Cost based dynamic pricing of goods

Methods and systems (200) for reducing losses related to perishables are disclosed. The perishables are grouped based on the use-by-date (UBD) and a quantity of at risk perishables are determined (210). A financial impact of the at risk perishables is calculated for each group (220). Pricing is dynamically determined for the perishables based on the financial impact and the UBD (230) and a price display is updated to indicate the pricing of the perishables (240).

BACKGROUND

The present embodiments relate generally to systems and methods for providing product and inventor management services, and more specifically to systems, methods and services for dynamically pricing goods based on shelf life of the good.

Many companies lose profit on wasted inventory due to the time sensitive nature of the goods being produced and/or sold. U.S. consumer goods manufacturers and retailers lose billions of dollars in the supply chain due to failures of life cycle management. It has been estimated by the Food Marketing Institute that over 2 billion USD is lost annually by the U.S. grocery industry on products that are destroyed, returned, placed in salvage or donated to charity.

There are several reasons for perishables obsolescence. For example, at the end of the supply chain, a retail store may receive products with less than their desired shelf life. If the store does not take action in time to move the product quickly to shelf, and/or markdown the product to stimulate sales, then the product can become un-saleable resulting in unnecessary wastage costs.

Present solutions are dependent on manual, untimely and labor-intensive processes, which are mostly ineffective. For example, every year the grocery industry comes up with new initiatives to reduce waste, but without the ability to automate the tracking and recording of the product lifecycle/shelf life, they quickly drop down the priority scale.

Consumer product manufacturers and retailers lack the ability to automatically detect shelf life of high-value perishables and dynamically price items to provide incentive to buyers for buying perishable goods with shorter shelf life, which could reduce losses due to failures in life cycle management.

SUMMARY

Embodiments disclosed herein address the above stated needs by considering the impact of shelf life on the pricing of an item. Accordingly, embodiments of the invention include methods and systems for reducing losses related to perishables. The perishables can be grouped based on the use-by-date (UBD) and a quantity of at risk perishables can be determined. A financial impact of the at risk perishables is calculated for each group. Pricing is dynamically determined for the perishables based on the financial impact and the UBD and a price display is updated to indicate the pricing of the perishables.

DETAILED DESCRIPTION

Additionally, in the following description the term perishable or perishable good or item is not limited to a specific type of good, such as food items. Those skilled in the art will appreciate that perishable goods can be any time sensitive item, such as circuit components (e.g., based on version), chemicals, pharmaceuticals, organic products, and the like. Accordingly, embodiments of the invention are not limited to food products or retailers, though these examples are used in the following disclosure to illustrate the invention.

As discussed in the foregoing, there are several reasons for perishables obsolescence. Embodiments of the invention reduce the magnitude of the problem at the end of the supply chain, where the store receives products with less than their desired shelf life. For example, if the store does not take action in time to move the product quickly to shelf, or markdown to stimulate sales, then the product can become unfit for sale, resulting in unnecessary wastage costs. However, embodiments of the invention aid in identifying and pricing the perishable goods to stimulate sales and thus reduce or eliminate the product waste.

Embodiments of the invention allow retailers to dynamically price perishables to stimulate sales and provide incentive to buy an item with shorter shelf life at a price lower than regular price vs. the one with longer shelf life at regular price. In one embodiment of the invention, radio frequency identification (RFID) tags are used in conjunction with a real-time dynamic pricing algorithm to facilitate pricing of the perishable goods. When used in conjunction with electronic displays, the customer can view a dynamic price range including low-end pricing if items with shorter shelf life are available.

Perishables with a regular price exceeding can have RFID tags attached (e.g., read-only tags). The retailer may wish to limit the scope to high value goods (e.g., $4 or as determined by the retailer). The retail store inventory system can store the use-by-date (UBD) for each unsold item with a unique electronic product code (EPC). At a predetermined frequency, the minimum and maximum price of perishable items exceeding a certain value (e.g., those with RFID tags attached) can be calculated and updated. The update frequency can be determined by the retail store manager, other designated individual, automatically determined based on industry/product type, automatically determined based on entered criteria, and the like. Once the minimum (Min) and maximum (Max) price of the perishable items are determined, the price range can be updated in a price file, sent to an electronic (e.g., digital) price display at the retail store and/or price-scan kiosks/terminals. When the perishable item is scanned at the point of sale (POS) terminal the customer pays the dynamic price from the price file which can be determined using the logic described below.

