RFID technology offers many potential benefits to businesses – reduced shrinkage, errors and delays in the supply chain, as well as enabling companies to interact with their customers in new ways. Many RFID trials are underway. But so far, these trials have delivered fewer benefits than expected, and the majority have not progressed to rollout, raising questions about the value realized.
Businesses need to take a different look at RFID trials; only investing in those that could be fully rolled out to deliver payback within 18 months. Very few of the current initiatives meet this criterion. Adopting this strict policy towards RFID will benefit vendors and suppliers, by: avoiding unnecessary costs; not investing time and resources in trials with minimal benefit; and forcing the business to search rigorously for areas where RFID can add real value.
RFID technology is being hailed as the solution that will significantly reduce shrinkage, errors and delays in the supply chain, as well as enable companies to interact with their customers in new ways. This has led a number of high-profile companies to undertake RFID trials. There has been much focus on this in the retail sector, with businesses at the forefront including M&S, Metro, Benetton, Wal-Mart and Tesco, and also interest in other sectors such as FMCG and pharmaceuticals manufacturing and the US military.
So far, however, these trials have delivered fewer benefits (or less benefit) than expected. They have typically focused on the technology, rather than the commercial viability of RFID – yet the technology is established and proven. The majority of the trials have therefore finished without immediate rollout plans raising questions about the value realized. Furthermore, confusion over the intended purpose of RFID tags and the privacy implications has led to adverse media attention and active boycotts of some of the companies involved. For example, the ‘smart shelf’ trialled by Tesco and Gillette, where store cameras photographed individuals removing razors from the shelf to track and deter thieves, attracted criticism worldwide.
So how should companies be approaching RFID trials? PA Consulting Group believes they need to take a fundamentally different look at piloting RFID – only investing in RFID trials that could be fully rolled out to deliver payback within 18 months. In PA’s view very few meet this criterion. Adopting this strict policy towards RFID will benefit companies at all points in their supply chain by:
- avoiding unnecessary costs
- not investing time and resources in trials with minimal
benefit
- forcing the business to search rigorously for areas where
RFID can add real value.
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RFID Executive Briefing Web site - http://www.rfid-executivebriefing.com/
