Retail IT forum: 2004 will be year of RFID

The IT department at Tesco is driving the business' adoption of radio frequency identification technology, delegates at the...

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.

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