Inbound Logistics | July 2007 | Digital Issue

SUPPLYCHAINTECHNOLOGY

‹ CONTINUED FROM PAGE 41

to adopt RFID, but rather a slow trudge to so-called “slap-and-ship” compli- ance so as not to lose a major customer. Today, the plan for RFID installation in Wal-Mart distribution centers is behind schedule, expansion plans for Target and the DoD have been delayed, and Albertsons discontinued its pilot, reports AMR Research analyst Lora Cecere in a recent paper, What We Have Learned From Three Years of RFID Pilots . Some shippers are wholeheartedly embracing RFID–retailers broke out as early adopters, along with companies in the automotive and aerospace/ defense industries. NOTES FROM THE FIELD U.K. retailer Marks & Spencer, for example, began item-level tagging on men’s suits back in 2004. Now 120 stores utilize RFID tags on a wide variety of both men’s and women’s clothing. In the United States, Best Buy has led the way, having issued a 2004 mandate similar to Wal-Mart’s. The retailer is also piloting RFID systems to expedite the process of locating items in store- fronts and back rooms, and plans to eventually use a RFID-based automated system designed to eliminate check- out lines. Hewlett-Packard also logs on to RFID–the computer manufacturer first implemented RFID in 2002, now maintains 28 RFID-enabled facilities worldwide, and plans to use 10 million Gen 2 tags in 2007, reports AMR. Mounting evidence exists, however, that many shippers are generally blasé about RFID, unless a specific man- date forces them to implement it. A recent study from IT industry group CompTIA highlights this. While 84 percent of technology resellers, solu- tions providers, systems integrators, and consultants surveyed say they will offer RFID products and solutions in the next three years, 65.6 percent report that their customers have yet to implement RFID solutions. “The results of the survey are reflec- tive of the RFID market, where rosy

forecasts about rapid and widespread adoption have given way to the real- ity of dealing with a technology whose broader deployment has been challenged by equipment and tag- ging costs, murky and unclear ROI for supply chain applications, and a work- force skills shortage,” explains David Sommer, vice president, e-business and software solutions for CompTIA. WHO’S USING RFID? I attended a recent Council of Supply Chain Management Professionals (CSCMP) NJ roundtable event, where logistics IT provider CAPE Systems demonstrated its RFID Tag Locator tech- nology – a software solution for RFID tag testing, evaluation, location, and usage – to a group of 50 logistics pro- fessionals. When the demonstrator asked us who worked for a company that implemented or was planning to implement RFID, only two people raised their hands. In both cases, their companies were complying with Wal- Mart’s mandate. Also, at CSCMP’s annual conference last October, interest in RFID seemed minimal. Only a handful of RFID sem- inars and vendors were on hand, and many shippers cited the familiar woes of high prices and low ROI as prohib- itive. When I wrote about this in my November column ( Talking Tech at CSCMP ) I got in trouble with a quartet of RFID supporters working on a book. They argued that strong interest from their client base did not mesh with what I noticed at the conference. “The truth is that RFID hype is down, but real business is up… Companies are increasingly using active RFID solu- tions where passive RFID fails to reap benefits… In the manufacturing arena, in particular, RFID is alive and well and providing value,” wrote the authors in an e-mail. Such discussion and debate among industry professionals is common. Even the analysts have mixed opinions about exactly where the RFID market is headed, and its eventual value.

“We originally predicted that RFID would see widespread adoption in 2008. This will not happen,” admits Cecere. Instead, AMR now expects the industry to take the next five years to learn and grow through focused, col- laborative RFID pilot projects. When asked what he expected of the RFID market in 2007, Sommer of CompTIA said he sees “strong move- ment across many industries, taking RFID deployments from the pilot test phase to the full production phase.” Global consultancy Frost & Sullivan expects the RFID market to stabilize between now and 2009, predicting the market’s revenue will nearly triple over the next four years. The firm also esti- mates the passive RFID tag market will grow to $486.6 million by 2013, from $124.6 million in 2006, citing the Gen 2 protocol for UHF RFID, and increased adoption by retail and military sectors as factors. Technology consulting firm IDTechEx, meanwhile, estimates world- wide demand for RFID tags (its report does not specify whether active or passive tags, or both) will reach 240 million units in 2007, rising to more than one billion units per year by 2009. It puts the total global RFID market val- ue – including all hardware, systems, and integration–at a whopping $4.96 billion in 2007. STILL NO DECISION What does all this mean for ship- pers? Do the market predictions, analyst and vendor endorsements, and impressive results from early adopters hold much sway? It is hard to know for sure whether this is the best of times or worst of times. The wait for an official verdict about RFID’s prospects for sup- ply chain applications continues. What is certain, however, is that we’ll still have a Dickens of a time determining how RFID can best help manufacturers, retailers, and distribu- tors on their constant quest to balance supply chain optimization with the bottom line. ■

42 Inbound Logistics • July 2007

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