Value proposition theme of RFIDretail conference
Value proposition theme of RFIDretail conference
MONTEREY, CA " If Bruce Peterson, senior vice president of perishables for Wal-Mart, is correct, then radio frequency identification technology has so far just scratched the surface of its potential.
?The ultimate applications to RFID have yet to be thought about," Mr. Peterson told the audience gathered for the RFIDretail conference held Feb. 10-11 at the Monterey Marriott, here.
The first day featured speakers from various industries, and the second day involved a field trip to the RFID cold-chain produce testing center at nearby NewStar in Salinas.
Sausalito, CA-based QLM Consulting is the consulting firm selected to operate the facility in conjunction with Michigan State University " the host of the RFIDretail conference. QLM operates the facility on behalf of Eden Prairie, MN-based C.H. Robinson Worldwide and NewStar, one of C.H. Robinson?s preferred providers.
Wal-Mart has embraced RFID technology wholeheartedly and has taken its suppliers along for the ride. The chain?s top 100 suppliers are scheduled to use RFID tags at the case and pallet level in 2005. All Wal-Mart suppliers are scheduled to use RFID tags at the case and pallet levels by the end of 2006. Wal-Mart went live Jan. 1 with three of its distribution centers using RFID technology to service 140-plus stores; by the end of 2005, Wal-Mart will have six distribution centers using RFID technology and serving 600-plus stores.
?RFID enables computers to talk to computers," Mr. Peterson said. "The ultimate utilization of the Internet is supply-chain applications."
Mr. Peterson said that there is no initiative to get rid of corrugated in favor of plastic, but that reusable plastic containers will "gain prominence in the supply chain." He echoed sentiments of other presenters at the RFIDretail conference, who focused on the value proposition in RFID usage.
Michael McCartney, principal of QLM Consulting, stressed the importance of RFID delivering present-time information on the location and condition of products as they move through the supply chain. Even the best point-of-sale data are a day old, and week-old data aren?t useful enough, Mr. McCartney said.
?RFID is present-time technology," Mr. McCartney said. "Up until now, you had a past-time look."
Among other things, the immediacy of RFID data retrieval has implications for in-store promotional advertising campaigns, Mr. McCartney said.
?Sales processes are based on past events, but year to year, month to month, week to week, customers change," Mr. McCartney said.
In that regard, RFID?s significance is related to economies of scale. At a certain size, the task of gathering information by phone gives way to gathering the information electronically, Mr. McCartney said. RFID?s present-time data can cut right to the heart of supply-chain issues, such as how many items are on hand and when the items are needed. Armed with this information, suppliers and retailers can take immediate corrective action, Mr. McCartney said.
?Suppliers and retailers will be able to identify inventory bottlenecks," Mr. McCartney said. "Service levels will increase and the supply chain will be more efficient."
Ultimately, suppliers will have a view to what?s happening on the sales floor, Mr. McCartney said. With an improved relationship between retailers and suppliers, mistakes can be identified earlier and corrective action taken quickly.
?The new dialogue will be on information that no one disputes," Mr. McCartney said, including information on what went where, how it got there, when it got there and how it got sold.
The new transportation rules that kicked in a year ago up the ante for having the right products at the right time in the right place, and that further bolsters the argument for RFID?s efficiencies, Mr. McCartney said.
?Traceability will go forward dramatically," Mr. McCartney said. "The buying public wants to know that traceability works. That?s going to be a huge process."
While the ability exists to trace back perishables without using RFID, there?s not enough of an information bridge to connect various tracing points along the way, Mr. McCartney said. RFID facilitates tracing back every ingredient and every source of ingredient.
?The sooner we can do that, the better off we?ll be," Mr. McCartney said. "The government won?t jump in to dictate to us."
New rules have empowered the Food & Drug Administration to come in and immediately seek an information trail from source to consumption. "I think the regulations are pretty heavy-handed, and I'm worried about that," Mr. McCartney said.
However, Mr. Peterson was a bit more circumspect about the government?s role, saying, "Congress does not want to legislate what traceability should look like." Mr. McCartney provided calculations that showed where savings could be realized in shipping with reduced labor dollars spent and where speedier unloading and inspection time could reduce receiving costs.
