This article was previously published in Retailspeak Magazine With mass speculation and widespread news surrounding the evolution of radio frequency identification (RFID) standards, it’s little wonder that the topic has received a sensationalistic spin akin to Y2K. Frenzied companies, eager to adopt or comply, are scrambling for answers. Instead, they find themselves confused amid fast-breaking updates about electronic product code (EPC) standards and various companies’ latest compliance requirements. It’s time to set the record straight and offer executives some truths about the reality of RFID. Debunking the myths, misconceptions and mysteries surrounding RFID will help put it in proper perspective and save wasted hours and euros searching for misguided answers.- Myth 1: There Are no Set Standards for RFID TodayTruth: GTAG? ISO 18006.A? ISO 18006.B? Gen 2 EPC? The acronym soup has thickened into a murky layer of complexity, further complicated by some vendors’ claims of owning the standards. The fact is that there are several RFID standards today. The major reason that the prior standards were never adopted on a broad scale was that the technology companies were the main drivers of these standards. They had a solution and were seeking a problem to address. EPC standards, however, were developed by end user companies to ensure that the technology developed addressed a specific business need. Recent rumors regarding the Global Proposal verses the Freedom Proposal within the EPC community, along with company lawsuits, have added to the uncertainty. EPCglobal is helping to define the standards for next-generation technology, but the big players—Wal-Mart, Metro, the U.S. department of Defense, and select Fortune 500 companies—are aggressively moving forward on the RFID adoption curve, and many have already implemented current-generation EPC technology. Smaller businesses will likely take their cue from the industry leaders as RFID standards continue to evolve, emerge and ultimately become more entrenched. Myth 2: Replacing Bar Code-Based Processes with RFID Processes Will Achieve ROITruth: Feeling the pressure to incorporate RFID into their manufacturing and logistics operations, some companies will tend to implement technology for technology’s sake. Buyer beware: Implementing RFID does not instantly guarantee a fast path to return on investment (ROI). To impact the bottom line, the decision to implement RFID must be linked to a definitive business goal. For most companies, it is cost-prohibitive to convert to RFID on a broad scale. And, in some cases, it doesn’t make sense. For example, if your warehouse is reliably scanning bar-coded cartons on a conveyor as they are loaded onto a truck, switching this process to RFID doesn’t really buy you anything. Why? Because the labor savings resulting from replacing an automated bar code scan with RFID simply don’t amount to much. However, if every carton is currently scanned manually, changing the process to automate the data capture could reduce labor requirements and increase facility throughput. In addition, if there are areas in which data is lacking, adding RFID can increase visibility and accuracy. The reality: RFID technology isn’t new. It has been around for the past decade, whereas bar code technology has surpassed three decades. The promise of achieving greater ROI with RFID is not time-sensitive as many may believe; it is application-dependent. Myth 3: RFID Benefits Only Retailers, Not SuppliersTruth: While the RFID spotlight has clearly illuminated major retailers (Wal-Mart, Tesco, Metro, Target and Albertson’s), several major Fortune 500 suppliers including Procter & Gamble, Gillette, and others are driving toward RFID implementation across the supply chain. Suppliers might not achieve incremental ROI, but there are benefits to be gained. As the Wal-Marts and Metros of the world implement new RFID requirements, suppliers—in their efforts to comply—must be prepared to execute the right technology strategy to serve their own business. Suppliers should view RFID compliance as a means to capture more detailed inventory information, increase visibility throughout the supply chain and reduce the number of claims. For the first time, suppliers can use shared data to gain new insights, better source products to meet demand patterns, take preemptive corrective actions to avoid claims and better satisfy their customers’ needs. More satisfied customers and increased stocks in-store lead to more business. Myth 4: RFID is the Only Way to Automate Manual Warehouse Receiving ProcessesTruth: In certain cases, RFID may be appropriate for warehouse automation, but it is not the only solution. In fact, one of the biggest paybacks of evaluating potential RFID uses in the warehouse is that this investigation actually helps uncover big savings opportunities that don’t require RFID technology. Savings can be significant for manufacturing companies that are looking to eliminate their labor-intensive, paper-based processes by automating the receiving function. Tagging of cases can be done with bar code (versus RFID) technology and still yield tangible ROI because the company has eliminated the potential for manual intervention and thus human error. Another example is a manufacturer that bar codes pallets and scans them onto containers. If the company discovers that it never sends the advanced shipping notice (ASN) to the receiving warehouse, they’ve identified a gap that can be rectified and this can therefore lead to improved customer service. This scenario does not require RFID; rather, it involves the addition of a simple step to close the warehouse receiving process loop—an especially important link for capable-to-promise (CTP) manufacturers. Myth 5: The EPC is an RFID Replacement of the Current Bar Codes (GTIN/UPC)Truth: EPC used in RFID tags and bar coding are considered complementary data-capture technologies. Even with large-scale adoption of RFID, there will be a continued need for bar coding to coexist with RFID in the future. While current bar coding offers the same number for every case of a given stock-keeping unit (SKU), EPC is a standard way to serialize all inventory. The unique attributes of RFID enable improved visibility into supply chain movements and history. With RFID technology, the level of information is deeper, allowing inventory to be tracked and data to be more freely shared between suppliers and retailers. While RFID has the potential to offer a closer technical fit as well as operational benefits in certain applications, it will not serve as a replacement for bar codes. Both types of technology have a place in today’s fast-developing business environment.
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