RFID: The Standard(s) Excuse
Of all the reasons given for the seemingly glacial pace of radio frequency identification (RFID) technology, one of the more prominent is a lack of standards for areas such as data structure and applications. Not true, says an article on the web site for the Association for Automatic Identification and Mobility (AIM).
According to the author of the article, Bert Moore, standards have been developed by two international standards organizations and therefore shouldn’t be used as an excuse for not moving forward with RFID.
In fact, Mr. Moore suggests, RFID standards put retailers and others using the technology in a better position than at a similar stage in the implementation of bar codes. “In the ‘old days’ of early bar code implementation, industry segments created their own standards. This made it relatively easy to know where to go for information. The problem, of course, was that many companies ended up having to comply with many different — and even conflicting — industry “standards.” It took many years for bar code standards to become rationalized among industries and moved up to the level of international standards.
AIM offers a list of existing, published RFID international standards and technical reports as well as added reference to those currently in development.
Discussion Questions: Is the standards issue real when it comes to radio frequency identification (RFID) technology implementation in the supply chain
or is Bert Moore correct in suggesting it is a non-issue? What remains as the real hurdle(s) retailers face with RFID?
I tend to agree that the slow adoption of RFID is less due to lack of standardization and more due to lack of a business model. It seems to work technologically, but the benefits to retailers (and their shoppers) have yet to be proved.
Is RFID a solution in search of a problem?
The big problem with RFID is that it is not cost justifiable as a replacement for Barcode. The cost justification rested on RFID’s ability to read large groups of objects (pallets of cases) simultaneously as opposed to one at a time with Barcode. In practice, the read rate came out to be 50% to 80%. This is forcing users to one at a time reading which is no better than Barcode.
New technology is most quickly adopted when the payoff is obvious. No one had to force businesses to start web sites on the internet. No one had to issue an edict to get people to use cell phones. No large customer had to demand that suppliers get email addresses. Everyone is waiting for real-life examples of obvious payoffs from RFID. Not analysis projections from the University of Arkansas, not theories from consultants who want implementation fees, not cost-shifting from the self-centered, not paranoid scenarios from the no-credibility Department of Homeland Security. The biggest RFID payoff everyone’s seen so far is highway electronic toll collection (EZ Pass). Toll collection isn’t retailing.
Yes, there are RFID standards controversies. If RFID was compelling, the standards issues wouldn’t be mentioned or they’d get resolved. There were standards issues for personal computer operating systems, and there still are competing standards for cell phones. When was the last time you heard of someone refraining from the acquisition of a cell phone or personal computer because of standards issues?
I suppose the “pace of RFID technology” (“glacial?”) is more a function of perspective, expectation, and opinion than a matter of hard facts and absolute metrics, but that issue aside, I do agree with Mr. Moore’s assertion…there is NOT a lack of “standards.” Utilization of RFID technology is growing, and it will certainly continue to grow. It remains to be seen whether there will be a discernible “big boom/big bang/big thing” phase in the adoption and implementation cycle of RFID, but I’m certain it WILL be a pervasive, transformational technology. Actually, I’m pretty confident we’re already IN the transformational stage, albeit still on the early side. Standards, as always, are vital. They will continue to emerge, evolve, and mature…just as they have with other technologies and processes. Our perceptions and interpretations of the technology’s “pace” will certainly go through cycles, but my sense is that RFID is on a steady, inexorable march through experimentation, adoption, implementation, to an eventual “transparent pervasiveness.” The standards development process will (and MUST!) be there every step of the way!
A large hurdle for RFID’s ability to read groups of objects simultaneously is interfering materials like aluminium and iron packaging, resulting in low read rates. But reading of hidden RFID tags on individual pallets, cases and consumer items already works well.
In retail, there is a business case for RFID tagging on items in fashion. Fashion items have relatively high prices and mark-ups and high product variety. Every lost sale or mark-down is a substantial profit loss.
Garments have a short shelf life before their first mark-down. Items are often misplaced by customers, and individual tagging makes stock control easier. Marks & Spencer UK and Levi Strauss stores in Mexico show good results with item tagging.
Individual RFID tagging of jewelry makes inventory counting less time consuming, and frequent stock keeping is an effective means for theft control. See pilot at Peter Franklin Jewellers, Indiana.
At C1000 supermarket chain in The Netherlands, a pilot of RFID tagging of standard produce crates improves speed and efficiency of distribution from suppliers to the stores. Wal-Mart expects the next wave of 300 suppliers to start shipping tagged cases and pallets by January 2007, bringing the total number of suppliers to 600.