Companies should start considering radio frequency identification
tagging (RFID) technology now to boost the efficiency and accuracy
of their supply chains, according to AMR Research.
In a report released last week, the analyst firm said early
adopters of RFID, which allows companies to electronically track
goods along the supply chain and maintain accurate inventories,
have reaped cost savings of about 5% of sales.
Many UK retailers, including Tesco and Woolworths, have expressed
an interest in RFID but the prohibitive cost of tags has prevented
widespread adoption.
However, companies - particularly those that deal in retail and
consumer goods - cannot afford to wait too long, warned Peter
Abell, research director of the retail industry service at AMR and
author of the report.
"RFID is here today, albeit at a price," he said. "Early adopters
are extolling its limitless potential to drive down costs in the
supply chain and provide faster, cleaner data, while cynics sit on
the sidelines waiting for the 'holy grail' - the five cents or
penny tag."
The AMR report identifies a number of steps companies need to take
to ensure the highest level of return on investments in RFID. These
include:
- Implement RFID applications incrementally in order to ensure
they remain within budget, receive a greater payback and minimise
disruption to the existing environment
- Ensure that in-house systems can support the collection,
storage and processing of RFID data
- Guarantee the cleanliness of RFID data.
RFID technology will become economically viable for most product
categories by 2005, said Abell. In order for companies to obtain
competitive advantage, they need to prepare their infrastructures
today, he added.
Asda pilot tests viability of RFID tagging
The Home
Office Chipping of Goods Initiative has completed a RFID pilot with
supermarket chain Asda, music publisher EMI Group, EMI distributor
Handelman UK and RFID supplier Bi-Star. The results of the trial
will be released next January.
Handelman tagged each CD to be sent to Asda with a global trade
identification number and a unique serial number. Asda received CDs
via backdoor readers, while a second set of readers at the point of
sale recorded each CD leaving the store.
The same readers accepted returns and received each CD as
inventory. The backdoor readers recorded each CD that Asda returned
to the manufacturer and Handelman made the transactions visible to
EMI for final reconciliation.