RFID outlook is positive but 'it will take time'

Related tags Rfid Supply chain management Tesco

As a new report backs up growing evidence that companies' IT spend
budgets are continuing to expand in an effort to incorporate RFID
tagging, the latest word from global retailers is that
implementation will take time.

The latest report on RFID from Forrester Research​ claims that companies are planning to increase IT spending by 3.9 per cent in 2005, a conclusion that also supports ABI Research's recent assertion that firms are set to scale up and integrate RFID into their normal operations this year.

However, at this week's National Retail Federation trade show, held in New York, heads from major US and European retailers including Wal-Mart, Metro and Tesco have all stressed that the implementation of the system, which many cosmetics and personal care companies are currently grabbling with, will not happen over night.

Linda Dillman, chief information officer for Wal-Mart said that 57 of its suppliers were now using the technology, and that this figure was to increase by the end of the month. However, she also pointed out that it would take some time for both retailers and suppliers to become fully competent in the deployment of the technology.

Wal-Mart has been key to the introduction of RFID technology, which will eventually encompass all price-tagged products contained in its stores worldwide. For cosmetics and personal care companies, this has thrown up a range of challenges in getting to grips with technology that is basic in concept but logistically complicated to implement.

At the New York trade show, representatives from both Tesco and Metro also stressed that implementation of RFID would take time, with Metro's Zygmunt Miedorf going as far as to say that it would be years before the processes is completed.

Although European retailers are working behind deadlines set by US retailers, the implications for the cosmetics and personal care industry are becoming increasingly global. As big players such as Tesco and Metro start to take up on the technology in Europe, this is expected to have a knock-on effect for smaller retailer, which should eventually lead to RFID becoming an industry norm for all aspects of retail.

But despite problems over implementation, the recent studies by Forrester and ABI both indicate that company executives are increasingly positive over their outlook for both their businesses in general and the implementation of RFID.

Although concerns remain over the expense of implementing RFID, retailers and suppliers alike are resigning themselves to the inevitability of adopting the technologies and to the benefits that it is expected to eventually bring.

RFID tags are tiny computer chips connected to miniature antennae that can be affixed to physical objects. The most commonly application of RFID contains an Electronic Product Code (EPC) with sufficient capacity to provide unique identifiers for all items produced worldwide.

When an RFID reader emits a radio signal, tags in the vicinity respond by transmitting their stored data to the reader. Passive (battery-less) RFID tags, read-range can vary from less than an inch to 20-30 feet, while active (self-powered) tags can have a much longer read range. The data is then sent to a distributed computing system involved in supply chain management or inventory control.

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