RFIDS face price, complexity hurdles

It might be touted as the biggest thing to hit the supply chain since the bar code came in 25 years ago, but RFID electronic tagging still has hurdles to overcome.

It might be touted as the biggest thing to hit the supply chain since the bar code came in 25 years ago, but RFID electronic tagging still has hurdles to overcome.

IBM, Fujitsu and others were pushing the benefits of radio frequency identification tags at the Asian Retailers Convention and Exhibition (ARCE) in Christchurch this week.

While appreciating its potential benefits, New Zealand retailers have fears over cost and complexity.

A theme of the ARCE event was the "Store of the Future" but, at 10 US cents apiece, the cost of the tags is still too much for individual product use. RFID tags will first appear in warehouses on pallets or boxes.

The tags have a small silicon chip and antenna that allows data to be read and written via a radio signal. They have no power source but are activated by a reader or scanner. Proponents say the tags are more durable than bar codes and have the additional benefit of not needing to be in line of site to be readable.

Hong Kong-based Brian Eccles, of IBM's business consulting services division, says RFID tags will help businesses increase sales because closer monitoring of stock will ensure the don’t run out of anything. Also, better tracing of goods, particularly those with a short shelf-life, will give stores a better idea of what's left, so they can readily alter prices to the shelves.

However, Eccles accepts there are issues like how companies manage the extra data RFID tagging can generate.

Dicki Lulay, head of the Uniform Code Council, which plans to issue guidelines on RFID tags, estimates US-based businesses alone will save $US70 billion a year once RFID is fully implemented.

Wal-Mart has trialled RFID tagging for several years and has mandated its top 100 suppliers to introduce systems by January 2005 and all its suppliers to have it by 2006.

Mark Arand, general manager of new business development at children’s clothing chain Pumpkin Patch, says the technology is "still some way off", but he can see its promise of better efficiency and security, plus cost reduction.

However, an obstacle is cost: of tags, installation, scanners and other hardware.

Stephen Anderson, head of Foodstuffs (South Island), which runs the Pak'N'Save, New World, and Four Square supermarkets, says his businesses is assessing RFID systems.

Benefits of inventory access and theft prevention appeal to him.

His main concern is the capacity of Foodstuffs’ IT systems to handle tag data; unless he buys "really big computers" it could become "paralysis by analysis".

He expects it will be three to four years before RFID is introduced at the pallet level and "quite a while" before individual stock items are tagged.

Paper Plus is in the throes of replacing a DOS-based point of sale inventory management system with a Windows one. But chairman Rob Clark says the company "will look at whatever technology we can to enhance our business".

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