A strategic partnership between four companies Monday announced plans to help suppliers incorporate radio frequency identification (RFID) technology into their supply chain operations.
The clock is ticking for major manufacturers of food and packaged goods who must beat the January 1, 2005 deadline imposed by the U.S. Department of Defense and Wal-Mart .
Under the moniker of epcSTARS, the group said it’s ready to meet the demand for quick RFID
According to George Reynolds, Tyco Fire & Security’s vice president of RFID, epcSTARS’ interoperable package will save end-users both time and money, because they’re pre-tested for conformance with retailers’ specifications and the open standards of the Electronic Product Code (EPC) Network.
“There’s so much to get done in the RFID space in a short amount of time with all these mandates,” Reynolds said. “With a small group that can work together for an end-to-end solution, we can move quickly.” Reynolds said that epcSTARS could get its customers up and running with a compliant RFID system in about eight weeks. A fixed price, to be determined, will include hardware, software and services.
Reynolds said that a key feature if the offering is its scalability: While manufacturers may be focused in the short term on meeting their retailer customers’ needs, they’ll see a return on their investment only when they can use the technology to enhance their internal operations.
“We made sure the hardware and software we deploy are applicable for someone looking at a potentially much deeper involvement in RFID,” he said.
Reynolds said that he believes the major retailers won’t be punitive about suppliers who can’t fully meet their deadlines. “They’re using the carrot much more than the stick, and they understand that people are in different places.” Reynolds said that tagging id as much art as science, and not all products can be handled the same way.
Part of the epcSTARS offering is use of a testing facility, where manufacturers can evaluate different tag and reader combos, as well as placement of the tags on the pallets or products.
GlobeRanger also is selling its iMotion Edgeware software independently, and announced its latest release today. The software supports RFID, wireless and sensor-based systems.
More retailers have joined with Bentonville, Ark. retailing giant Wal-Mart in demanding that their suppliers begin using RFID to track and report on the movement of shipments from factory to store. By automatically logging materials and products as they move through the supply chain and onto store shelves — and possibly into shopping bags — this technology promises to reduce inventory shrinkage, improve efficiency and predict shopping trends. European retailers Metro Group and Tesco have begun serious RFID trials with a plan to roll the tagging technology into their entire operations. In the U.S., Albertsons, Target and the U.S. Department of Defense have followed Wal-Mart in telling to suppliers to get with the program.
While companies tout their products, some analysts are warning that RFID will cost more and, perhaps, deliver less in the short term than suppliers might hope. RFID tracking is a good deal for retailers, according to a report released today, but a money pit for some of their suppliers. Soreon Research, a German IT market research firm, analyzed the costs and payback for five hypothetical companies, two retailers, a distribution center, and two suppliers.
The department store might see a return on investment within one year, according to Soreon’s analysis, thanks to reduced theft and out-of-stock items, plus more efficient processes. On the other hand, the textile manufacturer would take five years to gain a return on its investment tracking goods at the pallet level, and the firm found ROI for tracking at the item level to be “non-conceivable.”
“In the face of current cost pressures, companies are forced to make use of every opportunity to save on cost,” Soreon research director Steffen Binder said in a statement. “But RFID is a very complex technology which does not help everyone in a like manner.”
