RFID World 2005

Alliston Ackerman, News Editor

4/1/2005

Radio frequency identification (RFID) is poised to become the most far-reaching wireless technology since the cell phone; holding promise to essentially revolutionize the way the consumer goods (CG) market manages the supply chain. Right now, the CG industry is in the early phases of RFID implementation, which is primarily driven by retailer mandates rather than by a desire to gain return on investment (ROI) from internal efficiencies. With Wal-Mart's January 2005 deadline passed, the ratification of a Generation 2 standard, and new systems, solutions and suppliers emerging each day, the excitement surrounding RFID has reached an all time high.

In an effort to cut through the hype, exchange information around RFID and garner insight from industry leaders, more than 3,000 attendees and 130 exhibitors flocked to the Gaylord Texan Resort in Dallas, Texas, on March 1-3 for RFID World 2005. Attendees gleaned valuable wisdom from such industry thought-leaders as Wal-Mart, Kimberly-Clark and EPCglobal. Here, Consumer Goods Technology provides an inside look into these notable presentations.

The Driver's Seat
In an opening keynote address, Wal-Mart Executive Vice President and CIO Linda Dillman updated attendees on Wal-Mart's RFID program now that the January 2005 deadline for its top 100 suppliers to be RFID-compliant has passed. "January is over," said Dillman. "We're not talking 'theoreticals' anymore.
We're doing it." The retailer is currently RFID-live in 104 stores, three distribution centers and 36 Sam's Club stores, and has also completed 5.6 million successful RFID reads to date. Wal-Mart has also received 23,753 RFID-enabled pallets and 663,912 RFID-enabled cases from approximately 100 suppliers.
Credited as the source driving RFID adoption, Wal-Mart is already reaping rewards in inventory, employee productivity and shrink. Wal-Mart is also benefiting from increased visibility into its supply chain and is able to pinpoint specific areas where increased efficiency is needed such as delivered products sitting in stock rooms.

On the supplier front, Dillman said early adopters of RFID are more likely to reap significant benefits that will lead to competitive advantage within the marketplace. Some Wal-Mart suppliers are using the head start to push forward with integration plans that will yield internal business efficiencies.

Kimberly-Clark Tackles Global RFID
One of Wal-Mart's infamous Top 100 suppliers, Kimberly-Clark, revealed its renewed focus on transforming business processes in order to gain ROI from RFID technology during a second-day keynote. "It's not the technology, but how you reengineer your business processes that will help to achieve value from
RFID," said Mike O'Shea, Kimberly-Clark's director, Auto-ID/RFID Strategies & Technologies.

The brand owner of Huggies,
Pull-Ups, Kleenex and Kotex opened a RFID research lab in 2004 and has since conducted multiple internal and external RFID pilots to prepare for global deployment into the company's business processes. While Kimberly-Clark recognizes that the short-term ROI for RFID is still a challenge to pinpoint, O'Shea offered the following key insights:

RFID is not a plug and play technology.
The business case and potential for ROI is unique to each operation, so companies must implement in a scale that makes sense for their business.
The size of the benefits gained from RFID adoption is equal to the amount of work being done to find it. O'Shea recommends taking a "launch and learn" approach to RFID.
Companies deploying RFID must keep one foot in the present and one foot in the future. "We have mandates that we need to support in a tactical way now," said O'Shea. "But the future for Kimberly-Clark holds a broader business strategy to support the value of RFID."

EPCglobal:
Accelerating Adoption Also on the RFID World 2005 agenda was Mike Meranda, President of EPCglobal US, who stressed that early adopters have the most to gain from RFID and related network technologies based on EPCglobal's Electronic Product Code. "You need to be in the game now to gain benefits in the future," said Meranda.

According to Meranda, the potential benefits of RFID will increase significantly once the EPCglobal Network is up and running later this year, enabling companies to have more visibility into the supply chain based on RFID tag reads.

For 2005 and beyond, EPCglobal's vision includes driving down costs, while increasing speed and ease with standards-based hardware, software and networks; ensuring global interoperability; and supporting and encouraging robust marketplace for products and services.

Focusing on Business
Overall, one common theme emerged from RFID World 2005: the consumer goods market is preparing to move away from "slap-and-ship" compliance and toward a mindset focused on reengineering business processes to achieve value from RFID. Those companies, like Kimberly-Clark, that take a proactive approach will eventually win out over the competition where RFID is concerned.