RFID …Whats happening?

By admin, March 29, 2007 2:02 am


In June 2005, DHL Worldwide Express declared it was building the IT infrastructure to put RFID tags on every package it ships by 2015. The plans were to improve shipment controls, cut costs, and reduce data collection. But forget that lofty goal and the target date.

"We shouldn't have put a stake in the ground," said Bob berg, DHL's senior program manager for RFID, in an interview following his presentation Tuesday morning at the RFID Conference in Dallas.

While it still sees plenty of opportunity in RFID (Radio Frequency Identification), DHL is taking a more measured approach to the technology, and its efforts shouldn't be tied to a particular year, said Berg, who is among a handful of business managers talking about their companies' experiences Tuesday at the conference.

"If we went gung-ho [on an RFID deployment] it would cost over $1 billion," Berg told several dozen people who attended his conference session. "It's not going to be done on a lark. It's going to be carefully thought out. There has to be ROI."


Since its first RFID pilot three years ago, Wal-Mart has learned a valuable lesson: RFID's ability to improve the supply chain is limited by business partners' willingness to participate. The giant retailer is now focusing its radio frequency identification technology efforts primarily on in-store applications, while moving much more slowly with its distribution centers.

"We initially thought we'd install [RFID] into distribution centers as we installed it in stores," acknowledged Simon Langford, Wal-Mart's manager of global RFID strategy. "Quickly we learned, along with our suppliers, that a lot of the initial benefits was at the store level."

That's because just 3% of the companies that supply Wal-Mart with consumer goods, foods, and other items slap RFID tags containing identifying information on their pallets and cases. Wal-Mart's initial hope for RFID to speed and improve the distribution process does little good unless there is a "critical mass" of suppliers using it, Langford said. If an employee unloading a trailer finds pallets of goods alternatively identified by RFID and bar codes, that's going to slow the process down. Meanwhile, using RFID for reducing out-of-stock situations in stores benefits both Wal-Mart and its participating suppliers, he noted.

The slowdown of RFID in distribution centers is a sign that Wal-Mart is having to scale back on its ambitious plans to use the technology to reinvent the retail supply chain. When Wal-Mart's top executives discussed RFID plans a few years back, it was always with the tone that most suppliers, if not all, were expected to eventually get on board. The idea was to create a first-of-its-kind, RFID-enabled supply chain and serve as a model for next-generation data collaboration.

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Prashanth Rai

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