The RFID message from leaders along the supply chain is: the technology won’t be universally adopted anytime soon, but start today or pay the consequences.
Representatives from Loblaw’s, Kimberly-Clark and Gillette spoke on a panel at the EPCglobal Canadian Conference in Toronto Wednesday.
All three recommended that the time for companies – and not just retailers – to investigate the technology is now.
“Nothing’s stopping you from starting to assess (RFID),” said Roman Coba, senior vice-president, Eastern Canada, Loblaw Companies Inc. He noted that specs for the second generation of RFID, or Gen 2, recently became available. “It can only get better,” he said. “People need to start looking at it sooner rather than later.”
Mike O’Shea, director of RFID strategies and technologies for Kimberly-Clark Corp., likened it to the early days of the PC: people had to learn to use them when they became an integral part of the business world and they upgraded regularly as the technology progressed. “The sooner you can get engaged, the better off you’ll be,” he said.
Many manufacturers and suppliers see no choice but to adopt RFID in their shipping and packing processes. Best known among early adopters is Wal-Mart, which mandated that its top 100 suppliers that ship products to its Texas distribution centres adopt the technology as well.
“‘Mandate’ seems to be the word that dealers and retailers fear,” said Coba. But in pushing for RFID adoption, Wal-Mart is making it easier for other retailers and their suppliers to follow suit.
Coba said it’s easier to make that transition when all points along the supply chain are willing to go along with it. “Collaboration means both sides are ready to do it. That’s the only way this is going to work if you want mass adoption.”
The advantages are apparent: a more efficient supply chain; more granular data that can be read in real time; and the ability to track boxes, pallets and eventually individual products with non-line of sight scanning technology. The “shrink rate” can also be reduced through improved tracking, said Coba. Currently about seven to 10 per cent of goods are lost due to theft or spoilage.
Gillette is among the suppliers that has met Wal-Mart’s RFID mandate. “The sooner we get to mass adoption, the better our ROIs are going to be,” said Jamshed Dubash, director of technology, Auto ID, for The Gillette Co. “And this isn’t just for Gillette.”
Health care is another area where RFID has possibilities. Paul Schmidt, associate partner for Accenture’s health and life sciences supply chain practices, said that the technology can be used to track medication from its point of origin at a pharmaceuticals company through the supply chain and ultimately into the patient’s hands. RFID can help retailers more effectively balance stock levels and meet customer demand, but an effective supply chain when it comes to medication is crucial for patients’ welfare. It can also be used as an effective security measure. It’s less of a problem in North America, said Schmidt, but the World Health Organization estimates that two to seven per cent of pharmaceuticals on a global scale are counterfeit.
“There’s been a lot of talk around how RFID can secure the pharmaceuticals supply chain,” he said.
While large companies, and in some cases government offices like the U.S. department of defence, have begun to invest in RFID deployments, smaller firms may be hesitant to make the leap. It can be overwhelming, said Dubash. Even for a large enterprise like Gillette, the approach has been “launch and learn,” he said. “You cannot figure everything out. You get into paralysis if you try to do everything up front.”
“It’s not going to happen in 30 days or 60 days,” said Coba, who worked at Wal-Mart for eight years before joining Loblaw’s. “You have to educate your vendor base. You have to educate your own companies.”
O’Shea said Kimberly-Clark’s approach has been similar to that of Gillette’s: baby steps. “It’s not as simple as putting a tag or inlay on a pallet and watching it work,” he said. He recommended that companies interested in pursuing the technology start on a small scale and test it internally before taking it outside the organization. But it’s better to start now, he said, rather than wait for a key partner to mandate its adoption.
O’Shea said the best place to start may be to contact EPCglobal Canada, the company that hosted the conference. EPCglobal Canada, an affiliate of EPCglobal Inc., promotes an open standard around RFID and the Electronic Product Code.
The conference concludes on Thursday.