Golden Age Of Radio?

I believe 2004 will be the year that RFID (radio frequency identification) solutions become a strategic imperative for just about any company with a supply chain,if they haven't already. This applies, of course, to just about every retailer in the United States,and by association, just about every manufacturer. Accenture Chairman and CEO Joe Forehand last week even listed RFID as one of the services company's biggest opportunities in the next 12 months.

RFID tags can be used to track containers or consumer products as they proceed from warehouse to store shelf. They also are at the heart of electronic toll-collection systems, such as EZPass in the New York metropolitan area, although they have an inconsistent performance record there.

A report released last week by consulting firm A.T. Kearney, a subsidiary of systems integrator EDS, details many of the cost savings,and expenses,that companies can expect to incur as they begin to adopt RFID technology.

On the retail side, the benefits of reduced inventory could result in a one-time savings worth 5 percent of total inventory, while annual in-store and warehouse labor expenses could be cut by 7.5 percent. On the flip side, retailers could generate new sales by revising shelf mixes, the report found.

Of course, the report also found that RFID deployment could cost around $400,000 per distribution center and $100,000 per store, along with millions of dollars in systems integration services. Sound intriguing? The expense for manufacturers could be even more considerable: Not only do they need to deploy RFID infrastructure such as transponders, antennas and readers, but they also are burdened with the task of having to place the tags on pallets and cases,every time they go out the door. There is also the matter of RFID's performance, which can be spotty around certain types of products.

Without a company like Wal-Mart, it might have taken years to work out the kinks. But now, its groundbreaking project will establish a benchmark over the next two years for just about any solution provider with a supply-chain practice.

What signals are you hearing? HEATHER CLANCY, Editor at CRN, welcomes your letters at [email protected].