It is now three years since retailer Wal-Mart announced it would mandate the use of RFID by its suppliers, with the eventual intention of deploying RFID technology throughout its supply chain to improve efficiencies. And it is not the only firm to have taken such a decision, as retailers such as Metro of Germany and Target in …
In the end, who pays?
Who pays for the cost of RFID? The consumer.
"Always low prices. Always."
Unless we have to pass along an expense to the consumer.
Who's Really Surprised?
Since the invention of the mega-retailer (Woolworth, Sears, etc...) suppliers have always complained that the retailers issued difficult mandates that often threatened to put them out of business (Sears actually did murder several of it's big name suppliers), why is anyone surprised about Wal-Mart? Just like dealing with the devil, dealing with the uber-god of retail is going to have some consequences.
If the suppliers want to do business with Wal-Mart/Target they have to comply. Doing big retail screws margins so badly that most suppliers can't get away from mega-retail after they jump in. I feel no sympathy for the junk/disposable culture being driven by the mega-retailers. They have killed boutique shopping and I hope they choke on the bones of those they have eaten.
problems with traditional RFID chips...
traditional RFID chips don't work in proximity to metals or liquids - a nightmare in supermarket supply chains where a lot of product packaging contains foil or the product is itself liquid (milk, water, juice etc etc)
However, Qinetiq have recently announced their Omni-ID chip, which _does_ work in proximity to metal or liquids...
The Y2K (and now RFID) Acid Test
Back in 1999, I used a customer's (ie, company's) Y2K preparedness as an indicator as to the state of their IT management - and, consequently, the problems that I as a consultant would have in implementing "new" technology at their facilities. The less that they had prepared for Y2K (meaning how many out-source coders I found stuffed into corners and lunch rooms) the worse I knew MY projects were going to fare. I used this to properly configure project plans and pricing - and was pretty much dead-on with the estimates.
Fast-forward 8 years. Today, examining a producer/retailer embracing or resisting RFID is filling the same benchmark for me. RFID provides immense benefit to a company -IF- they have a proper appreciation and preparation of the support components - and business process re-engineering - that is required to USE this information. Few outside of Wal*Mart, P&G, etc. have made the necessary preparation to use the flood of data that RFID provides.
The real cost to a company that is required to implement RFID tagging in their products is the support infrastructure to give them benefit from the technology. Many do not understand how RFID in every individual produce can help them in managing their business in real-time: they are still in the "batch mentality" that says "well, monthly reports are good enough". It takes not only the sensors, communications and tracking systems, but a thorough re-work of the back-ends and the entire production and inventory management process - as well as a GOOD data warehouse - to truly benefit from this technology.
I mention all this together as the resistance to RFID from a corporate stand point is an indicator that the company's systems are still probably at a 1980's level of sophistication. Current industry best practices usually perscribe near-real-time tracking of inventory, WIP and materials stock in order to support flexible manufacturing, JIT delivery to manufacturing, WIP control and short-medium term ERP to name a few. If you're not doing these things WELL today, you're going to get your lunch eaten by other companies that are.
So for the next two years RFID will be my benchmark for deciding to take on a new client. If they ain't "got it" then I ain't going!
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