Alerted to Action
To say that adoption of RFID throughout the retail supply chain has been slower than early optimists predicted would be a gross under-statement. However, it would be even more inaccurate to suggest that RFID has become less relevant or has less potential in the retail industry. Widespread implementation of all products across all retail sectors will likely not come to pass—but where RFID succeeds, it soundly outperforms other technologies.
In his opening comments at the fifth annual RFID Journal LIVE! conference held last month in Orlando, Fla., Mark Roberti, founder and editor of conference host RFID Journal, noted that contrary to rumors suggesting its demise, interest in RFID applications is not fizzling—certainly not in the health-care, pharmaceutical or consumer-product-goods industries, nor in the retail industry, where companies such as Wal-Mart, Target and Best Buy have piloted into the future.
Rollin Ford, executive VP and CIO of Wal-Mart, in his keynote address to conference attendees, affirmed that RFID is assuming a “bigger and broader role” at the world’s largest retail organization.
Ford encouraged the audience to understand the broader context of RFID’s potential, from one that will enable innovation beyond customer service and corporate profitability to one that embraces and impacts global sustainability.
Wal-Mart is thinking far beyond tagging boxes and the benefits of RFID in its DCs. Back-end efficiencies remain important, but store-level improvements are even more dramatic. According to Ford, inventory inaccuracies account for 41% of out-of-stocks, but on products involved in the RFID rollout, the retailer reduced out-of-stocks by 30%.
“Global data synchronization creates a powerful business model—the Holy Grail is to know where all our stuff is at any given time and to be able to react in real time,” stated Ford. “RFID can automatically and efficiently detect errors. Accuracy leads to efficiency, which leads to sustainability. In-stock positioning has an impact on the daily good—if shoppers find what they came for, they can avoid extra trips to the store, which translates into savings on gas and lower gas emissions in the environment.”
Real-time action: In order for global data synchronization to be effective, all trading partners need to be working from the same page. Standardization is critical to the process, and many retailers and their trading partners have begun to use the EPCglobal Network’s EPC Information Services (EPCIS) standards.
During a panel discussion at RFID Journal LIVE!, Simon Langford, director of RFID strategy and transportation systems of Wal-Mart Stores, reiterated the importance of turning real-time alerts into real-time action and, to facilitate this, the need for all trading partners to be operating on a common format.
“EPCIS gives clarity [to the process] and cuts down on a lot of efforts,” stated Langford. “Using the EPCIS common format is particularly beneficial when launching a new item.”
EPCglobal is a nonprofit organization with membership open to retailers as well as their suppliers. However, even non-members can download the EPCIS standards at www.epcglobalinc.org.
Simon Ellis, supply chain futurist for Unilever, also participated in the panel discussion, and agreed that the EPCIS format is both easy and accessible. The common format creates a scalable environment, so that processes and analysis can ramp up efficiently as new products and locations are added.
Ellis noted that the amount of Unilever’s product with RFID tracking to the store level represents a very small sample of the manufacturer’s total shipments. Currently, Unilever’s RFID tags are confined to less than 50% of the product it ships to Wal-Mart and Target stores in a three-state region.
However, he did not want to minimize the potential of RFID or the promise it holds for future efficiencies.