RFID : You can’t hurry Love and you can’t hurry Technology!

You can’t hurry love and you can’t hurry technology! 2004 saw the predictions of how RFID was going to invade each and every corner of the supply chain.

Lets forget about the predictions of RFID chip on every toothpaste that a consumer buys, we knew that it was going to take a while before RFID reached the consumer level, there were cost concerns and privacy concerns, but generally the technologists told us that the RFID will revolutionize the supply chain. Walmart decided to take charge of the technology and show all of the other retailers on how it has to be done.

Last year there were a lot of grumblings from suppliers complaining that they were putting in all the investments and retailers were the one befitting from it. And that implementation of RFID was turning out to be more expensive and labor intensive than they thought it would be. Consultants complained that they were “under utilized” and RFID tag and reader manufacturer Alien Technology’s failed IPO didn’t help the matter much!

Now even the Walmart project is falling far short of the predictions: the Walmart’s savings have been practically non existent, suppliers have not only not seen any labor savings but have actually seen their cost rise and of course the RFID industry is so fragmented to provide real guidance. Not just Walmart but the Pharma and DoD appeared to have slowed down too. Dan Gilbert of SupplyChainDigest noted that:

I’ve heard several private reports that Wal-Mart is telling some people that for right now, they are going to sort of settle down for awhile, and try to better understand what to really do with the data and where the value prop really is for everyone.

The problem is the mismatch between the allocation of expenditure of infrastructure cost and the benefits realized. The group that has to expend resources on implementing it (manufacturer, suppliers) do not fully participate in the savings and gains that will be realized from implementing it.

Walmart asked its suppliers to include RFID tags; suppliers got ready but the manufacturers are lagging, so now the supplier has to pay for the tags, and also pay for the labor of affixing the tags, in addition to bearing the infrastructure cost of RFID readers etc. No cost savings for the suppliers.

Unless you are willing to allocate proportionate costs and benefits to each participant in the supply chain, the only way the technology will take hold is if it independently makes sense to implement it for each participant. And with RFID we are not there yet!

Personally, I have my doubts about quick RFID implementation, not because I don’t believe in the technology - it is remarkable for sure, but because I am not convinced that RFID is something that you can add-on to an existing physical structure that easily. Anybody who has installed WiFi system at home, knows that the signal is not uniform everywhere. Now consider RFID, which is on some ways a weaker signal then WiFi signal and the issues related to making sure that the all of the physical space of the warehouse in RFID device friendly! Others have commented on this issue in great detail. Add interferences, hardware and software issues, unresolved patnet issues and what you get is a system that you might not feel comfortable fully relying on for inventory/asset control.

When the technology needs to be implemented across the whole chain, be it the supply chain or the retail chain, it is just difficult to rush through; it takes time! The current RFID piecemeal approach is bound to be slow and excruciating.

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One Response to “RFID : You can’t hurry Love and you can’t hurry Technology!”

  1. By Alex on Feb 16, 2022 | Reply

    Even the government RFID projects have languished. Its one of those technology solutions where all the pieces are present, it even makes sense on paper but doesn’t fully work in real life. That is generally a sign that the “implementation” costs are not being properly calculated.

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