April 15, 2004, 4:23 PM — With RFID technology becoming more of a hot topic, some industry insiders sat down at the Global Supply Chain, RFID and GTIN Standards Conference in Toronto to discuss the benefits and the realities of the technology.
During the event, which was held at the Metro Toronto Convention Centre on Wednesday, Phil Friedman, vice-president of consumer products at Oracle Corp., said that RFID standards are "long overdue" and are finally coming into play.
Although RFID technology has been around since the Second World War, Wal-Mart Stores Inc. breathed new life into the technology since it made public its demands that its top 129 suppliers be outfitted with RFID tags by the beginning of 2005. It is critical that Wal-Mart isn't developing standards and driving them down to customers, Friedman noted.
While RFID is becoming smarter and more efficient every day, Friedman said it still has a ways to go before it is the super technology that many companies are hyping it to be.
One of the major errors that vendors make with a new technology is "over hyping the hell out of it" and they are then forced to spend the next two years correcting themselves and the next three years creating the right technology, Friedman said. He added that it is essential that companies "manage the hype."
The benefits that can come from the technology are visible in two key areas, according to Friedman -- supply chain optimization and trade management effectiveness.
In the supply chain, cost saving opportunities can be found in reducing raw materials and finished goods inventory and eliminating the frequency that a retail outlet is out of stock of a supplier's goods. Trade management can find ROI opportunities in improving settlement costs, Friedman added.
Because of institutions like Wal-Mart and the U.S. Department of Defense (DOD), it doesn't matter if companies want to deal with RFID or not, they have no choice but to do something about it, explained Mark Lewis, director of supply chain solutions at Datavision Inc., an implementer of RF and RFID solutions.
When deciding to implement RFID there are several different levels of coverage a company can choose to have. The easiest and most basic is what is referred to in the industry as 'slap and ship,' which Lewis explained is also the method to stay away from.
"With slap and ship, don't do it if you don't have to because there is no ROI in it," Lewis said. He added that this strategy should only be used as a last resort to gain quick compliance.
Like Oracle's Friedman, Lewis cited inventory management and stock-outs as key areas where ROI from RFID can be found and also warned that clinical trials, samples management and manufacturing materials tracking will show a very low return "because there is simply not enough volume in these areas to get ROI," he said.