Over the years many words have been written about the technical arguments surrounding RFID – this standard and that standard, the future of the bar code, the cost of tags, active or passive, read distances and this frequency being better than that. Geoff O'Neill, who manages the RFID development project at Woolworths, talks about the widespread application of RFID
While all these technical debates are going on, there is a receptive end user community, of which I am one, which is being frightened off by the jargon and the techno-babble coming from the industry. Meantime, commercially viable large-scale applications, providing the real proof that is needed, are few and far between.
Systems providers are not doing themselves any favours while it remains a technical debate but one voice above all the others has tried to move things forward.
Government is not often recognised for its stance on technology but one of the most innovative and forward thinking initiatives for the RFID industry has been the Chipping of Goods Initiative. Sponsored by the UK Home Office, this initiative is possibly the most influential initiative to hit the RFID industry as it encourages end users to adopt the technology, while sharing the development risks.
Shrinkage is the scourge of all retailers and across Europe costs around EUR30bn* in 2001. Recent figures break this down: customers account for 46% of shrinkage, employees some 29% and suppliers about 8% while internal process error accounted for 17% of shrinkage.
All of these are estimates, since we cannot count what we cannot see. Investigation is expensive and this lack of visibility prevents further analysis into the economic business case for RFID. In the ultra competitive retail sector margins are not conducive to risk taking!
This is where the Chipping of Goods Initiative is so revolutionary. It is designed to encourage organisations to adopt a technology that has both process benefits [for the organisation] and societal benefits [crime reduction], thereby spreading both the risk and the benefit.
One of the companies supported by the initiative is Woolworth’s, the general merchandise retailer with 800 stores across the UK.
The Woolworths project tracks merchandise through the supply chain from the point of it being picked in the distribution centre through to delivery at the store.
This visibility should help reduce shrinkage levels [both the legitimate process errors and the potential for criminal losses], totalling about 54% of estimated losses.
Merchandise picked in a pick to light automated environment is placed in uniquely bar coded tote boxes before being shipped to stores.
Dollies and roll cages are assembled into store orders, loaded onto trailers and delivered to stores.
Woolworths has worked closely with Integrated Product Intelligence [www.IPI-UK.com] as project consultants, systems integrator Microlise [www.Microlise.com] and US-based supply chain security solution provider Savi Technology [www.Savi.com].
Woolworths has developed a system that uses a unique combination of bar code, short and long range RFID, GPS and GSM based technologies to track the consignment through to the store.
The system allows for tracking in the warehouse environment by use of short and long range RFID, GPS for vehicle tracking while on route, and a handheld barcode and RFID reader for delivery drivers.
The system automatically confirms that the driver is at the intended store and that he has delivered the correct merchandise before transmitting the transaction data back to the central system.
The system corrects process errors on a real-time basis and provides an audit trail of movements in the event of a criminal investigation.
Woolworths is expecting this system to help reduce shrinkage by improving visibility.
This visibility should lead to improved operational efficiency, lower inventory levels and increased product availability – all components of shrinkage – process improvements and asset management.
Quantifiable benefits have yet to be reported [April 2003] but the early signs are favourable. Even at this stage the learnings have been significant:
1. RFID works if you understand your business processes
2. Bar codes will not be replaced by RFID. Both are vital parts of the infrastructure
3. Integration with existing management systems is vital
4. RFID is only part of the solution
5. Involve the eventual owners of the business process from the start
The potential user population is more interested in “what it does rather than how it does it” and is waiting for a breakthrough application.
While accepting that the technical discussions are necessary, they are not overcoming users concerns as the proof of the pudding is in the eating.
The Chipping of Goods Initiative and projects such as the one at Woolworths have been an excellent showcase for the RFID industry but it is now up to the industry to capitalise on this and move RFID from the ‘technology looking for a home’ into the ‘must have’ category.