RFID Mandate: Bearable After All?

RFID (radio frequency identification) is undoubtedly the most-used acronym in current conversations about SCM (supply chain management). This is ironic, considering that supply chain applications of the technology are still in their infancy and limited to a relative few of the countless CPG manufacturers. In the mid-tier especially, a retailer's only brush with supply chain RFID technology in practice might have come in conversation with a vendor it has in common with Wal-Mart. The conversation might not have been pleasant, as many CPG manufacturers on Wal-Mart's top 100 list go to great pains and expense to achieve compliance. There's an interesting article on our Web site entitled RFID With ROI (www.ismretail.com/retailnews) about one CPG vendor's turnaround experience with The Mandate. It's written to reflect the CPG vendor's perspective, but retailers can learn a lot from it.

Thankfully Forced Into RFID
The story is about Jack Link's Beef Jerky. Executives there understood Wal-Mart's goal to cut costs and improve supply chain efficiency using RFID, and though the company had little knowledge of the technology, it jumped in headfirst. For Jack Link's, RFID wasn't merely about compliance. The company wanted to explore how the technology could improve its own business practices. This year, Jack Link's will begin using the technology to track its own supply chain, automatically recording production reports, monitoring the movement and amount of its raw ingredients, and eliminating the paper reporting trail it uses to track lots. All this might not have happened had a retail partner not forcefully introduced the company to this emerging technology.

Jack Link's recognizes that as more of its retail partners adopt the technology, the vendor will be able to integrate its demand planning system with its RFID-compliant customers' receiving systems. This will give the company an accurate view of its store-level inventory and sales rates. Aren't optimized stock levels a goal of yours as well?

An RFID Mandate Of Your Own?
The technology's promise is exciting, but for a reality check, consider that even an enthusiastic adopter of The Mandate like Jack Link's struggled early on with those troubling read rates. The company improved from an early read rate of less than 80% after fiddling with tag placement until signal interference was alleviated. So while vendors scurry to figure out how to manage all the data a successful RFID implementation will generate, remember that most RFID implementations haven't been resonating with success. Pockets of efficiency and value are being found, but we're not to the point of slapping labels on boxes and watching all that valuable data pile up. In other words, you still have time to figure out how RFID will help you the way it helps Wal-Mart and Jack Link's, or how it can help you in some other way. With a proof statement from a jerky-manufacturing Wal-Mart supplier that's happy with its RFID progress, maybe you have some leverage to encourage integration with your own suppliers. If you haven't already, get started now. With big time players like ADT, IBM, Manhattan Associates, Oracle, SAP, Sun, and Microsoft focusing on RFID, solutions are getting closer, and retail benefits are getting clearer.