Wal-Mart SPEAKS AND the retail world listens. But what does its Radio Frequency Identification (RFID) edict mean? Will it be the top 100 suppliers in 2005 or all suppliers in 2006? What is the cost and what is the business case? Does compliancy mean tagging pallets and cases? With or without the infrastructure for real-time visibility and reporting? Clearly there are many questions, but here are nine things we already know:
One: RFID is a zero-sum game. Meaning the day after RFID is deployed no new markets or sales will be created. In an ROI-obsessed world it is important to understand that gains won't come from generating new revenue. Rather they will come from new efficiencies and a predicted shifting of market share toward early adopters.
Two: The cost of RFID will be spread across the supply chain between merchants and manufacturers, distributors, brokers, shippers and suppliers. Each will contribute a share of the cost, which some experts peg at $2 billion.
Three: The window of opportunity to begin an RFID pilot is the first half of 2004. Why? No retailer will conduct a pilot during the September-to-December selling season. This means that if Wal-Mart begins real-world RFID deployments in 2005, as is likely, and a retailer hasn't piloted in the first half of 2004, then it will need to wait until the first half of 2005 to test. This will result in a 2006 RFID roll out and give Wal-Mart a full year to consolidate its gains.
Four: RFID will enable immediate polling of inventory, and access to the data can be shared between retailers, manufacturers and all layers of the supply chain. This will revolutionize service, support, re-supply and product identification/location. Reduction in shrink and fraud are immediate benefits.
Five: RFID tagging will lead to further automation of such currently labor-intensive processes as physical inventories, cycle counting, replenishment and payment.
Six: Compliance with RFID tagging standards will reduce risk in locating expiration-date sensitive products and items subject to Hazmat disposal or recalls. It will also help deter counterfeiting of goods, piracy of digital rights and aid in tracking currency movements.
Seven: Service providers, consultants and integrators will play a leading role in the RFID roll out as merchants seek expert help during the testing and prototyping phase.
Eight: Most systems and applications that support supply-chain execution, inventory management, warehouse management and replenishment will need to support RFID.
Nine: Shoppers might not experience RFID in stores for several years, but the retailer experience will begin in the first half of 2004.