It’s crunch time

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Well, it looks like crunch time for suppliers to the world’s leading retailers. What with Wal-Mart compelling it’s top suppliers to take the plunge into Radio Frequency Identification (RFID) by the first of January 2005 and several other leading retailers moving in the same direction, it looks like suppliers are on a steep learning curve and face the bleak prospect of having to set aside a substantial capital sum for investment into this burgeoning technology.

So, what’s in it for the suppliers? Staying in business with your big retail customers I suppose. But apart from this rather stark choice there are advantages to the supplier too in grasping this technological nettle.

For one thing, tracking batches of product back through the chain would be a lot easier – particularly in incidents of food contamination or faulty components. Precision in pinpointing problem batches could save substantial sums in withdrawing product from the market. But, perhaps, of greater significance is the potential to reduced damage to the brand by being able to identify and isolate rogue batches quickly. I’m sure marketing departments would be the first to realise the value of this aspect of the technology.

Preventing seepage in the chain – or theft, as most of us call it – would be another benefit to deploying RFID tags. And for pharmaceutical manufacturers, tagging technology could be used to raise consumer confidence in authenticating products – a useful tool in the battle to combat the counterfeit drug trade.

So it’s not all pain and no gain. Of course, there are technological and standards issues to be addressed and overcome, but these are early days and much progress is being made. Tag prices are still much higher than the desired maximum price of five cents, and compare far from favourably with bar code costs, but this too is widely predicted to fall as market demand gathers pace.

Most of the mainstream IT companies are aligning their products to cater for wider acceptance of RFID. Enterprise systems company, SAP, is launching its first off-the-shelf RFID product this month and the big database companies are beginning to address this market. In March, Oracle introduced its Sensor-Based Services and has RFID enabled its warehouse management application. This is a technology that’s here to stay. Embrace it.

Nick Allen, Editor

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