The IT department at Tesco is driving the business'
adoption of radio frequency identification technology, delegates at
the Retail Systems Alert Leadership Forum heard last week, as the
hype surrounding the technology showed no signs of dying
down.
The technology, which allows goods to be tracked along the supply
chain, has been touted as "the next big thing" in retail IT for
some years, but delegates at the conference heard how 2004 will be
a watershed for RFID.
Tesco, the UK's largest retailer, has been trialling RFID in a
number of stores and one warehouse over the past year but plans to
step up its use of the technology this year, according to IT
director Colin Cobain.
"Later this month we will start case-level trials with six CPG
[consumer product goods] suppliers, which will involve tracking
goods from the supplier through the distribution centre and into
the store," he said. "And we are currently looking at which product
types will be viable for item tagging in quarter two or
three."
Cobain is leading the use of what he calls "radio barcodes" within
Tesco - in contrast to US retail giant Wal-Mart, where the mandate
came from the board - and his enthusiasm was obvious.
"This technology is going to enable accuracy across the supply
chain like we have never seen before," he said. "The question is
not whether radio barcodes will change the way you do business, but
whether you will be ready."
However, there are a number of obstacles that must be overcome
before RFID can be rolled out successfully, Cobain said.
"There are issues over standards and intellectual property - for
example, the frequency has not been ratified yet," he said. "We are
also concerned about the physical infrastructure standards - we do
not want to have to go back and change kit. We want
software-upgradeable readers."
Analyst firms AMR Research and GartnerG2 have warned retailers to
expect resistance from suppliers over RFID and Cobain admitted that
Tesco faces a battle to convince its business partners of the
benefits.
"The benefits are there for both retailers and suppliers but we are
concerned that they will be thinking it will just be a task for
them," saidCobain. "The benefits will be driven by application and
process change, not chips and readers."
Nevertheless, Tesco will not use RFID unless it meets the three
targets used for all IT projects: improving customer service,
making life easier for staff and cost-efficiency, Cobain said.