The compere at a recent conference on radio frequency identification (RFID), organised by tech company Checkpoint Systems, entertained his audience by psychoanalysing a box with an RFID tag on it. Although the retailers and manufacturers in the auditorium never got to hear his diagnosis, nobody would have been surprised if it had been schizophrenia.
Industry pundits seem to be in two minds about the track and trace technology. It will be a boon if you are shipping high value, low volume items such as DVDs and razor blades, declared Dave Donnan of consultancy AT Kearney, but not so useful if you are dealing with low value, high volume items such as breakfast cereals.
Money was at the root of many of the divergent views at the conference. The price of tags, which may account for 80 per cent of the cost of RFID, is bound to go below five cents with mass production, said one speaker, while George Lawrie of research firm Forrester dismissed the ‘myth of the five cent chip’ and declared that the current cost of 47 cents will only drop by 11 per cent every year.
Gasps from the audience
Forrester’s estimate that a notional Wal-Mart top 100 supplier might spend some $9m per year on RFID bought audible gasps from the audience. Lawrie was also gloomy about the shortage of qualified RF engineers who would be required to design and install the reading points in warehouses and stores.
Manufacturers were urged to start exploring how the technology could help better match factory production with demand. Other speakers were more cautious and recommended a so-called ‘slap and ship’ approach which involves applying tags at the behest of customers without bothering to invest in the infrastructure needed to read them. This is something that Wal-Mart has recently criticised.
Not that the world’s biggest retail suppliers will have much choice about applying RFID tags to their pallets, crates, dollies and cases. The largest hundred suppliers to German store group Metro are expected to begin tagging their crates by November this year while Wal-Mart has declared a similar ‘mandate’ for January next year.
Representatives of the US Federal Drug Agency and healthcare firm Johnson & Johnson lauded RFID’s potential to stop counterfeit drugs coming into the US by enabling medical staff to check the provenance of the pharmaceuticals they prescribed.
Drugs companies have even been carrying out tests to make sure that radiation from RFID doesn’t alter preparations and that signals are unaffected by the liquids in bottles or by foil packaging. Food safety experts also underlined the uses of RFID in ensuring that only fresh, unadulterated food makes it into consumers’ shopping baskets.
On the other hand, consumer packaged goods suppliers, closer to the coalface perhaps, bemoaned the high rate of tag failures, the difficulty of placing them in the correct position on containers and the labour intensive processes they are struggling with. US personal care products manufacturer Church & Dwight admitted it had been dismayed when it was fingered as one of Wal-Mart’s top 100. Matt Sawtelle, the company’s director consumer customer service, even asked attendees whether it was possible to hit the 100 per cent read accuracy required if RFID is to be useful.
Divisions over which frequencies to use for which applications also resurfaced at the Checkpoint gettogether. The recently-constituted EPC Global organisation, which has a brief to commercialise the Electronic Product Code (EPC) standard and is jointly run by the Universal Code Council and the European Article Numbering Association, has yet to reconcile different views about the use of ultra high frequency (UHF) and high frequency (HF) wavelengths.
The Americans want fast UHF wavelengths for both supply chain and store applications while Europeans in general favour UHF for warehouses and HF, which works best when goods are not moving, for stores. Ultimately EPC will cater for both wavelengths but insiders acknowledge tensions within EPC Global over which direction standards should take.
Players may be struggling to get their heads around the technology; its associated costs and benefits, but there is no need for the straight-jacket yet.