RFID: Conquering "the Last Yard"
Thursday, October 11, 2007 - RFID Connections

Dan Mullen

President

AIM Global

 

There have been a number of articles lately questioning major retailers' "commitment" to RFID and highlighting a shift in focus away from the supply chain towards "the last yard" within the store.  While this shift is somewhat disappointing (although not entirely true), it's also not all that surprising.

 

It's not entirely true because RFID labeled or tagged items are still required if companies are going to cover "the last yard" from the store room to the sales floor.  And it's not entirely surprising because it's in the store itself that the infrastructure can be quickly installed and managed to provide immediate benefits.

 

Industry experts have been saying from the very start that it's not tags and readers that will be the issue for many implementations; it will be infrastructure.

 

It's understandable that retailers would want to accelerate the maturation process of a full infrastructure. Having lived through the evolution of bar code adoption and its related infrastructure issue, they are the ones that most understand that the "Big Bang" of benefits will truly occur when there are no weak links in the RFID-enabled supply chain.  Of course, AIM members are only too happy to help in this process.

 

In the interim, however, companies are looking inside to build the necessary infrastructure and gain ROI.

 

Here's an example of why this is true.  One of the fastest growing applications for RFID in retail is tracking of promotional displays.  Ensuring that a special display is on the floor to coincide with promotions can make a tremendous difference in sales.  Having it out at the wrong time -- or not at all -- means that part of the promotion budget is wasted and both the product manufacturer and the store lose sales.  RFID tagging of displays makes it easy to verify the display is in place.  This infrastructure is relatively easy and inexpensive to install but the returns are significant.

 

What's noteworthy about display tracking, asset tracking, and some of the other, recently discussed, "hot" areas of RFID deployment is that they are all closed-loop or semi-closed systems.  The reason they're successful is that infrastructure has been put in place to effectively use RFID and because the benefits flow directly to the company that implements it. 

 

When you look at the retail model for RFID in the supply chain, it's a completely different story.  The model is an extremely ambitious and far-reaching concept.  Providing total visibility in both directions along the supply chain requires the development of processes and relationships at a depth that have not existed in the past.  And until that bi-directional communication is effected, the full benefits of RFID cannot be realized.  But, because of the number of organizations, business processes, software and integration efforts involved this is, most often, a slow and complex process.  It is understandable to want a rapid evolution to ubiquity, but expecting it to happen quickly or painlessly is, frankly speaking, naïve.

 

RFID Connections has often pointed to the parallels between RFID and bar code history.  Bar code labeling took off very slowly as well, with the familiar chicken-and-egg argument: "I'm not going to label till retailers start scanning" and "I'm not going to scan till manufacturers start labeling."  And that was a comparatively simple implementation.

 

At the same time, many manufacturers began seeing the benefit of using bar codes for internal applications and those took off quickly (in relative terms).

 

Why?  Again, infrastructure.  Companies using bar code, RFID or any other technology for internal or closed-loop applications control the infrastructure so they can reap the benefits and can, therefore, justify the costs.

 

The original EAN/UCC code and symbol system has been called a "very large closed-loop" system because standards or tools exist to provide a common means of communication -- in bar code symbols as well as electronically.  The EPCglobal system is just now getting to the point where those tools are becoming generally available.

 

So, while retail and defense will continue to roll out their RFID programs, albeit a little less rapidly than had been originally anticipated, significant growth will come in internal or closed-loop applications.  And that is not a bad thing.  As companies become more knowledgeable about, and comfortable with, RFID, the full development of a supply chain infrastructure will naturally follow.

 

And, if history has any lessons to teach, manufacturers will start pushing the use of RFID upstream to their suppliers which will further foster the growth of the necessary infrastructure.

 

-----

 

Comments on this column?  E-mail me: Dan Mullen, President, AIM Global

 

 

Share this Story
Digg   del.icio.us   Yahoo   Reddit   Facebook   Google

Related Articles :
No Related Content Found

Search Articles :