IBM targets smaller firms for RFID services

IBM is to expand its services for companies working on RFID technology.

IBM is to expand its services for companies working on RFID technology.

It has developed RFID services for large-scale industrial companies - including the automotive, aerospace and defence, manufacturing, chemicals and petroleum, forest and paper and electronics industries - and for mid-market companies, which it defines as those with fewer than 1,000 employees.

The services include consulting, development of a business case, technical proof of concept, pilots for the client and trading partners and full system implementation.

IBM's decision to extend its RFID services is a response to rising demand, said Eric Gabrielson, IBM Global Services' RFID vice-president.

In the industrial sector companies are exploring RFID not just to comply with mandates from government agencies and partners requiring them to adopt the technology, he said.

"They are doing it also for a number of other [internal reasons], such as improving their business processes and enhancing their collaboration with customers," Gabrielson said.

That is the case at Heinz, which recently began looking into RFID and has hired IBM to assist in the venture.

"We are using IBM to build our RFID business case, to see how it looks from today to 10 years out: where we can see some benefits, where we can see some cost offsets and where we can roll out the project from slap-and-ship, which is the 2005 retailer mandate, all the way out through tagging items in a production environment," said Doug Ostrosky, Heinz's RFID program manager.

For now, Heinz is focused on getting a pilot project up and running. The company hired IBM in June to help with testing products, drafting a business case and the actual set-up of the pilot facility, Ostrosky said.

So far Ostrosky has been happy with IBM's service, particularly its honesty about the technology, he said. "If they do not know an answer, they do not make it up. They find the right source, ask the right questions and come back with the most honest answer," Ostrosky said.

And some problems do not have a definitive answer in the RFID world yet, including the technology's acknowledged difficulties with products containing certain materials and packaging. One such case is Heinz's flagship ketchup product and its containers, Ostrosky said.

"We have a liquid product in a sometimes glass or plastic container with metal or plastic lids and that, for some reason, does not lend itself to 100% [RFID] readability all the time. It is not an IBM issue. That is just the physics of it, so that is something we are trying to work through," he said. "For our product, the technology still is not where we would like it to be."

Meanwhile, mid-market companies see RFID adoption as an emerging requirement and do not want to be left behind, as is the case of Kayser-Roth. The clothing manufacturer is not one of Wal-Mart's 100 largest suppliers, and as such was not among those the retail giant said had to become RFID-compliant by January 2005. Nonetheless, Kayser-Roth volunteered to meet the deadline.

"We want to meet Wal-Mart's requirements and ship cases and pallets with RFID tags," said Gary Stegall, senior project manager at Kayser-Roth. "That is how we got started in this project and how we started looking for suppliers that could support us in this venture."

The venture involves RFID-enabling a Kayser-Roth distribution center as a pilot project. "Our goal is to use IBM to help us get this first pilot off the ground and then enable the rest ourselves as we need to," Stegall said.

Still, initially IBM almost lost the Kayser-Roth business because IBM's offering was aimed at companies that were much larger than Kayser-Roth, Stegall said. But IBM adapted its offering for the mid-market.

 "They came back with a solution to meet our needs as a mid-market company. When they presented us with this solution, it was exactly what we wanted, very well priced and we were very pleased with it," Stegall said.

Juan Carlos Perez writes for IDG News Service

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