DHL Backs Off Plans For RFID On Every Package By 2015

In June 2005, DHL Worldwide Express declared it was building the IT infrastructure to put RFID tags on every package it ships by 2015. The plans were to improve shipment controls, cut costs, and reduce data collection. But forget that lofty goal and the target date.

"We shouldn't have put a stake in the ground," said Bob Berg, DHL's senior program manager for RFID, in an interview following his presentation Tuesday morning at the RFID Conference in Dallas.

While it still sees plenty of opportunity in RFID (Radio Frequency Identification), DHL is taking a more measured approach to the technology, and its efforts shouldn't be tied to a particular year, said Berg, who was among a handful of business managers talking about their companies' experiences Tuesday at the conference.

"If we went gung-ho [on an RFID deployment], it would cost over $1 billion," Berg told several dozen people who attended his conference session. "It's not going to be done on a lark. It's going to be carefully thought out. There has to be ROI."

DHL would still like to offer RFID tag "slap and ship" services in the United States, something it offers in Europe primarily to the suppliers of giant retailer Metro AG, which has one of the only true RFID-powered retail supply chains in the world. But so far, DHL hasn't seen much demand in the United States, Berg said, and that includes not much interest from Wal-Mart suppliers. Efforts to improve internal efficiencies at DHL, meanwhile, will not be a reason to deploy RFID. "We've taken a tremendous amount of effort to look for internal efficiencies, and we can't find it," he said.

Still, there's obviously ROI in the sale of slap-and-ship services to customers. In Europe, goods are sent from a supplier's warehouse to a DHL center where tags are slapped onto pallets and cases and shipped on to Metro AG's distribution centers.

One of the biggest areas of opportunity for RFID, Berg said, is to track and monitor the temperature of cold perishables such as seafood. "That's where we think RFID is really going to have some gains," he said, adding that the company has developed a service for that that it could offer customers. "Hopefully we can deploy it before too long." Again, DHL is waiting to hear demand from the marketplace.

Other areas where DHL sees opportunity for an RFID shipping service is in high-value shipments and devices containing sensitive data.

For companies interested in or testing the technology, he has this advice: Start on data management quickly; be prepared for new technology developments; start small; be prepared to change your business processes to get the most from RFID; and get familiar with the technology.

Berg said DHL has solved problems related to shipping products containing metals and liquids; the first involves proper tag placement, and the latter can be addressed through specialized tags now available. Still, issues remain regarding readability of some types of pallets and large metal containers.