Early Adopter Sees RFID Progress

RFID Journal: Where are the business benefits?
Therrien: The things we see in near term are around promotion execution, which is a key way we go to market in the retail channel. When those events don't get executed according to plan, we don't achieve the sales opportunities we target, and we don't connect with the shopper the way we want to. We pay contract packaging and contract manufacturing to create special promotional displays. We do not receive the full return on that investment when the promotional product and display items aren't in the store. Using the technology to help in the execution of product promotions, we can get clear visibility where the RFID infrastructure exists [in the retail supply chain], and we can put that information into the hands of people who can respond to it and take corrective action. The incremental cost of tagging those displays is very small relative to the investment in those promotion events, so we're expanding that capability where the installed network exists.

RFID Journal: What about tagging cases and pallets to reduce out-of-stocks?
Therrien: Tagging cases and pallets can provide benefits by providing shelf-level visibility on an everyday basis, but the question is, Who reacts to the information? Some suppliers have representatives in stores on an everyday basis. They do direct-store deliveries for some categories, and they can have that driver follow up on potential out-of-stocks on products that go through the warehouse channel. Some suppliers are better positioned to leverage the data RFID provides, but not all suppliers have a representative in the store every day, so retailers need to develop the capabilities to react to that everyday shelf-level data.

RFID Journal: Are retailers developing that capability?
Therrien: Yes, there is work that is going on, and that is one of the things some suppliers are waiting for. They want some assurance that something different happens when they tag product. Automated systems are just beginning to emerge. It's immature at this stage, and there are questions about how well you can scale those systems. The software tools are not as mature as they are with the promotion-execution piece.

RFID Journal: Why do the EPC standards matter?
Therrien: These are critical for EPC RFID initiatives, because supply chain partners must be able to speak the same language. We have to have interoperability between software systems that use RFID data, regardless of [the] software vendor you work with. That's the only way we'll be able to choose the applications that make the most sense for our business.

RFID Journal: How long do you expect it will be before adoption ramps up?
Therrien: Adopt rates will vary by category and retailer type. In my opinion, the apparel and entertainment categories are going to be early adopters at the item level. There is a stronger business case there than in other categories. Other categories will follow as costs fall and the applications required to leverage RFID mature and become more scalable.


Learn more about the state of EPC and where companies are realizing the benefits of this technology at EPC Connection 2007, being held in Chicago, Oct. 2-4, 2007.