From some viewpoints, it's been pretty much all good on the radio frequency identification (RFID) front as retailers such as Metro in Germany and Wal-Mart here in the U.S. have reported impressive results from the use of the technology.
A report in The Wall Street Journal, however, says all is not well in RFID land as suppliers continue to express concerns about the investment in the technology while pointing to less than satisfying returns.
The retailer, according to the Journal, had planned to have 12 of its distribution centers using RFID by January 2006. To date, the technology is in place at five of the DCs along with 1,000 stores.
The chain did not reply to the question of whether the technology was leading to cost savings but continued to point to better shelf management and improvements in inventory replenishment as the benefits it has seen from the implementation of RFID.
The controversy surrounding the use of RFID does not appear to be a question of whether the technology works or that it provides certain benefits to all participants in the supply chain. The question that appears to be increasingly asked is if it is the right technology and whether another might achieve the same or better results without the expense and effort involved.
Most suppliers have been reluctant to speak over concerns it may harm business relations with large customers, such as Wal-Mart, Target, Best Buy and Albertsons, that are in various stages of RFID testing.
"Do you want to risk the business by not being in the game?" Howard Stockdale, Beaver Street Fisheries' chief information officer, rhetorically asked the Journal.
Last summer, VF Corp., makers of Wrangler and Nautica clothing, decided to pull back on RFID investments. "We'll let others drive the technology," said Martin Schneider, VF's global chief information officer.
The slower than expected pace of Wal-Mart's program has identified some roadblocks to RFID implementation with less than satisfactory answers in specific cases.
A continuing issue remains the cost of retrofitting warehoused and stores to make them RFID enable. There is the remaining concern over bringing RFID down to the item level for two primary reasons: 1) The public relations aspect dealing with privacy concerns and 2) the cost of tags for lower-cost items such as many CPG items doesn't seem to pass the cost/benefit analysis.
David Donnan, a manufacturing consultant and former president of radio-frequency-device maker CheckPoint Systems Inc., said most companies working with RFID today are not looking to stop testing. Instead, "they'll say, 'Go slower.'"
Discussion Questions: The issues raised in The Wall Street Journal article are not new, but they have been repeated for a number of years now. How "slow" should trading partners be proceeding with RFID projects if that is the prudent course to take? Are there other technologies that would achieve similar results to those predicted for RFID without the apparent hassle (cost and implementation) involved?