Logistics firms hold back but are key to widescale RFID roll-out

Although retailers are pushing the roll-out of radio frequency identification tagging, logistics companies are staying with...

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.

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