By the end of 2006, several companies, including Kimberly-Clark, Procter & Gamble and Schering-Plough, had software in place to show precisely where promotional items were in the supply chain. That is, using EPCglobal tag and data sharing standards—common formats for sharing information about where and when a tag was read—they could see that promotional items were not on the floor at certain stores when they were supposed to be. In pilots, where these companies worked with Wal-Mart to get promotional displays out on time, sales increased (see "Kimberly-Clark Gets an Early Win").

Now early adopters have one last challenge to overcome: putting IT systems and business processes in place to use the data in a systematic way. How does Supplier A let Retailer B know that store 123 doesn't have a display out on time or put it out too early? How are associates in store 123 alerted and what processes do they follow to make sure they are responding to requests from a variety of retailers? How do suppliers act on the data or how do their third-party merchandisers—agents who visit retail stores on a supplier's behalf to make sure product is on the floor—use the data to make sure promotional displays are out on time?

By the end of this year, those issues will likely be resolved and the leading early adopters will start tagging all of their promotional displays being sent to RFID-enabled stores. The same processes can be used for fast-moving consumer goods that are often out of stock, such as batteries, chocolate bars, razor blades and soft drinks. So expect to see more of these items tagged once companies have the business processes in place to act on the RFID data.

Mass adoption of RFID in the retail consumer packaged goods supply chain will occur only when the cost of implementing systems reaches a point where companies can benefit from tagging slow-moving goods sold off the shelf; demand for these goods is easier to predict and replenishment can be done effectively without RFID. But when both the suppliers and retailers have installed an RFID infrastructure, the only additional cost for tagging slow-moving goods will be the cost of the tag.

When will the tags become inexpensive enough that it makes sense to tag slow-moving goods? It will depend on innovation by technology providers (faster, cheaper assembly technologies would lower tag costs) and how quickly companies ramp up the tagging of faster-moving goods and promotions (the sooner they start making large volume purchases, the faster prices of tags will fall). But it's clear that the volume of tagged goods in the retail/CPG supply chain will start rising more quickly in the second half of this year and continue to increase steadily because both retailers and suppliers will be achieving hard benefits from tagging fast-moving items and promotional displays.