|Home||Internet of Things||Aerospace||Apparel||Energy||Defense||Health Care||Logistics||Manufacturing||Retail|
2006: Another Building Year for EPC RFID
Despite recent optimism, ARC Advisory Group's Chantal Polsonetti argues in this guest column that the 2006 forecast around EPC RFID is conservative due to the measured pace of retailer rollouts, the need to transition to Gen2 technology, and continued search for ROI among even the leading adopters.
Apr 21, 2006—This article was originally published by RFID Update.
April 21, 2006—The hype surrounding use of EPC RFID in the retail supply chain has cooled off considerably since Wal-Mart first informed its top 100 suppliers about its pending tagging mandate nearly two and a half years ago. In spite of the fact that over 300 suppliers are now shipping tagged product to Wal-Mart, the total volume remains low. The forecast for 2006 is similarly conservative due to the measured pace of retailer rollouts, the need to transition to the new EPCglobal Gen2 technology, and continued search for ROI among even the leading adopters.
Wal-Mart is not the only retailer currently mandating, piloting, or talking about mandating that suppliers apply RFID tags to cases and/or pallets. But it is Wal-Mart's activity, and that of its suppliers, that serves as a bellwether for the state of EPC RFID in retail. Manufacturers are shipping to other retailers, such as Target, Albertsons, Best Buy, and Metro, but in many cases this activity is in pilot mode or has just started up as of the beginning of 2006.
In February of this year Wal-Mart reported that they had received 9 million cases and 230 thousand pallets tagged with EPC RFID labels since their initiative began over a year earlier, a paltry figure compared to the over 5 billion cases processed annually in their US distribution centers. These figures are reinforced by manufacturers who are Wal-Mart suppliers, many of whom estimate 2005 shipments of RFID-tagged product in the tens to hundreds of thousands. Many expect volume to increase in 2006, but Wal-Mart's rollout schedule is such that the major escalation is not scheduled to occur until October. An additional 300 suppliers are scheduled to begin shipping in 2007, but many of these companies will be operating in the same pilot mode that typified the 2005 experience for the lead suppliers.
Availability of RFID tags and labels that support the EPCglobal Gen2 standard, first ratified in December of 2004, is now fairly widespread. Many manufacturers subject to near-term retail compliance mandates have completed, or are in the process of completing, Gen2 product evaluations. We expect the transition to Gen2 to be largely completed by the end of this year, when most manufacturers will have used up their inventory of Gen1 tags. Wal-Mart's expressed intent to stop receiving product tagged with Gen1 labels by mid-year is a primary catalyst for the migration, as is pursuit of the benefits associated with Gen2, and some manufacturers have already begun shipping Gen2-tagged merchandise as of January of this year. Wal-Mart reports that Gen2 has been performing well in their facilities, in some cases delivering 100 percent read rates on products that could not be read using Gen1 technology.
A lingering footnote to the Gen2 transition is the fact that fabless semiconductor provider Impinj remains the sole provider of Gen2 silicon. Major legacy players such as Texas Instruments and Philips were expected to have entered the market by now, and some manufacturers are expressing disappointment that these and other legacy RF silicon providers have not yet joined the fray.
Login and post your comment!
Not a member?
Signup for an account now to access all of the features of RFIDJournal.com!
SEND IT YOUR WAY
RFID JOURNAL EVENTS
ASK THE EXPERTS
Simply enter a question for our experts.