It makes no sense to keep denying RFID

by Gary Hartley on 2010-08-13

Why do people continue denying the transformative potential of RFID (radio frequency identification) for supply chain management and retail experience in New Zealand, as in every other country?  

At a recent conference, I got talking with a company manager who was adamant that RFID is a technology of no real significance. He certainly did not see any grounds for looking more closely at how it might develop the efficiency and profitability of his business. While claiming no expertise in that business, I seriously doubt that he was right. He was certainly wrong about RFID in general.

The advance of tag and reader technology is relentless, and so is the range of applications in industry and government. We now have tags that receive and transmit ultra high frequency signals under water, and others that work on and around metal objects – both scenarios once deemed to be impossible in a ‘physics’ sort of way. Meanwhile the cost of tags has fallen rapidly, with some approaching the US5 cents per tag threshold that has long seen as a tipping point for mass take-up of the technology.

It does seem to be the case that the global financial crisis and recessionary times in the United States and Europe has slowed the pace of take-up. Since 2007, companies and state agencies have been analysing the business case for RFID even more closely as capital budgets everywhere have been tightened up. But the fundamental benefits of any well-designed application of the technology have not changed and, indeed, the new emphasis on investment efficiency may enhance the business case for RFID as a means of reducing operating cost, increasing stock turn rates and so on.

Look at Wal*Mart, one of the earliest adopters of RFID on the EPC (Electronic Product Code) standard for supply chain management and inventory control: The US retail giant has just announced the introduction of item-level tagging on jeans and other basic clothing sold in its stores. EPC/RFID will be used to manage and sell each garment, with tags being applied in the manufacturing plant and read for the last time on the retail sales floor. Wal*Mart says it will be working closely with its suppliers and distributors to help them integrate EPC/RFID into their warehousing and logistical operations, at various points between manufacture and sales floor. Wal*Mart might have slowed the pace on its take-up in recent years but this is one large company that can see the significance of RFID to its endless quest for improved efficiency and profitability!

Interest in the technology is growing worldwide. Take a look at the www.RFIDJournal.com website. It gives a great overview of take-up among industries and government agencies from Brazil to Hong Kong to Portugal. The “RFID Deployment Worldwide” map pinpoints applications in dozens of countries with web links to organisations involved in each case. It’s a quick way for anyone to update themselves on the real-world of this technology. It includes one New Zealand example: The EastPack use of EPC/RFID in its Bay of Plenty kiwifruit pack houses.

There might be a useful role for “Doubting Thomas” in the design and appraisal of a particular EPC/RFID application but it is an increasingly senseless stance to take in relation to the technology per se. Limitations on the capability of tags and readers are falling away, and questions of commercial viability are being answered case-by-case. It makes even less sense when we look at many of the technology developments that seem to have, in contrast, instant acceptance as workable and valid. I recently came across a new app. for the iPhone – a public toilet finder in major cities around the world.  Instead of following signage or asking a local, here is space-age technology for locating a loo in Paris or Pittsburgh! If people can “get” the utility of such an app, why anyone would be denying the potential of RFID (especially EPC/RFID)?

I will be exploring the topic further with my recent acquaintance, who is a manager in a not insignificant New Zealand company.

ENDS

Gary Hartley
GM Business - GS1
www.gs1nz.org