Aug 26, 2013My previous column, Getting to the Tipping Point, suggested that as more retailers deploy RFID, it will become cheaper for a supplier to tag all items with the same stock-keeping unit (SKU), even if some of its customers aren't yet using the technology in their stores. But that assumes the tagging requirements from multiple retailers are the same or similar. Unfortunately, that is not always the case.
Here's a real-life example (actual company names have been changed). The T-Shirt Factory manufactures T-shirts for several retailers. Four retailers ask the Factory to RFID-tag individual selling units of its popular white V-necks (a selling unit is a plastic wrapper containing three T-shirts). This should enable the Factory to reach the tipping point and RFID-tag all white V-neck selling units at the source of manufacture when other labels are applied. But Retailer A requests the Factory to RFID-tag selling units using Tag-Type One inserted into the plastic wrapper. Retailer B also wants to use Tag-Type One, but it prefers the tag adhered to the top outside edge of the wrapper. Retailer C wants the tag inside the wrapper, but would like to use Tag-Type Two. And Retailer D wants Tag-Type Three adhered to the bottom inside edge of the wrapper. With these different requirements, the Factory has to create separate tagging processes, which proves inefficient and chaotic.
So the Factory is forced to meet with each retailer to negotiate a solution that will work for everyone involved. It takes months for three retailers to reach a consensus regarding tag type and placement. After several more months, the lone holdout relents.
This, of course, is not a viable solution for industrywide adoption. Fortunately, retailers and suppliers have been working together, with guidance from GS1, to address conflicting tagging requirements. The thinking is that suppliers need to have flexibility in tag selection and placement—as long as the tag meets minimal performance requirements and any aesthetic demands of the retailer. "GS1 has been working with industry retailers and brand owners on recommended voluntary guidelines and standards regarding tag performance," says Melanie Nuce, a VP with GS1 US. "We will soon begin prototyping potential solutions, so we can document the outcomes, produce best-practice guidelines and recommend standards enhancements to the Global Standards Management Process."
As more suppliers and retailers begin using RFID, it is important that they realize the potential problems with conflicting tagging requirements and work to resolve those problems before they become a major issue. Ultimately, suppliers should decide on tag type and placement, but only when it meets an accepted set of requirements that satisfies the needs of all retailers.
Bill Hardgrave is the dean of Auburn University's Harbert College of Business and the founder of the University of Arkansas' RFID Research Center. He will address other RFID adoption and business case issues in this column. Send your questions to hardgrave@auburn.edu.
