Andrew Blatherwick, Chairman, RELEX Solutions, discusses the slow adoption of radio-frequency identification (RFID).
The industry may have been talking about RFID for 20 years, but it still has not come into common use or delivered significant value to retailers.
The biggest issue has been the hype and promise that was created, without the technology in the right place to deliver. The price of tags has been an inhibitor to mass adoption: Initially they were $10 plus and simply were not a realistic application for a retail operation. Though possible for use on cages or totes in a warehouse, the reading technology was also not particularly advanced and the Newton Cage effect of racking meant accurately tracking tags was difficult. Indeed, until recently, most RFID readers could manage at best 80% over any meaningful distance or 90% with handheld readers, offering little advantage over a barcode reader which did not carry the same premium price.
So have we at last reached the time for RFID to come into its own? Nearly would be my assessment. Getting critical mass is significant, and the most logical starting point for this mass adoption is the high price, upmarket clothing sector where the price of a tag is less significant and the cost of ‘shrinkage’ significantly higher. However, the real driver is that as the technology around RFID has improved so their price has begun to fall; and at now less than $1 and dropping fast as demand increases they become a real opportunity for a large market.
In parallel, companies such as Impinj, Balluff & Informatrac – and most importantly and recently a Cambridge University based UK company PervasID – are changing the capability of the readers. PervasID is now capable of reading 99% accurate reads over a 20 metre area, and with more readers can accurately cover a complete warehouse with no ‘Newton Cage’ effect. This is a major step forward and finally may deliver the huge potential that RFID offers.
With the technology now in place, the question becomes where is RFID going to deliver the most benefits to justify the investment? There are a number of areas of importance in retail: security; asset management; and – the largest opportunity – Supply Chain.
· Accurate real time tracking of inventory, in the warehouse, in transit and in store. The reduction in time checking, counting and logging product at all levels of the Supply Chain will deliver great savings.
· The accuracy of that inventory is even more valuable in an inventory management environment. The ability to accurately know what you have and where will reduce safety stock, enable better timing of replenishment and give better data on which to forecast future demand.
· In the store product can be located on the gondolas or on promotional display, often difficult for centrally based inventory and operations staff to identify, which has a massive impact on the volume sold and therefore in need of replenishment.
· In the chilled environment the ability to not only know what stock you have on shelf but also the date mark and shelf life remaining would revolutionise inventory management in what is one of the most expensive sectors to operate.
Although some of these applications would not be the first to materialise, the simple one-way tags are already able to tell retailers what stock is in a location, what direction it is moving in: Into or out of a Warehouse, vehicle or store. Indeed, this is where PervasID and Impinj have already transformed the opportunity. It then becomes a short step to enable the more complex uses outlined above.
Is it time for RFID to deliver. We are very close now and the benefits are within touching distance. As the opportunity grows it will gather more momentum to greater adoption and eventually impact all areas of product and retail. Fashion is likely to be the first to benefit, but larger prizes are on offer in the fast moving and shelf life impacted food retailers. It may be 20 years after the hype started but within the next couple of years retailers of all types could be seeing an economic business case for making the move to mass RFID adoption.