RFID Realities

Retailers

Wal-Mart:
Wal-Mart is probably the most high-profile user of RFID and could see the quickest financial benefits from the technology, thanks to the economies of scale from its massive retail network.

The company has set a deadline of January 2005 for its top 100 suppliers to achieve pallet-and-case-level tagging, with the overall aim to have all its US suppliers on board by 2006. Once the US has been migrated, Wal-Mart intends to motivate European and Canadian suppliers to follow suit.

Simon Langford, manger of RFID strategy at Wal-Mart/ASDA, claims the technology itself is not new; it is only its application in the supply chain that is relatively untried. "RFID is being used by 20 million households in the US, so it is not new. Our focus is at case and pallet. But the majority of benefit today is at store level -- that's where the real low hanging fruit is. We will get better and smarter at inventory levels and our inventory systems will be able to react more effectively," he says.

Adoption has started in a big way, says Langford, at not just Wal-Mart but the US Department of Defense and Delta Airlines as well. Different industries have recognised the importance of RFID.

Tesco:
To confuse matters, the UK retail giant refers to RFID as the "radio barcode". The company has been experimenting with the technology since 1992 and aims to have readers in all the key points in its supply chain, in stores and, eventually, at all its tills -- but that is some way off, says Tesco IT director Colin Cobain

"We have done four significant trials. One item-level one with Gillette. It helped improve security and shrink, but also showed that item level is not viable in terms of price," says Cobain

The company has also carried out an item-level tagging trial with home entertainment products, such as DVDs, in its Leicester and Sanford stores, tracking to shelf level. RFID helped in this instance as stock often gets moved around the shelves by browsing customers, which makes it extremely difficult for Tesco to keep track of inventory "It's the best trial we have in terms of item level; we know what is on the shelf and what isn't."

Tesco has also been experimenting with the security aspects of RFID to create a secure supply chain, with readers at shop back doors and distribution centres to control all high value items. The company is working with IBM to realise this level of visibility of high profile goods from distribution centre to store, and is planning a mass roll-out for Q1 2005.

Woolworths:
Woolworths has been trialling RFID for more than two years, initially as part of a Home Office project but more recently internally to investigate the benefits of using the technology in the supply chain between its distribution centres and stores.

There needs to be international cooperation on RFID standards for the technology to be a real success, says Geoffrey O'Neil, director of strategic projects for Woolworths UK. "We need cooperation on a global basis. We don't want different flavours of RFID developing in clusters around the world."

O'Neil adds that most companies were also overlooking some important issues surrounding the cost of RFID projects and claims that integration with enterprise applications and logistics infrastructure is the real problem. "A lot of people seem to be focused on the cost of tags but I am far more interested in the costs of integration," he says.