Radio frequency identification tags will be adopted faster
than barcodes were 20 years ago, but there are still major hurdles
to be overcome before the technology is in widespread use at
consumer level, analysts have warned.
A survey of 250 senior executives from retail, consumer products
and clothing companies, conducted by AMR Research revealed that 60%
of respondents are currently evaluating RFID tags, and 10% already
have projects in place.
Companies view RFID as holding great promise for improving B2B
processes, such as reducing out-of-stocks and warehouse operating
costs, the survey found.
However, the use of RFIDto improve the consumer shopping experience
will have less impact, with companies concerned about the public
perception of the technology rather than its potential for
delivering value to customers.
Companies need to consider the overall cost of putting an
RFID-based supply chain infrastructure in place, warned Pete Abell,
an analyst at AMR.
"While all eyes have been trained on the cost of the tags, the
significant investment required to build up the infrastructure has
been largely ignored," he said. "This will inevitably come under
closer scrutiny as organisations evaluate the total cost of
implementing RFID, weighing it against the expected
benefits."
Despite fears over high costs, RFID tags, which allow goods to be
electronically tracked along the supply chain from warehouse to
point-of-sale, are beginning to gain support among UK retail and
consumer goods companies.
Tesco and Woolworths are conducting relatively small-scale trials
of RFID tags and earlier this month Marks & Spencer announced
the first large-scale use of the technology in-store.
The retailer, which last year successfully implemented RFID tags on
3.5million product delivery trays in its food supply chain, will
begin tagging individual clothing items this autumn, in conjunction
with RFID technology specialist Intellident.
M&S will be the first UK company to use ultra-high-frequency
tags, which offer faster data transfer feeds and longer read ranges
than high-frequency tags. This makes them suitable for applications
in which many fast moving individual items need to be read, even if
they are in close proximity to each other, such as in rails of
hanging garments or stacked shirts.
James Stafford, technical executive at M&S, is confident that
clothing tagging will bring a number of benefits. "RFID is the next
big thing in retailing," he said. "It means we can aim for perfect
availability for customers. We can also reduce handling and
counting to free staff to spend more time serving customers."