Fat pipe

When it comes to m-commerce, the future is already here, and some industry observers believe that those who wait to jump on the bandwagon may find themselves running tocatch up.

However, few, if any, companies in the food industry, aside from several DSD vendors, are taking advantage of wireless technology despite the development of new devices by some 15 to 25 companies. Among those involved today are Frito-Lay, Pepsi and Kraft, who have joined such firms as Federal Express, UPS, Caterpillar, Charles Schwab and Goldman Sachs.

"There are tremendous B2B applications for the industry in inventory reduction, transportation scheduling, remote order entry and fulfillment, and revenues related to m-commerce could rise to $250 billion by 2005," according to Michael J. Silverstein, senior vice president, The Boston Consulting Group, Chicago.

Adam Petrovich, vice president of the integration services group at Symbol Technologies Inc., Pittsburgh, is also optimistic about the future of m-commerce in a number of areas, including PDAs, telephony, wireless voice networking and the miniaturization of consumer devices with bar code scanners.

"The advantage goes to the early adopters. However, the challenge is to make sure it benefits all members of the supply chain–retailers, manufacturers and consumers–and to establish best practices," he says.

For manufacturers, he adds, one of the major benefits is to create target marketing programs based on a consumer's shopping history—even down to the point where you can tell whether a consumer is doing a short or long shopping trip based on the first few purchases they make in-store. For retailers, the opportunity is to maximize profitability, build their brand image, and provide a better shopping experience, Petrovich notes.

A sign that m-commerce has a way to go on the consumer side is underscored by Japan's NTT DoCoMo, the wireless division of Nippon Telephone & Telegraph, which has delayed the launch of its 3G mobile phone network until October. Japan is generally considered the world leader in mobile commerce, and the delay, according to some observers, is a major setback to global expansion of this technology. This would have been the world's first commercial 3G operation.

There is now some concern that 3G technology and networks, which allow subscribers to download data significantly faster and access Internet portals through their phones, may also be prohibitively expensive.

At this point, m-commerce is virtually non-existent in the B2C sector in the United States, and the technology is not likely to catch on for another five to 10 years, Silverstein says.



his is underscored by recent consumer surveys conducted by A.T. Kearney, in conjunction with Cambridge University's Judge Institute of Management, which found that only 12% of mobile phone users in the United States, Europe and Asia intended to use Internet-enabled telephones for any type of transaction.

The percentage is lowest in the United States, where only about 3% of consumers plan to use cell phones for making purchases. However, Jupiter Research notes that European consumers, despite higher cell phone usage, have little interest in mobile applications besides e-mail.

As to the B2B segment, Silverstein notes that there are a number of myths surrounding the technology, one of the major ones being that it is something for the future and not yet on the CEO's agenda. "The truth is that many of our clients, retailers and packaged goods companies are using wireless today, taking the costs out of the system and generating revenues," he says.

One of the major obstacles to m-commerce implementation, according to Silverstein, is the perceived cost. "However, this is not a multimillion- dollar enterprise. Devices are ubiquitous, and the carrier exchange networks are cheap and declining at a rapid rate."

Furthermore, today's technology and bandwidth can easily fulfill the highest demand applications, so there's no need to get caught up in the "fat pipe syndrome" and wait for unlimited bandwidth and the ultra high speed transmission of 3G technology, Silverstein notes. "This is not entertainment for teenagers. There are applications throughout manufacturing, transport, wholesale and retail that are critical," he says. "This includes sales force automation, inventory management, process control, logistics and fleet management, wireless customer relationship management, and customer advertising," he adds, noting that such firms as Frito-Lay, Pepsi and Kraft/Nabisco are using wireless technology to generate new sales and productivity gains and to enhance customer service.

"The world of m-commerce is one where you know the location of everything. It's a world where trucks are not missing and loading docks are scheduled to the second," Silverstein says. In the case of PepsiCo, use of a wireless WAN (wide area network) reduced fulfillment time, according to Silverstein. "It was driven by a sales rep to a single store, to a vehicle docking that basically entered orders and business. Since the wireless WAN records orders, prints invoices, transmits orders and automatically restocks the warehouse, there are no more out-of-stocks, and sales increase."

Nabisco used it to lower warehouse costs. Using speech recognition software, the computer gets the picker to the location where he scans the bar code, and products are recorded. "It's hands-free ordering and automatic rerouting that eliminates picking and offers more timely inventory control," Silverstein says.

Basically, implementation of m-commerce is a four-step process, according to Silverstein—awareness, idea generation, triage and building. Awareness is simply building a common understanding of m-commerce and a network of people interested in the concept. Idea generation means covering all the possibilities m-commerce offers and formalizing ideas into initiatives to be investigated.

Triage involves categorizing the initiatives into those that should be pursued immediately, further analyzed or shelved. At this point, companies should also outline the initiatives for launching and building m-business—initiatives that include business development, planning, or- ganization, technology and marketing.

"Start with the things that are easy to do—messaging, e-mail, dynamic scheduling. Add the new generation of mobile enterprise applications, tie it

to your database, add customization, improve the interface and get ready

for unlimited mobile bandwidth,"

Silverstein says.