Although retailers are pushing the roll-out of radio frequency
identification tagging, logistics companies are staying with
barcodes until a profitable business case can be found
The supermarket giants leading the radio frequency identification
tagging revolution could find their plans undermined by the
reluctance of logistics companies to adopt the technology.
US supermarket giant Wal-Mart is one month into a trial with its
top suppliers using RFID tags on deliveries to 100 stores. In the
UK, Tesco has unveiled a major roll-out of RFID readers to all its
stores.
German retail giant Metro has reported successful implementation of
RFID readers and tags at its biggest distribution centre, with 99%
successful tag read-rates.
However, when Wal-Mart announced its "RFID mandate" last year,
manufacturing companies were quick to point out that the benefits
of the new tag and trace technology would go to the retailer, not
its suppliers.
According to research company Analytiqa, logistics companies, which
lie between the retailer and manufacturer in the supply chain,
could play a crucial role in ensuring that standards for the new
technology and the benefits of RFID are shared along the supply
chain.
"Logistics providers should invest in RFID, gather expertise and
manage its complexities," said Mark O'Bornick, senior analyst at
Analytiqa.
"This capability is not considered a service. Manufacturers and
retailers demand this and have pointed out they will consider
switching from providers they believe lack this competence."
Despite this blunt warning global logistics firms are not rushing
ahead with the technology, and have said they already have adequate
visibility of the supply chain for the foreseeable future.
Federal Express told Computer Weekly, "We are looking into whether
or not there is a need to track beyond what we are already doing."
Logistics company Exel said the technology has potential, but that
adoption is a long way off. "Once we have a good understanding of
[the technology] we will incorporate RFID into our operations, but
only where the business case stacks up and, more importantly, only
when the technology can be used within its limits," the company
said.
Exel believes that with current technology, it will be between five
and 10 years before it uses RFID in the majority of its operations.
A key development in the spread of RFID will be the availability of
low-cost printable tags. "We are keeping an eye on developments of
the fully printed RFID tag which, because of a sensible unit price,
opens up the potential of high-volume, low-cost item level
tracking," a spokeswoman said.
Barcodes v RFID
Logistics company Exel has carried out carton-level tracking in the
drinks industry using passive (UHF) tags. The trial highlighted the
problems many users face when trying to implement radio frequency
identification, according to Exel.
It found that the range of RFID readers was inadequate and that
there were difficulties in reading tagged items from the middle of
pallets. "Our conclusion is that carton tracking in many cases is
still best performed using barcodes," a spokeswoman said.
The company said it would use RFID where appropriate, but,
"Currently its performance is not consistent enough for all of our
supply chains," it said.
Exel also ran item-level tracking in a retail supply chain.
Although the company was able to track garments from Hong Kong to
the UK, the trial gave valuable insight into the limitations of
RFID.
The main finding was that the spacing of tags was critical. "As
with carton tracking, we believe the barcode is the most
appropriate technology in the supply chain," the spokeswoman said.