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Early Adopter Sees RFID Progress
Phil Therrien, EPC manager for Kimberly-Clark, tells RFID Journal that despite a pause in the marketplace, RFID adoption is progressing and will move forward quickly in certain applications and product categories.
Sep 21, 2007—Kimberly-Clark (K-C) has been one of the leading proponents of using radio frequency identification systems based on Electronic Product Code (EPC) standards to improve supply chain efficiencies. While some companies continue to employ a "slap-and-ship" approach to meeting tagging requirements, K-C is using RFID data to improve promotions execution and reduce out-of-stocks.
Phil Therrien, K-C's EPC manager, is responsible for working with technologists to develop and roll out new RFID applications. Therrien will be a speaker at the EPC Connection 2007 conference and exhibition, to be held in Chicago, Oct. 2-4.
RFID Journal: There are reports that some of the leading adopters of RFID in the retail supply chain are slowing down their rollouts, or even backing off. What's your perception of where the market is today?
Therrien: There is a pause in the adoption cycle; there's no question about that. In 2003 and 2004, there was a lot of excitement. People got caught up in the hype cycle. As a supplier, to make this technology work from a business perspective, there has to be a critical mass of retail customers using the technology. You can't tag at manufacturing if there isn't any benefit downstream because the retailers haven't installed the technology. Today, we are focused on those specific applications where we can deliver a benefit based on the scale of the retail network that already exists.
RFID Journal: Given that Wal-Mart is currently the only mass merchandise retailer in the United States rolling out RFID infrastructure to a large number of stores, do you think it's worth tagging products, given the cost of maintaining separate inventories?
Therrien: Today, suppliers frequently create custom packaging for specific retailers. So managing RFID-tagged inventory is a subcomponent of the inventory segmentation and mass customization, which is a key component of K-C's strategy of becoming an indispensable partner to our retail customers.
RFID Journal: Why aren't more retailers jumping on board, in your view?
Therrien: Competition and the drive to deliver results for shareholders and meet Wall Street's expectations in the retail industry are intense today. Some retailers have struggled to deliver same-store sales growth, and to position themselves as being meaningful with their consumers. As they evaluate different opportunities to invest their dollars to drive business results, they must choose those initiatives that best drive results. Investments are made based on creating shopper relevance and the kind of business performance that drives shareholder value.
RFID Journal: Do you expect to see more retailers adopting RFID in the next 12 to 18 months?
Therrien: In some categories, you'll see more retailers embrace RFID as part of their business infrastructure, such as apparel and footwear or media and entertainment, where they have challenges managing inventory. Adoption in these areas will help drive the cost of using the technology down, which will make RFID more relevant for adjacent categories.
RFID Journal: Do you see more suppliers jumping on board?
Therrien: I believe many suppliers are waiting to gain a better understanding of the change in process that will help drive the benefit of using RFID in their supply chain applications. When the benefits become clear to them, they will most likely seize the opportunity.
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