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THE WORLD'S RFID AUTHORITY
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DC ROI
by KEN ROHLEDER, posted 02/22/2007
> Gabrielle,
I based it on the paragraph in the article where Langsford says there are only 5 DC's implemented because they shifted focus to the stores where there is a more immediate ROI. I would have been more accurate to say "immediate ROI." It is hard to see where savings would come from though since barcode systems are so efficient and RFID poses some odd problems. Such as, what if a pallet of cases are checked in, and there are 3 cases wide, by 3 cases deep, by 3 cases high, but the RFID interrogator shows only 25 boxes? It would seem that 2 tags aren't transmitting; but which 2? How could you tell short of taking the pallet to the far corner of the parking lot and bringing in one case at a time until you got no reading on two of them. And how would you correct the problem so that the cases can proceed through the distribution channel? The tags are only 95% effective, so this problem would present itself constantly in a large DC. > Ken, > I ask this question for a greater understanding on my part. > What information did you base your statement that no DC ROI > exists? > > Thanks in advance for your reply. > > > > > This article denies the Wall Street Journal's claims > while > > simultaneously confirming them. > > > > The fact is, Wal-Mart under Linda Dillman was clearly > > mandating case-level RFID across the board. She told MSN > > Money Magazine that "they would not invest more time in > > suppliers that are reluctant..." > > > > The major CPG's co-opted the initiative to meet their > ends > > -- namely to insure store-level compliance with > promotional > > product in which they give Wal-Mart significant funds > for > > executing. No compliance -- no funds. The use of RFID > for > > promotions does benefit suppliers, consumers, and > Wal-mart; > > but it is not the vision Dillman had for the technology. > > > > It also confirms that the ROI at the DC's isn't there -- > > which again was a major thrust of the initiative early > on. > > > > > > Finally, it confirms that using RFID to locate general > > merchandise among a sea of boxes in the back room > doesn't > > work either. For example, cases in the box bailer > waiting > > to be recycled continue to transmit data when the stock > > room is interrogated. A bit of a problem with no obvious > > solution. > > > > RFID does make sense for tracking P-O-P compliance, but > > that will fail to generate the kind of impact that > Wal-Mart > > originally suggested by many orders of magnitude. > > > > RFID will be useful in retail and Wal-Mart blazed the > > trail, but their initiative as originally conceived has > in > > fact fizzled. Why not redefine the initiative honestly > and > > move on? > > > > Message threads
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