The logic modules can receive input for each perishable item at the UPC/GTIN level. For example, the following list of variables can be obtained for a given perishable.A=Quantity-on-hand grouped by nth use-by-date (UBD) from the retail store inventory systemB=Shortest shelf-life for the itemC=Longest shelf-life for the itemD=Period between longest and shortest shelf-lifeE=Average quantity sales per day for the itemF=Retail price per itemG=Cost per itemN=cost of discarding/disposing/returning the item to the supplier

From the foregoing list of variables various values can be calculated to aid in the pricing of the perishables. For example, a period between longest and shortest shelf-life can be calculated as:
D=C−B.(1)

A projection of the quantity of perishables that would have to be discarded if not sold before the use-by-date (UBD) can be calculated as:
Hn=An−E,(2)

If the calculation of Hnin Eq. 2 yields a result greater than zero, then the financial impact on the nth UBD group can be calculated as follows.
IF Hn>0 THEN  (3)
In=Hn×(F−G)  (4)
Jn=Hn×G(5)
Kn=Hn×F(6)
Ln=(Hn/An)×100  (7)
IF Ln>=Z THEN  (8)
Mn=(G−N/2)  (9)
ELSE
Mn=(G+(In−In×(Ln/100)/Hn))  (10)
ELSE
RETURN.

In the foregoing algorithm Inis the loss of profit impact, Jnis the cost of perishables if not sold by use-by-date, Knis the loss of revenue if perishables are not sold by the use-by-date, L is the percentage of quantity unlikely to be sold by the use-by-date (UBD) and Z is a threshold for the percentage of quantity unlikely to be sold by the UBD (e.g., 90). Mnare output values of the price of the perishable item expiring on n use-by-date which are used to determine the Min and the Max price values of the perishable item.

Referring toFIG. 1, a system level diagram is illustrated showing an exemplary architecture according to at least one embodiment of the invention. For example, product data gathering and display devices110can be any data gathering and display devices such as handheld RFID reader112, fixed RFID reader114, smart shelves116and electronic displays118. These devices110are used to gather information and display information at the retail level. The data gathered by the data gathering devices110can be filtered and aggregated at the local level by a controller or smart reader120. The controller120may include infrastructure middleware embedded to integrate RFID data collection and reporting at the edge of the network. For example, the infrastructure middleware may be J2ME (Java-based) open standards with secure messaging capabilities. The controller120can then pass the aggregated data via a data link/message bus125to a remote server130. The remote server130may be at the retail level or may be at some other remote location. The remote server130may include a Java 2 Enterprise Edition (J2EE) Platform to execute RFID enabled business processes and to aggregate and analyze data from RFID devices. The remote server130may communicate the data acquired and processed from the RFID devices to an enterprise server140via data link135. The enterprise server140may be configured to integrate RFID-enabled business processes with new and legacy line of business applications. The enterprise server140may also run or communicate with packaged applications150. The packaged applications generally refer to business applications which can use RFID information for pricing, inventory management, distribution, and the like. For example, the packaged applications can include Enterprise Resource Planning (ERP), Warehouse Management Software (WMS), and Supply Chain Management (SCM) applications.

Those skilled in the art will appreciate that the infrastructure for implementing embodiments of the invention is commercially available. For example, IBM Websphere® RFID infrastructure devices can be used for data gathering devices110and controllers120. IBM Websphere® RFID premises servers can be used for remote/premises server130and IBM Websphere® Business Integration, Websphere® Portal and Websphere® Product Center can be used to implement enterprise server140and packaged applications150. For example, a WebSphere RFID Premises Server can act as a central repository for data coming in from RFID readers and controllers, and can execute business processes using RFID data.

RFID is an emerging technology that can enable real-time connection to information at the very edge of a business, such as retail stores and/or distribution centers, with their enterprise operations. The WebSphere® RFID Premises Server provides an RFID platform that can enable end-to-end processes that can help transform businesses, particularly through enhanced supply chain management and asset management. The Premises Server can run on a Java 2 Enterprise Edition Web-application server, which can provide secure messaging and data filtering, along with management and deployment for remote locations such as retail stores, distribution centers, and manufacturing sites. The Premises Server can interpret and correlate high volumes of data from RFID devices while connecting to the server to other upstream servers such as an enterprise server.

