Hardware & Infrastructure
Commentary
2/25/2005
12:46 PM
Gene Alvarez
Gene Alvarez
Commentary
Connect Directly
RSS
E-Mail
50%
50%

RFID, Fast Follower Strategies Don't Mix

The most common reaction to RFID in the retail industry appears to be apprehension. That's not a reason to stand still, however. RFID is not a technology that lends itself easily to a "fast follower" strategy, due to heavy infrastructure, as well as business process and application, requirements.

Key questions about retail RFID were asked by attendees at the annual National Retail Federation Conference in New York City as three major retailers -- Wal*Mart, Tesco and Metro Group -- presented their RFID projects' status. Their presentations created both RFID "buzz" as well as apprehension among suppliers and retailers.

The most common reaction to RFID appears to be apprehension; many enterprises are standing on the sidelines amid concerns that RFID has been over-hyped. Indeed, these enterprises do have reasons to be cautious after the whole dotcom bust. However progress is being made, meaning enterprises must keep pace with competitors while controlling investment costs with a technology that has many moving parts.

RFID is not a technology that lends itself easily to a "fast follower" strategy, due to heavy infrastructure, as well as business process and application, requirements. That's why we believe that during 2005/2006, enterprises should not let competitors get too far ahead in RFID deployments.

In that time period, suppliers will continue to struggle with meeting retailer mandates and a simplified, streamlined "Slap & Ship" model will remain the preferred model of compliance. Furthermore, suppliers will deploy RFID internally as an enabler of process improvements and asset management based on knowledge gained from pilots to meet retailer mandates in the 2006-07 timeframe.

Concurrently, suppliers will continue to struggle with tag costs as demand drives prices upward and supplies remain low through 2005/06. However, by 2008/09, as the market stabilizes, suppliers will see tag costs level off as the tag market attains equilibrium, bringing RFID within reach for the masses.

On the other hand, regardless of their industry, each enterprise's adoption rate and success will be a function of many variables, such as the percentage of R&D transformational spend within the IT budget, the types of products to be tagged, the enterprise's appetite for risk, mandate pressure or lack of mandate pressure.

Consequently, Global 2000, as well as small and mid-market enterprises, are asking questions. For instance, how will current RFID tagging schemes, at case and pallet levels, affect IT organizations?

The impact on IT organizations created by current RFID case/pallet tagging schemes hits hard and at many levels of technology within enterprise IT portfolios. The initial entry into an RFID project requires IT organizations to support in-field pilots.

These pilots' objectives are to test RFID tags, antennas and readers with pallets and cases to determine the impact to existing infrastructure and operational environments.

Furthermore, pilots require IT resources in the field (e.g. distribution centers, stores) to access and manage the numerous components and variables that are part of the pilots. These IT teams will initially assess the impact of RFID to existing infrastructure that is used for barcode-based data capture and determine reusable components such as wireless networks and application servers.

Previous
1 of 2
Next
Comment  | 
Print  | 
More Insights
The Business of Going Digital
The Business of Going Digital
Digital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest - September 10, 2014
A high-scale relational database? NoSQL database? Hadoop? Event-processing technology? When it comes to big data, one size doesn't fit all. Here's how to decide.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.