We know about the liability shift deadline on January 1 2005. We know that Acquirers and Issuers and the payment industry as a whole are pushing for retailers to roll with Chip & PIN before the deadline. We know that non-compliant retailers will foot the bill for card fraud from their outlets (despite the misplaced optimism of some that say the banks wont dare to charge them). We also know that retailers can choose not to implement Chip & PIN, but first they need to answer the question “can I afford not to do this?” So what are the critical factors that will decide the issue?

Wilding says: “The most obvious of reasons for implementing Chip & PIN is to prevent the direct financial losses that will be met by non-compliant retailers after the liability shift. What is not known is the level of potential losses, as Acquirer figures on current losses may not paint the whole picture. What is known is that over 50 per cent of current card fraud occurs in card resent environments.

The great unknown is the amount of additional fraud a non-compliant retailer will suffer when fraudsters migrate their activity away from compliant retailers and towards the non-compliant retailer. Industry opinion varies between an increase of 100-500 per cent and will obviously vary between merchant categories.

History tells us, however, that card fraud will always migrate to the weakest link and the only question is “how much?”. Furthermore, the industry’s robust marketing campaign towards Chip & PIN acceptance is generating the unwanted side effect of educating fraudsters about the vulnerability of non-compliant retailers that is likely to increase their susceptibility.

The national marketing campaign towards Chip & PIN acceptance will result in cardholders becoming extremely cautious about using their cards at magnetic swipe merchants. These consumers will regard Chip & PIN as the safety net for their card usage and their spending habits will change to suit.

Merchants that remain non-compliant may risk loss of footfall, loss of turnover and ultimately, a reduction in bottom line profitability. Chip & PIN compliant competitors may make directly associated gains.

Consumers usually choose an environment which is both comfortable and safe. Consumer perception of a retailer is key to the retailer’s success. By ensuring a safe card processing environment for consumers, the retailer is protecting its reputation and showing concern for its customers and enhancing consumer confidence.

Loss of consumer confidence will damage the retailer’s reputation, which may have a direct impact on turnover. Non-compliance could also raise questions as to a merchant’s capability and competence given the amount of time in which compliance could’ve been achieved. For tier 1 and many tier 2 merchants, the damage potential is obvious and real.

Carrot and Stick. To encourage early Chip & PIN adoption, many retailers have been offered Merchant Service Charge (MSC) reductions by their Acquirers. As roll out continues to gather pace, this “carrot” approach may diminish and the possibility exists that Acquirers will turn to a “stick” approach by increasing MSC for non-compliant merchants. A saving today in not implementing Chip & PIN may cost the non-compliant retailer tomorrow, and the next day and the day after.

Whilst the payment industry has focused on direct loss through fraud as its main argument in favour of Chip & PIN adoption, many merchants have struggled to justify the cost of implementation on this basis alone. In fact, many merchants have decided to adopt a “wait and see” approach as a direct result. However, after factoring all of the less obvious arguments into the equation, it becomes apparent that timely Chip & PIN adoption is the only realistic and viable conclusion.

Commidea is a leading developer of card payment processing systems in the UK and has developed Chip & PIN solutions that are affordable, justifiable and simple to implement.

Furthermore, our knowledge of the industry and our expertise in the field of Chip & PIN helps us to make implementation a painless process for our customers.”

SINCLAIR FIRMLY INTO SPOTLIGHT

A revolutionary ripeness testing machine has come under the spotlight with recognition from engineering experts.

Norwich based Sinclair International is celebrating after receiving a top award for its Sinclair iQ - Firmness Tester. The machine uses a low impact, non-destructive method of sensing firmness and can sort up to 600 pieces of fruit a minute.

The innovative and practical equipment has already been acknowledged by a number of companies in the fresh produce industry, but now the American Society of Agricultural Engineers presented the company with its Rain Bird Concept of the Year award at its annual international meeting in Ottawa, Ontario recently.

The system has already been tested on avocados in three major UK pre-pack operations and can now be adapted to inspect other soft fruits such as kiwis, tomatoes and peaches.

In fact it is the stone-fruit capabilities of the equipment which has attracted the attentions of a major US grower.

Gerawan Farming, one of the world’s largest growers of peaches, nectarines and plums, has become the first fruit grower in the US to invest in the Sinclair iQ-firmness testing system.

