RFID
Coming Soon to a Retailer Near You
Neil Harrison, Shane Johnson, and Tim Nagle, MBA 2's
Issue date: 2/7/05 Section: News
- Page 1 of 1
(RFID) technology has surged since Wal-Mart announced that its top suppliers would be required to apply tags to cases and pallets of goods. The promise of RFID tags, small computer chips connected to wireless antennae, lies in the ability of retailers and suppliers to increase labor productivity and significantly increase transparency throughout the supply chain. The potential to improve stock-out rates, decrease inventory holding costs, and gain increased intelligence about sales trends and consumer buying habits has players like Wal-Mart and Target extremely excited about the technology and its potential to improve profits in an industry with notoriously thin margins.
If RFID can live up to its promise, it will be nothing short of a revolutionary shift in supply chain management. However, while major retailers and their suppliers continue to experiment with the technology and prepare for widespread deployment throughout their supply chains, questions remain about the technology itself, the sizable challenges of integrating the technology into their existing architecture, and concerns of suppliers, customers, and other stakeholders.
Senior representatives from Wal-Mart and Target discussed how RFID technology will improve business operations for retail firms, leading to improved in-stock rates and reduced costs. Both Target and Wal-Mart are in the process of conducting RFID pilot programs in select facilities with top suppliers. Manufacturing firms Kimberly-Clark and Nestle Purina answered questions about the business case for RFID tagging. Both packaged goods firms recognized the benefits of early involvement with RFID, and the ability to ensure that industry standards are developed that meet each firms' individual needs, instead of having to redesign company policies to meet emerging standards.
While the price per tag today is around twenty-five to thirty cents, most panelists agreed that through collaboration, prices for RFID readers and tags would drop substantially in the foreseeable future. RFID practitioners from Accenture and Precisia were also on hand to discuss the benefits and potential hurdles RFID technology will face in the future.
Panelists all agreed that there is a greater need for education on the benefits and applications of RFID. While individual firms will need to communicate these benefits to consumers, industry groups will also work to alleviate privacy concerns.
RFID is simply another way for firms to collect information at various points in the value chain, but how organizations use that data will determine who will benefit the most from the technology.
If RFID can live up to its promise, it will be nothing short of a revolutionary shift in supply chain management. However, while major retailers and their suppliers continue to experiment with the technology and prepare for widespread deployment throughout their supply chains, questions remain about the technology itself, the sizable challenges of integrating the technology into their existing architecture, and concerns of suppliers, customers, and other stakeholders.
Senior representatives from Wal-Mart and Target discussed how RFID technology will improve business operations for retail firms, leading to improved in-stock rates and reduced costs. Both Target and Wal-Mart are in the process of conducting RFID pilot programs in select facilities with top suppliers. Manufacturing firms Kimberly-Clark and Nestle Purina answered questions about the business case for RFID tagging. Both packaged goods firms recognized the benefits of early involvement with RFID, and the ability to ensure that industry standards are developed that meet each firms' individual needs, instead of having to redesign company policies to meet emerging standards.
While the price per tag today is around twenty-five to thirty cents, most panelists agreed that through collaboration, prices for RFID readers and tags would drop substantially in the foreseeable future. RFID practitioners from Accenture and Precisia were also on hand to discuss the benefits and potential hurdles RFID technology will face in the future.
Panelists all agreed that there is a greater need for education on the benefits and applications of RFID. While individual firms will need to communicate these benefits to consumers, industry groups will also work to alleviate privacy concerns.
RFID is simply another way for firms to collect information at various points in the value chain, but how organizations use that data will determine who will benefit the most from the technology.