Frank Riva, director of industry development for EPC Global, said that RFID adoption is a lengthy process. "No way in the near term are we going to see elimination of bar codes," Mr. Riva said. "Margins preclude five-cent [RFID] tags from being cheap enough to eliminate bar codes."
RFID tags typically cost 20-50 cents per tag; five cents per tag is the number commonly thought to be the high end of affordability for suppliers.
Brian Pinter, applications and site manager for Birds Eye Foods, said that Birds Eye has shortened its internal RFID timetable from three years to two years. To date, the company had sent 60,000 RFID-tagged items to Wal-Mart. Birds Eye has been manually slapping RFID tags on items at the loading point for shipping them, but expects to have an automatic tag labeling system in place within three or four months, Mr. Pinter said.
?We knew there would be an expense from day one. There?s not a large margin in a bag of vegetables," Mr. Pinter said, adding that the present cost of RFID tags is wiping out Birds Eye?s profit "100 percent."
But that price equation is changing, Mr. Pinter said, as the cost of the tags Birds Eye uses has dropped by 20 cents per tag in the past 18 months. Furthermore, the company can see a future return on its RFID investment in improved inventory accuracy and visibility, increased receiving efficiencies and reduced shrink.
Wal-Mart, Target and Albertson?s supermarkets " all with RFID initiatives under way " make up a significant portion of Birds Eye?s business, Mr. Pinter said.
Tom Casas, vice president of information technology for Salinas-based Tanimura & Antle, said that T&A?s RFID program has the company shipping one SKU of lettuce to Wal-Mart?s distribution center in Cleburne, TX. T&A ships 25 pallets a week to Wal-Mart, and Mr. Casas said that T&A is paying 50 cents per RFID tag and that it is "looking for the benefit still."
David Dever, chief financial officer and executive vice president of Reedley, CA-based Ballantine Produce Co., which specializes in growing and marketing tree fruit and grapes, said, "RFID will help us know temperatures and how long picked product has been sitting in the field."
Mr. Dever said that RFID will allow Ballantine "to track all our assets better," and that "labor costs will be reduced in cold storage and shipping costs." He also said that the company believes RFID will help it reduce shrink.
?The ultimate applications to RFID have yet to be thought about," Mr. Peterson told the audience gathered for the RFIDretail conference held Feb. 10-11 at the Monterey Marriott, here.
The first day featured speakers from various industries, and the second day involved a field trip to the RFID cold-chain produce testing center at nearby NewStar in Salinas.
Sausalito, CA-based QLM Consulting is the consulting firm selected to operate the facility in conjunction with Michigan State University " the host of the RFIDretail conference. QLM operates the facility on behalf of Eden Prairie, MN-based C.H. Robinson Worldwide and NewStar, one of C.H. Robinson?s preferred providers.
Wal-Mart has embraced RFID technology wholeheartedly and has taken its suppliers along for the ride. The chain?s top 100 suppliers are scheduled to use RFID tags at the case and pallet level in 2005. All Wal-Mart suppliers are scheduled to use RFID tags at the case and pallet levels by the end of 2006. Wal-Mart went live Jan. 1 with three of its distribution centers using RFID technology to service 140-plus stores; by the end of 2005, Wal-Mart will have six distribution centers using RFID technology and serving 600-plus stores.
?RFID enables computers to talk to computers," Mr. Peterson said. "The ultimate utilization of the Internet is supply-chain applications."
Mr. Peterson said that there is no initiative to get rid of corrugated in favor of plastic, but that reusable plastic containers will "gain prominence in the supply chain." He echoed sentiments of other presenters at the RFIDretail conference, who focused on the value proposition in RFID usage.
Michael McCartney, principal of QLM Consulting, stressed the importance of RFID delivering present-time information on the location and condition of products as they move through the supply chain. Even the best point-of-sale data are a day old, and week-old data aren?t useful enough, Mr. McCartney said.
?RFID is present-time technology," Mr. McCartney said. "Up until now, you had a past-time look."
Among other things, the immediacy of RFID data retrieval has implications for in-store promotional advertising campaigns, Mr. McCartney said.
