New Zealand needs to start on RFID

New Zealand has been slow to move into the use of radio frequency identification (RFID) tags in the supply chain, and is in danger of missing a crucial takeoff of the technology over the next year, says Peter Stevens, head of the local branch of the international article-numbering organization, EAN.

Only a few companies have moved seriously into pilot use of RFID, such as food chain Progressive, which is using it to track meat at a newly built factory.

Considerable scepticism still surrounds the return-on-investment potential of the technology and some doubt has also been cast on the cost of the tags and the accuracy of the readers.

The middleware, Stevens says, has been described, probably with some truth, as “half-baked”.

“Not all the physics stuff has been done,” he admits, referring to trouble with the behaviour of radio waves going through some metals and liquids.

But if the benefits are as fuzzy as they are rumoured to be “then why are Wal-Mart, the U.S. Department of Defense, major German supermarket chain Metro, Tesco, Coles Meyer just two months ago and Gillette all adopting it?” he asks.

The answer is that “at present, perhaps, the payback might not be there, but (longer-term) prospects are so big that a start must be made now.”

Most major companies in the world are already past their investigation stage and embarking on pilots, he says. Apart from the promised efficiencies of knowing exactly where stock is in the supply chain and reducing “shrinkage”, there is a risk of New Zealand suppliers being left off international supply chains oriented to RFID and the tracking systems that it makes possible.

The continuous reading and updating of tags made possible by RFID — as distinct from the stage-by-stage checking of read-only barcodes — outmodes the concept of a “supply-chain”, Stevens says. “It will be a supply tube” — a continuous progression with no discernible stages and links.

Speaking to a NZ Computer Society audience late last month, he promoted the EPCglobal network as magnifying the benefits of RFID by instituting internationally standard RFID codes for lines of merchandise, and allowing access to those numbers and accompanying information on consignments through a worldwide internet-like object naming service, which, together with special purpose middleware, known as Savant, helps manage the huge volumes of data generated by the movement of tagged goods. The worldwide import-export system will be linked online and New Zealand has to be on board, says Stevens.

Better tracking, he says, has shown, incidentally, that “shrinkage” is more than simple customer theft. Often it reflects an “inside job” by store staff and managers, spiriting away consignments of goods and claiming theft. The “missing” goods are replaced under insurance and the store gets extra goods for free.

With RFID tracking, both genuine theft and false claims of theft will be more difficult to perpetrate, he says.

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