Future Now
The IFTF Blog
RFID in 2005: Retail session
More notes from the Commerce Department's RFID in 2005 conference. The usual caveats-- that, as Jacques Derrida put it, every decoding is another encoding-- apply.
Lori Denham (Retail Industry Leaders Association)
78% of members think RFID is promising, but still want more clarity on payoffs.
Potential benefits for companies: Increase supply chain visibility ($3 trillion spent in global supply chain; 6-10% lost due to poor visibility; that means $180-300B savings through RFID), less safety stock and associated transport costs, reduced out-of-stocks, shrinkage and theft, more efficient recalls.
Potential benefits for consumers: Improved in-stocks, better product selection, product freshness, identification for recalls, product authentication, easier returns. Customer acceptance is key to industry-wide adoption.
Brad Bass (HP)
Both consumer of RFID and developer of new RFID products.
Using RFID in Memphis, Chester PA, Sao Paolo; opening another 30 sites soon. Use it to eliminate some manual processes (e.g. inspection of empty ink cartridges).
Replicating factory/warehouse conditions in the lab turns out to be tough.
Research projects: sentient environments; EPC network compatible technologies; nanotech and next-gen sensing techs; innovative business processes; RFID/sensor based enterprise security.
Susan Chapman (GM)
Valuable automative apps that will provide important safety, security, and convenience benefits to customers; RFID will have valuable applications in manufacturing process, inventory control and anti-counterfeiting.
But in many applications in the automotive space, turning off tags isn't necessarily viable.
Current applications
- Vehicle theft deterrent systems
- Keyless access, pushbutton start
- RFID+sensors in tire pressure monitoring
- Garage door openers
- Used in vehicle manufacturing to track vehicle assemble and parts
Anticipated uses
- Vehicle-to-vehicle communication
- Smart highways
- Compliance with TREAD Act
- Enhanced inventory management
- Anti-counterfeit
Policy issues: i.e., things we worry about
- Confusing RF devices that enable safety and other consumer benefits with bad surveillance
- Accomodation for RFID applications whhere it's not possible to disable/turn off RFID
- Potential for a patchwork of state legislation that makes RFI-device technology use difficulty
- Restrictive regulations
Pam Stegeman (GMA)
GMA has been doing a survey on RFID and EPC in retail.
Lessons learned
- It should be about the technology, but better processes, consumer value
- Ensure positive consumer point of view
- Set business oriented goals and measure results
- Communications must be increased
- Be realistic about costs and savings
- Maintain flexibility and tech options
Better supply and demand visibility requires technology, but also better proceses and properly-trained people
Benefit Opportunity Areas
- Reduced retailer claims
- Reduced DC/Plant labor
- Reduced inventory
- Improved on-shelf availability
...but there's lots of difference in value between industries, and some benefits-- esp. reduced out of stocks-- requires involved trading partners.
Likewise, break-even point for tag prices varies considerably between industries: health/beauty can use more costly tags than groceries. Overall, even optimistic estimates for tag prices are insufficient to generate a positive return for many manufacturers; need to find more ways to increase value potential and decrease overall costs.
Where today's gains can be found
- High-value, low-volume items
- Significant out of stocks
- Counterfeit or illegally diverted
- Significant use of mixed pallets
- Low use of bar code tech in supply chain
This means that pharms, OTC, consumer electronics, fashion, cosmetics, a few HBC and non-food can use RFID profitable immediately; dry goods, perishables, beverages, frozen goods, DSD distribution are spottier.
Recommendations
- Understand category dynamics: rollout categories most able to gain ROI in the short term
- Define process changes and demonstrate benefits
- Share data freely, openly and in a standardized way
Mark MacCarthy (Visa)
Rolling out contactless credit cards ltaer this year. Contactless payments are garnering increased attention, driven by increase demand (merchants/issuers want differentiation), consumers demonstrating interest (they're more likely to accept the tech largely for convenience and speed).
Security and privacy: little personal information on the card itself; 128-bit encryption; can't be read by EPC readers; additional layers of security on top. Think the security is as good as mag stripe.
John Howells (Healthcare Distribution Management Association)
Why do they like RFID? Patient safety, track and trace, pedigree, regulatory compliance, reduce warehouse costs, aid returns/recalls, reduce pilferage and security costs.
Healthcare benefits: reduce diversion; highlight short dated product; reduce cost of trials.
Challenges: Cost; privacy; data ownership and sharing; tag performance; supply chain integration; standards; regulations.
John Phillips (PepsiCo)
RFID work at PepsiCo
Live retailer pilots in Texas
3 automated print and apply lines
Tagging some SKUs at case and pallet level
Creating in-house testing and certification lab
Lessons from the lab
- The importance of the craft of RF can't be underestimated
- Tag placement and selection is an art and science
- Long way to go to applying tags at high speed
Remember to enjoy PepsiCo products!
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