Although specific references have been made to commercially available devices, the invention is not limited to these devices. The reference to specific devices is merely provided for convenience of illustration of the exemplary embodiments of the invention. Further, since many of these commercial devices are well understood to those skilled in the art detailed explanation of each aspect of the illustrated embodiment or alternative configurations will be omitted. Accordingly, those skilled in the art will appreciate that embodiments of the invention are not limited to the illustrated configuration or devices discussed herein.

Referring toFIG. 2, a system for reducing losses related to perishables is illustrated. The system can include logic200for reducing losses related to perishables including logic210configured to determine a quantity of at risk perishables. The at risk perishables are generally determined as the perishables in excess of the average sales for a given UBD, which are grouped based on the UBD, as discussed in the foregoing. That is, for each perishable within a particular type of good (e.g., milk) the inventory is grouped by UBD and then the at risk perishables can be determined (see, e.g., equation 2). Logic220is configured to calculate a financial impact of the at risk perishables (e.g., the cost and loss of revenue if the perishables are not sold by the UBD). Logic230is configured to dynamically price the perishables based on the financial impact and the UBD. For example, the dynamic pricing can be calculated according to Eqs. 8-10 discussed above. Logic240is configured to update a price display to indicate the pricing of the perishables. Logic module240of system200can be operably coupled to the electronic displays. Further, Logic250can be configured to update a point of sale (POS) terminal160with the pricing of the perishables.

The system200can communicate with elements such as data gathering and display elements110, controllers120and/or POS terminals160to obtain data on the perishables and update pricing information at the retail level. The system200and various logic modules (210-250) can communicate via communication link205to the various elements in the overall system. For example, the RFID data gathering device(s)110can be operably coupled to the logic for reducing losses related to perishables. The RFID data gathering device can be at least one of a handheld RFID reader, a fixed RFID reader, and a shelf unit having an integrated RFID reader. Further, a controller120operably coupled between or in parallel to the RFID data gathering device110and the logic for reducing losses related to perishables200. Additionally, the price display118can be an electronic display that is configured to display a range of pricing (e.g., minimum and maximum pricing for the perishables available). Thus, a consumer can be notified of a range of pricing available for each group of goods and will be encouraged to purchase the lower cost (e.g., at risk) perishable, thereby reducing the losses for the retail store. The actual pricing for each group based on UBD can be dynamically calculated as discussed in the foregoing and the new pricing can be pushed to the POS terminals or kiosks so that the correct price will be charged to the consumer. Likewise, using the RFID tag and readers or other conventional (e.g. bar code scanners) to identify the product purchased can allow for automatic update of the inventory on hand and recalculation of the pricing if desired.

In addition to the elements illustrated inFIG. 2, the system can further include a server (e.g. remote/premises server) and an enterprise server in communication with the premises server, such as illustrated inFIG. 1. The logic200for reducing losses related to perishables can be located on at least one of the premises server and the enterprise server. For example, the logic200could be entirely contained on one or both servers. Alternatively, the logic200can be distributed over one or more servers, other suitable processing devices or can be independent elements, as will be appreciated by those skilled in the art. Generally, the various logic modules210-250can be located in any server or suitable device and can be configured in any configuration so long as the functionality of the elements are achieve. For example, logic modules210-250could be integrated into one software program or could be distributed as separate modules on several servers. Accordingly, the invention is not limited to the configurations illustrated in the accompanying drawings or discussed herein. In addition to logic200, additional applications/software can be located on the remote and/or enterprise servers. The applications can be configured to perform various functions, such as enterprise resource planning, warehouse management, and supply chain management. Each application can communicate with the logic200for reducing losses related to perishables and utilize common data from the RFID devices.

Further, each logic module (e.g.,210-250) can include additional logic. For example, logic210can included logic configured to receive information from a group of perishables affixed with radio frequency identification (RFID) tags scanned using the RFID data gathering devices110to obtain a UBD for each perishable. Logic configured to group perishables by UBD and logic configured to calculate the quantity at risk (e.g., using Eq. 2) can also be included. Also, logic220can include logic to perform the algorithm of Eqs. 3-7 and logic230can include logic to perform the algorithm of Eqs. 8-10. Those skilled in the art will appreciate that each illustrated logic module (210-250) can have various layers of logic to accomplish the functions/sequence of actions disclosed herein. Accordingly, the invention is not limited to the arrangements or logic modules illustrated in the accompanying drawings.