?Sales processes are based on past events, but year to year, month to month, week to week, customers change," Mr. McCartney said.
In that regard, RFID?s significance is related to economies of scale. At a certain size, the task of gathering information by phone gives way to gathering the information electronically, Mr. McCartney said. RFID?s present-time data can cut right to the heart of supply-chain issues, such as how many items are on hand and when the items are needed. Armed with this information, suppliers and retailers can take immediate corrective action, Mr. McCartney said.
?Suppliers and retailers will be able to identify inventory bottlenecks," Mr. McCartney said. "Service levels will increase and the supply chain will be more efficient."
Ultimately, suppliers will have a view to what?s happening on the sales floor, Mr. McCartney said. With an improved relationship between retailers and suppliers, mistakes can be identified earlier and corrective action taken quickly.
?The new dialogue will be on information that no one disputes," Mr. McCartney said, including information on what went where, how it got there, when it got there and how it got sold.
The new transportation rules that kicked in a year ago up the ante for having the right products at the right time in the right place, and that further bolsters the argument for RFID?s efficiencies, Mr. McCartney said.
?Traceability will go forward dramatically," Mr. McCartney said. "The buying public wants to know that traceability works. That?s going to be a huge process."
While the ability exists to trace back perishables without using RFID, there?s not enough of an information bridge to connect various tracing points along the way, Mr. McCartney said. RFID facilitates tracing back every ingredient and every source of ingredient.
?The sooner we can do that, the better off we?ll be," Mr. McCartney said. "The government won?t jump in to dictate to us."
New rules have empowered the Food & Drug Administration to come in and immediately seek an information trail from source to consumption. "I think the regulations are pretty heavy-handed, and I'm worried about that," Mr. McCartney said.
However, Mr. Peterson was a bit more circumspect about the government?s role, saying, "Congress does not want to legislate what traceability should look like." Mr. McCartney provided calculations that showed where savings could be realized in shipping with reduced labor dollars spent and where speedier unloading and inspection time could reduce receiving costs.
Frank Riva, director of industry development for EPC Global, said that RFID adoption is a lengthy process. "No way in the near term are we going to see elimination of bar codes," Mr. Riva said. "Margins preclude five-cent [RFID] tags from being cheap enough to eliminate bar codes."
RFID tags typically cost 20-50 cents per tag; five cents per tag is the number commonly thought to be the high end of affordability for suppliers.
Brian Pinter, applications and site manager for Birds Eye Foods, said that Birds Eye has shortened its internal RFID timetable from three years to two years. To date, the company had sent 60,000 RFID-tagged items to Wal-Mart. Birds Eye has been manually slapping RFID tags on items at the loading point for shipping them, but expects to have an automatic tag labeling system in place within three or four months, Mr. Pinter said.
?We knew there would be an expense from day one. There?s not a large margin in a bag of vegetables," Mr. Pinter said, adding that the present cost of RFID tags is wiping out Birds Eye?s profit "100 percent."
But that price equation is changing, Mr. Pinter said, as the cost of the tags Birds Eye uses has dropped by 20 cents per tag in the past 18 months. Furthermore, the company can see a future return on its RFID investment in improved inventory accuracy and visibility, increased receiving efficiencies and reduced shrink.
Wal-Mart, Target and Albertson?s supermarkets " all with RFID initiatives under way " make up a significant portion of Birds Eye?s business, Mr. Pinter said.
Tom Casas, vice president of information technology for Salinas-based Tanimura & Antle, said that T&A?s RFID program has the company shipping one SKU of lettuce to Wal-Mart?s distribution center in Cleburne, TX. T&A ships 25 pallets a week to Wal-Mart, and Mr. Casas said that T&A is paying 50 cents per RFID tag and that it is "looking for the benefit still."
David Dever, chief financial officer and executive vice president of Reedley, CA-based Ballantine Produce Co., which specializes in growing and marketing tree fruit and grapes, said, "RFID will help us know temperatures and how long picked product has been sitting in the field."
Mr. Dever said that RFID will allow Ballantine "to track all our assets better," and that "labor costs will be reduced in cold storage and shipping costs." He also said that the company believes RFID will help it reduce shrink.
