Leading consumer packaged goods suppliers remain deeply sceptical about the business case for RFID and some are only investing in it because they want to cement relationships with the world’s largest retailers, it was claimed at an RFID workshop this week.
RFID could transform businesses through the promise of complete supply chain visibility, agreed manufacturers at an RFID workshop hosted by Netmarkets Europe.
However, the industry was already sitting on reams of data it did not utilise effectively, and adding more at huge cost would not banish out of stocks.
Likewise, pressure from retailers was forcing suppliers to try to build a business case for RFID as an end in itself rather than identifying problem areas in their own businesses and looking at RFID as one of several solutions, claimed one retailer at the round table event.
“We should look at our processes instead of saying, let’s find an application for this IT. RFID is not a silver bullet and it won’t suddenly transform our business.”
With out of stocks in categories such as health and beauty higher than 10% in some cases, RFID would almost pay for itself if it could drive up availability by a few percentage points, said Unilever supply chain e-business activity director Juup Willemse. However, suppliers needed to proceed with caution, he added.
“Potentially it could add another 5-6% to on-shelf availability in some categories, although you really need item level tagging to tackle the instore issues. We’ve worked on about 20 RFID pilots - both internally and with retail partners. But it’s not a panacea. We already have an enormous amount of data swimming around our businesses that we don’t know what to do with.”
The comments came as Wal-Mart revealed that 137 suppliers were on track to participate with RFID shipment to three Dallas depots by January 2005.
However, some suppliers had requested more time to work through technical issues, said Wal-Mart Stores executive vice president Michael Duke.
Tags cost an average of 30 cents and could drop to a viable 5 cents as early as the end of 2006, he claimed.
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Elaine Watson