Further, embodiments of the invention include methods and methods of providing services to a customer (e.g., over a network and/or to manage computer resources) for performing the processes, activities, functions, steps and/or sequence of actions discussed herein. For example, referring toFIG. 3, a method of reducing losses related to perishables is illustrated. A quantity of at risk perishables is determined, block310. The perishables can be grouped based on the use-by-date (UBD) and the at risk perishables can be determined as discussed in the foregoing. A financial impact of the at risk perishables is calculated, block320. The perishables are dynamically priced based on the financial impact and the UBD, block330and a price display can be updated to indicate the pricing of the perishables, block340. The method can further include updating a point of sale (POS) terminal with the pricing of the perishables, block350.

Embodiments of the invention can include further methods and sub-methods as discussed herein. For example, block310determining the quantity of at risk perishables can include additional processes such as illustrated inFIG. 4. Referring toFIG. 4, a group of perishables affixed with radio frequency identification (RFID) tags can be scanned using a RFID reader to obtain UBD for each perishable, block312. The perishables can be grouped by UBD, block and the quantity at risk can be calculated using Eq. 1, for example. Likewise other blocks of the method illustrated inFIG. 3can include additional sub-process as described herein. For example, referring toFIG. 5, calculating the financial impact in block320can include calculating a loss of profit based on the quantity at risk, a retail price per perishable and a cost per perishable, block322. A cost for perishables not sold by the UBD can be calculated, block324. A loss of revenue for perishables not sold by the UBD can be calculated, block326.

Block330dynamically pricing the perishables can include additional processes. For example, referring toFIG. 6, an estimated percentage of the quantity at risk unlikely to be sold by the UBD can be determined, block332. The estimated percentage can be compared to a threshold value, block334. The threshold value can be set to any value desired (e.g., 1% to 99%). If the estimated percentage is equal to or exceeds the threshold value, the price of the perishable can be determined based on a cost of the perishable less a percentage (e.g., 10% to 100%) of a cost of disposing of the perishable, block336. If the estimated percentage is less than the threshold value, the price of the perishable can be determined based on a cost of the perishable plus a loss profit estimate times a percentage of quantity likely to be sold by the UBD, block338.

Those of ordinary skill in the art understand that data, information and signals may be represented in a number of different ways, using various technologies and techniques. The logical blocks in the flow charts, circuits, and components described in connection with the various embodiments may be implemented as hardware, software, firmware, or some combination thereof. Those of ordinary skill in the art would know to implement the described embodiments using various design options, depending upon the particular constraints and considerations of the situation. Such design choices are not a departure from the scope of the present invention.

The various logical blocks depicted in the flow charts, circuits, and components may be implemented using a personal computer, a microprocessor, a controller, a digital signal processor (DSP), an application specific integrated circuit (ASIC), using discrete or integrated circuitry, or a combination of these. A general purpose processor may be a microprocessor, but in the alternative, the processor may be any conventional processor, microcontroller, or state machine.

Accordingly, an embodiment of the invention can include a computer readable media embodying a method for reducing losses related to perishables comprising: determining a quantity of at risk perishables, wherein the perishables are grouped based on the use-by-date (UBD); calculating a financial impact of the at risk perishables; dynamically pricing the perishables based on the financial impact and the UBD; and updating a price display to indicate the pricing of the perishables. The computer readable media can embody additional methods disclosed herein, such as updating a point of sale (POS) terminal with the pricing of the perishables, and other methods disclosed in the foregoing description.

The various steps and activities in the embodiments described herein may be performed in the exemplary order illustrated in the figures, or another order, depending upon the particularities of the implementation. Various other activities and steps may be performed in a sequence other than that illustrated in the figures.

The disclosure of the various embodiments is provided so as to enable those of ordinary skill in the art to make and use the present invention. Design choices and modifications to the various embodiments will occur to practitioners of ordinary skill in the art without departing from the spirit or scope of the invention. The present invention is not intended to be limited only to those specific versions which are discussed herein for the sake of illustration, but is to be accorded the widest scope for the features and aspects of the invention enabled herein and recited in the appended claims.