The Californian based company grows, packs and supplies stone fruit to major retailers across the US and also to global markets.

The new machinery will enable Gerawan to improve the consistency of its peaches, nectarines and plums and also reduce labour costs and boost packhouse efficiency.

Dan Gerawan, president, said he expects, by the end of the season this September, the system will have sorted around 700,000 cartons containing more than 40 million stone fruit.

“Quality has always been at the heart of our business and we have continued to invest in technology to improve sorting and grading.

“The development of the Sinclair iQ firmness testing system is timely for the stone fruit industry. We are seeing an increasing trend towards pre-conditioning or further ripening of fruit before cooling. The iQ system will allow packers to fine tune this process.”

Sinclair International claimed the machine could sort up to 10 fruit a second, with patented air bellows touching each fruit at four separate locations. Ripeness can then be determined and fruit sorted into six firmness bands.

The system can also segregate fruit of a specified firmness and remove unevenly ripened, soft or hard produce.

With the addition of Gerawan, Sinclair now has systems installed at commercial fruit operations around the world, including Europe, Chile, New Zealand and South Africa.

EXPLOIT ITC

If you have followed the sequence of previous articles, you will have selected the right system, a partner who works well with your team, installed the solution on a robust and secure infrastructure and experienced a smooth implementation.

The question now is how to fully exploit your investment by using it to win more business.

Operating in the fast moving and demanding fresh produce sector, you are now very well placed to use information and communications technology (ICT) as a competitive aid. The key factor will be the ability of your systems to seamlessly integrate with your suppliers and customers. The driver for this will be the need to speed up current processes while curtailing costs. This will be encouraged by clients who are driven by cutthroat competition at consumer level. It is here that an integrated supply chain solution will provide you with a significant commercial advantage.

In an ideal world, your system would be seamlessly linked to your customers and your suppliers. Orders placed by your clients would be automatically entered into your business management system.

At the same time, back to back orders would be raised on your suppliers for the right volume of product to fulfil the customer orders. The system would monitor the progress of all orders from grower to pack house and through the delivery process.

Proof of delivery would be captured electronically and transmitted immediately to your system triggering an automatically produced invoice. Your invoice would be electronically entered into your customer’s business management system for subsequent authorisation. When sanctioned, a BACS payment is sent to your bank and a remittance advice transmitted to your system. An exception reporting system alerts you to issues requiring management attention and a dynamic executive information system highlights customer and product trends as they happen. Remarkably, there is no data duplication and paperwork is minimal.

You could be forgiven for thinking that this is science fiction or only for large companies with millions to spend that could afford to take years to implement. However, with the maturing of the IT industry, such technology is not just feasible but available now to medium sized companies. The recent entry of companies such as Microsoft into the mid range business management market has provided world class solutions at affordable prices. They can also be quickly deployed and come with industry standard built in integration facilities.

The LinkFresh FP3 system based on Microsoft Navision, is a good example of this concept in action. The powerful inbuilt financial, manufacturing, distribution, CRM and e-commerce facilities have attracted over 34,000 companies worldwide to use it as their core business management solution. In addition, a set of powerful rapid development tools have enabled the production of specific fresh produce integrated LinkFresh applications. However, the open design of the product means that integrating products such as Microsoft’s Sharepoint Portal and BizTalk Server is a relatively simple task.

SharePoint Portal provides an intranet that can be used to share information and documents across departments. This can be extended as an extranet to enable electronic collaboration with your customers and suppliers. BizTalk server is a universal translator with built in workflow facilities. It allows you to send and receive electronic information to other systems that can be integrated without the usual hassle of file conversion. It can also be used to issue pre-defined alerts when quality issues affect a client order.

The arrival of technologies such as Radio Frequency Identification (RFID) will make cost effective product and batch tracking a reality. However, the icing on the cake is the ability to provide customer facing staff with access to dynamically updated real time information. Here, mobile solutions that seamlessly link to your customer and product data can be used as a real competitive aid. Imagine equipping your category managers with a device that tracks sales as well as alerting them to possible supply issues as they happen.

Hopefully, this article may assist you in realising that supply chain integration is no longer just a pipe dream. It is the business model of the future and will be driven by the need to do more with less using IT as a facilitator. Furthermore, it is available now.

In the next article, the focus falls on getting a return on your IT investment.

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