Metro CEO Calls for Single RFID Standard
By George Anderson
Hans-Joachim Körber, chairman and CEO of the Metro Group, is a radio frequency identification (RFID) prophet.
Mr. Körber’s company has been out front in the testing and adoption of RFID (Metro launched its Future Store in 2003) and he believes that the technology will benefit retailers across the board. He doesn’t even mind if his competitors realize the benefits from using the technology.
“We expressly welcome the [RFID] activities of our competitors,” he said at the opening of the Global Retail Technology Forum in Düseldorf, Germany, “because it is in our interests to achieve an international understanding of uniform standards across all companies and industries.”
Developing a uniform standard is essential if retailers and others using the technology are to achieve the full benefits from it, said Mr. Körber
“[RFID] is the future, and it will make retailers’ lives easier,” he said, “but there is one precondition: We have to go for common standards. We have to seize the opportunity today to have one worldwide standard. That’s why we push so much, on the EPC global board, for one standard that fits pharma, textiles or whatever.”
A single standard is necessary to speed up adoption of the technology. Metro’s CEO expressed disappointment that while global giants such as Johnson & Johnson and Procter and Gamble are employing RFID, many others are not. According to an RFID Journal report, Metro was looking for 100 suppliers to be using RFID by this point and less than half are actually up to speed.
While Metro’s CEO admitted that the company is still “more or less in the test phase” with RFID, he remains convinced of its power to reshape the shopping experience for consumers and the supply chain for retailers.
“By far, the key technology with the greatest potential to our business—and, therefore, of strategic importance—is radio frequency identification,” he said.
Moderator’s Comment: Is a single worldwide standard for RFID a precondition for widespread adoption of the technology? Do you agree with Hans-Joachim
Körber’s assessment that RFID is the technology with the greatest potential benefit for his company and other retailers?
“We have to have the same data on the tag… what we are looking for is one worldwide numbering system – say, 28 digits – that allows us to use RFID in
different industries. At the moment, we are still in that process,” said Mr. Körber. –
George Anderson – Moderator
I do not understand. The Electronic Product Code (EPC) is 96 bits. 2 to the power of 96 = 79,228,162,514,264,300,000,000,000,000
This works out to more than 28 digits.
A uniform standard will provide an easier path to widespread adoption, but a realization of ROI will pave the way. Twisting arms is having less of an impact than originally planned.
This is a chicken/egg situation. It’s easier to reduce the cost if everyone uses the same standard and it’s easier to get broad acceptance if the cost is low. People don’t want to adopt a system whose costs prevent a decent return on investment. Stories of breakthrough profit increases via RFID are scarce. So broad usage isn’t imminent. And the costs aren’t minimized.
I agree 100% with Mr. Körber’s statements. RFID adoption and success is even more dependent on standards adoption than EDI. The benefits of the technology are totally driven out of having an agreement on the data formats stored in the tags. Having said that, the standards groups need to think small. Historically, people working on these standards try to come up with the ultimate solution, when in reality, we can gain real benefit from just agreeing a few fields.
Much to my surprise there was an ad on British television recently for UPS with American actors extolling the virtues of having all pallets bearing RFID chips. Surprising because we don’t usually get American ads, UPS doesn’t advertise a lot over here and very few people have even heard about RFID. But if this is the first move in an attempt to go global, it’s taking a good tack by getting consumers on board from the get go and showing them (because they are buying so much online that needs to be delivered promptly and safely) the advantages to be had. The timing is either brilliant or diabolical with all the talk over here at the moment about infringing civil liberties with a national database, compulsory ID cards, Parliament being bypassed in laws to detain alleged terrorists, little or no definition of the glorification of terrorism which got approved today. We’ve also had lots of press coverage of your Mr. B’s antics in bypassing the courts when he feels like a bit of eavesdropping so I don’t think it will take long for the underlying message of the UPS ad to start making waves.
Today’s technological Tower Of Babel includes Betamax, laserdiscs, the metric system, PAL video, Aztek code, area codes, zip codes, monetary currency and – as in the beginning – languages. There will never be a single worldwide standard for anything. Even girl+boy is no longer a worldwide standard. Tigers mating with lions produce offspring, for Pete’s sake!
RFID is cute, sexy, current, and – well – cute. Ron Margulis is the smartest person I know on this subject, and I don’t see him portraying RFID as an end-all, be-all. (Where have you gone Ron Margulio? [Please pardon the Simon & Garfunkel reference.])
Here’s the key question: Is there a worldwide standard on anything at all?
For RFID to gain traction, a number of things must happen. Having one worldwide standard is critical, as no country is an island in today’s global economy. In the next 5 years there will be a significant increase is consumer products crossing country borders. The cost of the tag must be reduced to 1 to 2 cents per tag. Without a lower tag cost there are no economics for lower cost items. Last, but not least, is the reader technology must significantly improve. Like computers, the read speed and reliability must increase while the cost decreases. Until all these things are achieved, RFID will be an experiment.
The use of RFID is a tool, not a goal. Although RFID is a very promising tool, it is only one of the many tools we possess that can get us to the goal of better serving the needs of our consumers. We have tried many “new, promising tools” over the past 10+ years to, for instance, reduce out of stocks. And, yet, out of stocks remains at a relatively constant level. Until we test the tool to make sure it works the way we expect it to, train our people in the proper use of this tool, and change our business processes to gain maximum advantage from use of this tool, we simply have another tool gathering dust on most people’s shelves.
What he says makes total sense, but there are always (and will always be) a few idiots who insist on proprietary interfaces in the hope of becoming the dominant player in the field, a la Bill Gates with Windows. (Dream on.) In almost every case in an emerging industry, this silly behavior mucks up progress needlessly.