Realization of SCM and CRM by Using RFID-captured Consumer Behavior Information

Abstract

Physical store retailers are facing a tougher situation than ever. In order to tackle this tough situation, they need not only to reduce cost by effectively executing SCM but also to introduce measures to increase profit like CRM. They are effective by themselves, but if they are combined the retailers can enjoy more benefits from these practices. However, there is no good application that realize both two business practices together. In this study, assuming that RFID system captures consumer behavior information on the sales floor, we propose an application, in which discount prices are offered to FSP member customers based on their loyalty level and the discount prices are computed to achieve a target inventory turnover rate. To realize this application, we also propose two algorithms that effectively control an inventory turnover rate at the same time reward FSP customers based on their loyalty status. For evaluation, we develop a prototype system of the application for a proof of concept and run a numerical study to show the validity of the proposed algorithms.