Early adopters seek return on investment for RFID

For companies looking to adopt Radio Frequency Identification Device (RFID), successful implementation will take more than just rolling out a few tracking devices, industry experts told an event focused on the technology Tuesday.

At this week’s RFID Journal Live! Canada conference in Toronto, early adopters of RFID in the retail, distribution, and manufacturing fields got together to share their experiences using the tracking technology. Mike O’Shea, director of auto-ID sensing technology at Irving, Tex.-based consumer products company Kimberly-Clark, said in his keynote speech that enterprises deploying RFID won’t see the return on investment until they reengineer their business practices.

“A large consumer goods company we were dealing with told us they weren’t seeing any ROI after implementation,” O’Shea said. “When we asked them what they were doing with the data they collected, they told us ‘nothing.’ We told them ‘just putting tags on cases doesn’t deliver an ROI.’”

According to O’Shea, RFID is the cost of doing business for major manufacturers looking to get products into retail giants such as Wal-Mart. Companies looking for a quick return on investment with RFID will have to look elsewhere, he said. Instead, O’Shea argued, RFID can provide manufacturers with vast amounts of data to help retail partners reduce out-of-stocks and improve promotions tracking.

“The good news is that the technology works and we are getting lots of reads with the tracking chips,” O’Shea said. “The bad news is the technology works and we are getting lots of reads with the tracking chips. For example, it can sometimes be difficult to look through all of the data and understanding the root causes of why something goes out-of-stock.”

But O’Shea said, companies should still go through the evaluation process and try to roll out RFID where it’s comfortable financially to do so.

Also during the conference, Toronto-based GS1 Canada, a non-profit supply chain standards body, announced the launch of a government-subsidized knowledge centre specifically geared toward Ontario small and medium enterprises (SMEs) looking to adopt RFID. The GS1 knowledge centre contains guidelines and best practices developed by companies such as Wal-Mart Canada, Loblaws, Bell Canada, Ford, and Boeing, among others.

“Part of the goal for this is to ensure Canada isn’t at a disadvantage in this field,” Eileen Mac Donald, executive vice-president and chief operation officer at GS1 Canada, said. “We have a role to inform SMEs with the right information and encourage adoption.”

Mac Donald said that GS1 receives hundreds of calls from companies looking to learn more about adopting RFID, so launching the free knowledge centre was a necessity.

Some companies are reluctant to use RFID chips because of the privacy concerns many consumers have with having their products tracked after purchase. One representative from EPCglobal, a developer of industry-driven standards for the Electronic Produce Code network and RFID use, said that transparency is the key to alleviating consumer fears and benefit from RFID adoption.

“You’re not going to hide why you’re using the technology,” Patrick Javick, manager of industry development at EPCglobal North America, said. “For example at Wal-Mart, notices posted at its stores say the technology is being used and even in some cases these notices are at stores where it’s not using it, just in case an RFID package is shipped into its store.

Javick said consumer choice and education are also important because the consumer needs to understand the purposes behind RFID as well as have the ability to remove the tag after purchasing a product. He cited the EPCglobal guidelines on responsibility use of RFID for manufacturers and retails to follow. EPCglobal is represented locally at GS1 organizations in over 100 countries.

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