GS1 Colombia’s RFID Retail Challenge

Most goods in Colombia are sold through small shops, making it a challenge for suppliers to gain downstream benefits from RFID tagging.
Published: September 18, 2007

One thing I learned while in Bogotá last week (see RFID in Bogotá and GS1 Colombia Provides EPCIS Service) is that almost half of all retail sales in Colombia are transacted through small shops known as tiendas. These local stores are typically a couple hundred square feet in volume, run by a sole proprietor who handles purchasing, marketing, inventory and just about everything else.

GS1 Colombia‘s sister company, LOGyCA, has created a tienda in its Performance Tests Center, but Leonardo Vitolo, director of logistics for LOGyCA, says his group has had trouble developing applications that would provide value to such small businesses.

One application his team is considering is tagging the store itself—that is, placing a tag with a unique identifier somewhere within the tienda. Sounds funny, but it actually makes sense. Stores move, and when rents get too high, proprietors close down and reopen nearby. Having a unique identifier would allow suppliers to know that a store in a new location is actually an existing partner. That way, sales histories wouldn’t be lost just because a tienda had moved a few blocks.

An even greater benefit to tagging stores would be that it would enable consumer packaged goods companies to confirm that a driver had made deliveries to all tiendas on a particular route by requiring the driver to read each location’s store tag. Since the tiendas are an important sales channel in Colombia, CPG companies would need to confirm that goods have been replenished properly.

It’s unlikely the tiendas would gain huge benefits in their operations. Most do not purchase full cases of products, so tagging would have to be performed at the item level. Stores this size, however, are unlikely to invest in point-of-sale systems that can read Electronic Product Codes, because most do not move enough volume to gain any real benefit.

If the tiendas don’t deploy RFID, the CPG companies supplying them won’t be able to obtain data on store inventory, or on how many items have been sold. One possible application might be to provide drivers with handheld RFID interrogators and have them read tags on cases—or partial cases—delivered and on the store itself. That way, in the event of a recall, a CPG company could identify any manufacturing lots with problems, and recall them from stores that had received shipments from those lots. (Regulations in some countries require this kind of lot tracking, but I’m not sure if that’s the case in Colombia.)

Each country has its own supply chain, so it might be a challenge for companies to achieve benefits in some regions—at least, at present. RFID is not, and probably never will be, a one-size-fits-all technology. Applications that work in one country might not work in another, so companies will need to develop RFID strategies that make sense for their businesses, and for the supply chains in which they operate. And RFID vendors will need to develop specific applications to meet the different needs in each region or country.