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RFID at the Item -- For Some, Sooner Than Later

Peter Abell, analyst with research firm Manufacturing Insights, discusses in this guest contribution the benefits of item-level tagging for high-value product categories, citing Hewlett-Packard's printer-tagging initiative as a prime example.
Apr 19, 2006This article was originally published by RFID Update.

April 19, 2006—Market watchers have tracked and opined on the progress toward item-level tracking of fast moving consumer goods. However, while Wal-Mart has been setting the cadence in this value chain, high-value product categories like consumer electronics and computing have found their own tempo -- one based on real business value.

Witness Didier Chenneveau, VP of operations for Hewlett-Packard in Brazil, discussing HP's use of tags on the printer chassis that automatically have the component genealogy of the machine captured as it moves along the assembly line. This has enabled the factory to be 20% more efficient from a cost-per-labor-dollar perspective and increased the level of quality data available. Quality data is the first prerequisite to RFID success within the four walls and throughout the end-to-end supply chain. In a recent interview, Chenneveau said that beyond the factory, "we're RFID-enabling the complete supply chain, including manufacturing, distribution, repair, reverse logistics, and recycling."

HP would like to tag all printers sold in the United States -- as opposed to tagging the cardboard boxes in which the printers are packaged -- because there are more benefits for HP, such as the ability to trace a defective printer back to the source, evaluate root causes, and correct the problem. As the printer is assembled, data is written to the tag. For instance, when an application-specific integrated circuit (ASIC) or print cartridge motor is installed, its serial number is written to the tag. "We're recording the DNA of the unit as we make it," said Chenneveau.

After the device's interior components have been assembled and tested, the results of the test are written to the tag. If the components fail, the printer is taken off the production line, quarantined, and evaluated. Meanwhile accepted printers are routed to product completion where HP writes the country of destination to the tag. This assures the manufacturer ships the units to the proper countries.

Retailers such as Best Buy, Wal-Mart, Target, and others who sell consumer electronic and computing products will quickly provide the appropriate distribution center and store-level infrastructure to take advantage of manufacturer activity. Smart retailers realize that economics will drive adoption much faster than mandates. Retailers that provide the infrastructure will reduce shrink, increase sales, and provide numerous consumer benefits. For example, when combined with a consumer's loyalty card information, RFID-enabled retailers could enable automated warranty registration, rebate processing, quicker repairs, and even a lower price.

The panacea of end-to-end supply chain visibility will not happen all at once, but it will happen for those product categories where the economics justify infrastructure investment at each point in the value chain. Expect high-value consumer electronics, appliances, and other consumer durables to be the product category trailblazers.
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