RealTime IT News

RFID... Tagged for Retail

Seeing profits in the little things in life, major league IT players have all announced radio frequency identification (RFID) initiatives at the National Retail Federation 20004 this week.

Intel, IBM, Microsoft and Sun Microsystems were among the enterprise software heavy hitters that showed off products and services designed to provide what some call "real-time retailing."

By automatically logging materials and products as they move through the supply chain and onto store shelves -- and possibly into shopping bags -- these vendors say that RFID technology can reduce inventory shrinkage, improve efficiency and predict trends.

Technology to let retailers collaborate with their suppliers will be a top focus of IT spending through 2005 or 2006, according to META Group vice president of technology research services Gene Alvarez. He reports that software to enhance channel efficiencies, support collaborative planning and selling, keep customers happy and introduce new products will be central to retailers IT initiatives.

"It's the announcements by Wal-Mart and the Department of Defense that are driving the RFID piece [of retail technology]," Alvarez said. "The Wal-Mart effect has many retailers interested in any kind of supply chain efficiencies, as well as customer service capabilities."

Following that lead, Intel Monday announced it has formed the EPC Retail User's Group of Europe, a working group with three of Europe's largest retailers to accelerate adoption of EPC technology. Group members Carrefour, Intel, METRO Group and Tesco are already piloting the use of RFID and the proposed international standard Electronic Product Code in live stores.

"The key thing about these three retailers is their commitment to piloting, implementation, testing and development," said Jon Stine, Intel's global industry manager for retail-consumer packaged goods. "This is not an academic what-if group. They're committed to testing and finding the answers."

For example, Intel, METRO Group, SAP and IBM worked with a variety of other hardware and software companies to build Extra Future Store in Rheinberg, Germany. The store, which opened in April 2003, features smart shelves that provide real-time info on what's on them, a camera in the vegetable scale that recognizes the fruit and vegetables placed on its tray and a kiosk information system.

The issue facing EPC Retail User's Group retailers is finding where the technology's business value lies, according to Stine. "There's not a question as to whether there is value," he said. But the group will examine what architectures and collaborative efforts are required, and how to organize, manage and move data among trading partners. Intel's goal for the working group is to increase the use of its Centrino mobile chip, Itanium 2 architecture for databases and the Intel XScale architecture.

Also today at the show, METRO Group made its own announcement that it will implement RFID for pallet-tracking across its supply chain of 250 stores, 10 central warehouses and 100 suppliers. It said that the Future Store project showed that the tech reduced losses, optimized ordering and reduced the amount of out-of-stock items. Integration chores for the mass roll-out will be handled by IBM.

Meantime, Sun Microsystems said that it had opened its Dallas RFID Test Center. The center gets its power from the Solaris Operating System using Sun Java Enterprise Software and the Sun standards-based implementation of Savant. Customers can demo applications in a 17,000 warehouse, complete with loading docks, conveyor belts and, beginning in Q2, have access to Sun software for RFID input devices and for managing Electronic Product Code (EPC) information. Sun said the Test Center is the culmination of three years of work on joining Web services and Sun Java Enterprise System with RFID technology. Sun also announced a raft of partnerships with vendors supporting its RFID infrastructure products.

Not to be left out in the cold, Microsoft gave details of its Smarter Retailing Initiative, a technology and services combo with three parts. Smarter Shopping will help retailers use their existing technology investments, for example by providing product and service information via cell phones and PDAs. Smarter Selling will provide retail employees with improved product location and inventory information, while Smarter Operations will give the retailer tools to manage technologies such as wireless devices and RFID. More than 20 vendors will go along on Microsoft's ride, including system integrators, software vendors and OEMs.

The announcements and initiatives such as Future Store have exciting possibilities for hardware and software vendors, according to analysts. IDC expects RFID spending on the U.S. retail supply chain to grow to almost US$1.3 billion in 2008, up from $91.5 million in 2003. But whether these initiatives will bring business value is still to be determined.

"The Future Store is a live prototype for folks to experiment with the consumer," META Group's Alvarez said. "It's the world's largest live focus group. But I don't know if there have actually been real live supply chain efficiencies that have paid for the hardware or applications, let alone the whole thing."