Gundlach (2009) says that Chinese culture is quite different from Western countries, and, therefore, organizational culture is attached within national culture and its core attribute to discern between the Chinese and the Western view of satisfaction. There are specific aspects of business in China which have been seen as the main barriers to the adoption of Western countries ERPs. Gundlach (2009) also says that Chinese culture on the business company contains special characteristics, which can be of strategic and operative influence.

Many companies from China do not buy ERP systems from Western countries because they are restricted by China’s closed economy (Law, 2007). Chinese companies are characterized as having behind-hand and nonstandard management systems and business process which cannot cope with ERPs from Western countries such as SAP. Back in 1996, Law (2007) says that quite a number of discussions about ERP systems appeared in influential presses, but the economy reform in China was not yet fully accomplished hence the old system was still deep rooted. Law (2007) also noted that cultural and communication barriers are among the greatest challenges in the adoption of ERPs from Western countries. The impact of cultural differences is still being felt by many international companies. Law (2007) indicated that the success of ERP implementation in China may be achieved using a different approach from that in Western developed countries. In this context, Chinese enterprise executives should have a good understanding of the uniqueness of context in China while reflecting on the experiences of Western countries in order to enhance their business performance (Law, 2007). 

According to CampTop of Form (2004), Chinese companies do not implement ERPs from Western countries because adapting the implementation to the prevailing cultural style was an important cause of their implementation failures. CampTop of Form (2004) stated that a company that implements ERP system has to change its business processes to the ERP best-practice processes. In this case, the change both impacts on the customer’s culture and is constrained by it (CampTop of Form, 2004). ERPs from Western countries have built in value biases reflecting the value priorities of the culture in which they are developed. CampTop of Form (2004), as a result, says that “national cultures between China and Western countries are different according to Hofstede’s dimensions of national culture” (p.116). CampTop of Form (2004) says that “cultural values embedded in their ERP packages are hypothesized to be affected negatively when these ERP systems deployed in societies such as China” (p. 116). It is important to note that ERPs from Western countries tend to group decision and consultative management to avoid risk for the individual over individual decision and authoritative management (CampTop of Form, 2004). Companies from China want ERP systems which will welcome innovation a bit too easily not putting enough energy into their application. There is, therefore, a need to improve understanding of critical factors affecting ERP implementation success in China.

Western countries ERPs should establish success measures to assess the extent to which their implementation success can be defined in China (CampTop of Form, 2004). By considering the difference between domestic culture of China and Western countries, this gap has widely affected ERP implementation in specific. Scholars also note that in the context of Western countries ERP implementation by Chinese companies, the user satisfaction measure concerns overall satisfaction and outlines how the entire system is adopted. Technology diffusion in the Chinese society is expected to widen the adoption gap of Western countries ERPs because IT firms from China are fighting to gain the ERP market share of the ever growing Chinese economy.