While RFID allows goods to be easily identified and tracked in the supply chain, and beyond - in earlier trials, Marks & Spencer claimed to be enjoying 10-fold cost savings, compared with the use of traditional barcodes for handling food products - one of the greatest potential benefits for retailers is the ability to combine this with information held on a back-office database. This can enhance the shopping experience for the customer while they are in the store.
In future, this is the area that is likely to become the main focus, as retailers' interest in streamlining logistics gives way to a growing concern for the customer experience.
More efficient service
This was the rationale behind Prada's early pilot scheme at one of its New York stores. By combining RFID, or smart tags with product information from a back-office database, the store has given shoppers the ability to find out more about the products that interest them as they shop.
If a customer who is trying on clothes wants to know if a particular garment is available in another size or colour, they are able to find out for themselves without having to get dressed by checking the options on an interactive video touch-screen. The result for the customer is a more efficient service; the benefit to the retailer is potentially higher sales.
Such innovations will be a strong theme at the Retail Solutions show in June, which will showcase some of the latest products aimed at retailers in this area, from suppliers including Retek, IBM and Paxar.
One of the show's seminars, New Concepts in RFID Intelligent Spaces, will set the scene by exploring the growing range of information-driven applications that are being created and deployed in stores, as well as in the supply chain.
It will consider how RFID technology can be used to improve on-shelf availability, and reduce retailers' overheads through effective inventory management and operational practices.
A case study from Entertainment UK will also examine how the shopping experience can be improved through the ability to monitor inventory-relevant goods movement across the goods flow chain. This can now be done in real time, by combining intelligent back-room and shopfloor control with interactive shelving.
In another seminar, M&S head of RFID James Stafford will give an update on the business benefits the retailer is experiencing from its use of item-level tagging for food and clothing in the supply chain, one of the more popular applications of RFID to date.
IBM, whose RFID solutions include consultation and implementation services, as well as software, will be using the show to extol the virtues of a phased approach to RFID. The company will be demonstrating RFID-based solutions for distribution, and order picking demonstrations using live customer projects. The solutions on show are presently being used by Tesco and Metro.
Focus on supply chain
These solutions are aimed at any business with a warehouse or distribution centre as part of their supply chain. RFID at the manufacturer's site ensures that the right goods are packed onto the right lorries, and that they arrive intact at the right location. At the retailer's site, the solution allows for the automated input of incoming product information, offering managers far greater stock visibility.
IT services company Infosys Technologies will be promoting a framework it has developed that enables companies to evaluate the potential impact of RFID across their business. Like IBM, this involves building a business case and developing a roadmap for phased adoption to keep set-up costs and disruption to a minimum.
Meanwhile, apparel labelling and ID products manufacturer Paxar will show its RFID microchip tags for item-level garment tagging. It makes reference to the trial that is under way at M&S, which is believed to be the largest garment-specific trial to date.
The pilot is now in its second phase, being tested on men's suits at six of M&S's London outlets. With the ability to read product details on the tags at different points in the supply chain, the information can be used to ensure that the right goods are delivered to the right stores at the right time.
A Forrester Research market report on RFID, published on its Web site in December, concluded that many companies would have no choice but to adopt RFID technology this year. This is because of pressure from powerful retailers, such as Tesco, which are insisting that their supply chain partners support the technology to enable product tracking and management across the full length of the supply chain.
The report reaches the following conclusions about what companies should do about RFID this year. While not all of these recommendations apply directly to retail companies, there is advice worth heeding:
- Pilot EPC now. Even companies not directly affected by these mandates should begin pilots to gain advantage over their competitors. For example, Michelin was one of the first businesses to develop RFID-tagged tyres. Its pilot gave it insight into how radio waves travel through rubber. This knowledge will allow it to be one of the first to offer innovative services such as roadside assistance for flat tyres.
- Explore other uses of RFID and X-Internet technologies. Companies need to evaluate RFID within the context of a larger trend, namely the extended Internet - a set of technologies that connects companies' information systems to physical assets, products, and devices. Many benefits can happen only when RFID works with complementary technologies such as Bluetooth and GPS. For example, DHL has used both RFID tags and existing satellite tracking systems to monitor the movement of Nokia phones throughout its distribution chain.
- Use pilots to model implementation costs based on process change. Studies have measured the costs of RFID deployment based on how many billions of tags, new network equipment, readers, printers, and storage hardware might be needed. However, Forrester believes that companies will spend much more on training, data analysis and optimising business processes than they will on technology. It advises that companies use pilot projects to plot where and how these processes must change.
RFID at Retail Solutions show: Retek, F30; IBM, F24; Paxar, C24; Infosys, C10.