Marks & Spencer, Tesco,Wal-Mart, Metro Group,Airbus, Hong Kong Airport,Schiphol Airport, Milan
Airport,Center Parcs, Flora Holland and
logistics firmAlpha Groupare all piloting or
implementingradio frequency
identification(RFID) systems.
They are doing so because the item tracking technology offers
the tantalising prospect of revolutionising the management of
retail supply chains, delivering effective asset tracking, cutting
lost and misplaced baggage at airports, and fighting drug
counterfeiting.
RFID has the potential to transform supply chains and offer
significant business advantage, but there have been more pilots and
trials than full-scale implementations that have been made public.
It is important to make this distinction, because a number of
organisations have kept their RFID work quiet to give themselves a
competitive edge.
From pilot to full roll-out
So what does this say about the overall progress from RFID
pilots to full roll-out?
Perhaps, it suggests that some organisations have failed to make
a clear business case for RFID, or that RFID has yet to make it on
to executives' radar screens as a means of process improvement,
better tracking of corporate assets, or a more visible, effective
supply chain.
A full-scale RFID roll-out requires significant change
management within the organisation, so top-level executive support
is needed to give the project clout. This is only possible if the
board believes in the project and can see the value of RFID.
"It would cost perhaps £2.5m for a company to invest in RFID for
a major implementation. However, if managers can spend £50,000 to
make the business case for using RFID, it is much more likely that
they can eventually get the £2.5m from the company to deliver a
full-scale roll-out," says Jan Poulsen, business development
manager at Lyngsoe Systems, which is helping Alpha Group run the
logistics infrastructure for the supply of McDonald's restaurants
in Europe, and is helping airports install RFID for baggage
handling.
David Lyon, EPC global business manager at the UK arm of the
GS1 global standards
organisation, says pilots should by now have gone beyond the
stage of simply trialling the technology.
"
Tesco has proved that the technology works with EPC global
Class 1, Gen Two tags and readers. The real idea behind pilots
should be to see whether RFID can fix what is broken in the supply
chain," he says.
GS1 UK wants to get participants on board for a UK pilot of the
EPC Information Service (EPCIS), which allows trading partners to
manage and exchange RFID-sourced data, such as what, when, where
and why, through the supply chain in real-time.
GS1 Germany's RFID Test Centre has played a vital role in
Metro Group's comprehensive roll-out plans. Although Metro has
been in full roll-out mode at pallet level in its Cash and Carry
and Real hypermarkets since the start of the year, the company's
Galeria Kaufhof outlet in Essen has only been using RFID in a trial
for item tagging since September.
About 30,000 menswear items in Galeria Kaufhof have been RFID
tagged, and the store has become a showcase for EPC global
standards, including an application-level events standard to pass
formatted RFID data to the application layer and EPCIS
middleware.
"At Metro Group, we started the introduction of RFID in our
process chain in late 2004. Since then we have gained considerable
experience with changes in the technology as well as the necessary
adaptation of processes," says Gerd Wolfram, managing director of
MGI Metro Group IT.
"However, based on our experience with the use of RFID in our
supply chain and in front-store applications, we have been able to
confirm what we supposed from the very beginning: the matching of
user requirements with technology development is pivotal.
"Thus, close collaboration between RFID users and RFID
technology providers is the basis upon which one can build a
capable RFID system."
RFID at Marks & Spencer
Alongside Metro's implementation, another project that is
universally regarded as a business success is Marks & Spencer's
development, pilot, and extensive roll out of its Intelligent Label
(RFID) project, tagging clothes in its stores.
Intended to guarantee product availability for customers,
M&S is rolling out RFID in 120 of its 300 stores. In its spring
2006 pilot - big enough to give M&S management a clear idea of
what RFID offered - the company piloted 42 stores in 20 countries,
using 15 suppliers.
"You do have to do big pilots to prove big business cases and
produce numbers that will impress your board," James Stafford, head
of RFID and general merchandise at M&S, told the IDTechEx RFID
Europe conference.
M&S is getting its suppliers in Sri Lanka and Turkey to not
only attach the tags at the point of manufacture, but to scan the
clothes at the start of the supply chain. So, as well as helping to
ensure shop-floor availability of products, the company is getting
more accurate supply chain matching data.
Andy McBain,
Motorola's EMEA senior product marketing manager, who has
worked on RFID implementations at airports including Hong Kong, and
with the Spanish postal service Correos, says organisations must
understand the extra work needed to deliver an RFID roll-out.
"You have to plan your system looking at the wider picture,
otherwise you will not know if you will get scalability across 40
distribution centres. You will have to have an open mind on your
business case too, because it may not come from what you originally
thought.
"You also have to remember to ask your network gurus whether
your back-end infrastructure, database and network can cope with
all the extra data traffic generated by RFID," he says.
"That is why a major roll-out has to have board-level buy-in,
because generating all the extra data may impact your network and
consequently your business. You will need a strategic planning team
that includes networks and operations specialists, the unions, and
a top executive with a business hat on."
The scalability issue is one that worried holiday resort chain
Center Parcs, which is planning an RFID roll-out in France. The
project, linked to a customer's visitor card, could be used for
workforce management. For instance, the system could measure when a
customer walked into a store and then track how quickly they were
served and whether a sale was made.
Richard Verhoeff, Center Parcs' director of IT services and
e-commerce, says, "We were afraid that with so much data, there
would be no scalability for the RFID project."
To guarantee scalability, Center Parcs has adopted a
Linux-based datawarehouse appliance from
Netezza with the capacity for up to 1,000 blades.
Andrew Price, RFID project manager at the
International Air Transport
Association, has successfully driven the development of a
standard for RFID in baggage handling and a business case that says
the business could achieve savings of £350m a year from RFID
implementation, benefiting airlines, airports and passengers. A
string of airports, led by Hong Kong, are proving that the business
case works.
Timing is everything
Price says organisations must see the overall benefits of
conducting RFID pilots and subsequent implementation.
"One of the important things to understand when doing a pilot is
that you want to know what you are going to be doing with the
technology, not whether the technology works," says Price.
RFID can generate significant business benefits, but the timing
has to be right, and there may be other routes the company can go
down to cut costs or improve efficiency. For example, airlines can
save themselves millions of pounds by changing aircraft flight
paths into airports.
Even at Marks & Spencer, RFID had to wait for its chance, as
the company's chief executive, Stuart Rose, said last November when
the company announced its 120-store RFID roll-out plans.
"RFID had to sit slightly on the sidelines while other things
took priority," he said.
That is perhaps the lesson that many RFID exponents promoting
the technology within their organisations have had to learn:
understand the right time to move from pilot to roll-out, and be
ready to deliver it.