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RFID Heats Up in Latin America

The time is right for Mexico, Central America and South America to embrace RFID, and companies are doing so to compete at home and abroad.
By Elizabeth Wasserman
Aug 01, 2007—Until recently, news about radio frequency identification pilots and deployments in Latin America has been scarce and sporadic. While some companies in the region are sophisticated in their use of technology, many others have yet to embrace the use of bar codes, let alone RFID. And with no retailer or government mandates within these countries requiring suppliers to use RFID in their supply chains, as there have been with the U.S. Department of Defense and Wal-Mart in the United States, Tesco in the United Kingdom and Metro in Germany, there was little to compel companies to adopt the technology.

Today, while Latin America still lags behind the United States, Europe and Asia in RFID implementations, RFID projects throughout the region are growing rapidly. Indeed, Hewlett-Packard Brazil recently won the first RFID Journal Award for Best RFID Implementation (see "Keeping Tabs on Printers"). The company is using RFID to track individual printers, as well as improve supply chain management and manufacturing and distribution processes.

While Latin America still lags behind the United States, Europe and Asia in RFID implementations, RFID projects throughout the region are growing rapidly.
Moreover, Mexico could be one of the first countries to secure its pharmaceutical supply chain. A directive from the Mexican government last year required manufacturers and distributors to put RFID tags on medicines sold to individuals covered under Seguro Popular, a government health-care institution that operates similarly to an insurer and serves roughly 4 million families. While implementation has been delayed due to a change in administration in the Mexican government, the pharmaceutical industry has been testing the technology in preparation, according to Jorge Morales, director of operations for the International Supply Chain Education Alliance Mexico.

As the cost of RFID comes down and international companies share their experiences publicly about successful RFID applications, the technology is starting to be deployed throughout Latin American manufacturing plants, retail chains, government agencies and organizations in ways that are becoming standard elsewhere in the world-to track products, equipment, assets and people. For example, Procter & Gamble and Avon in Brazil are using CHEP's RFID-tagged containers to track and trace products at warehousing and distribution facilities. Levi Strauss in Mexico is tracking jeans and other goods on store racks and shelves to ensure customers can find the products they want to buy. Ford Motor Co. is using WhereNet's active RFID real-time locating system technology to track parts at its automobile manufacturing plant in Hermosillo, Mexico. Hospitals and medical centers are tracking medical devices and patients to help staff locate equipment and beds more quickly. And RFID is being tested and deployed in Latin America as a security technology to prevent everything from tire theft to carjacking (see "RFID Crime-Busters").

The recent surge in RFID pilots and deployments can also be attributed to encroaching competition from international retailers-most notably Wal-Mart-that are rapidly expanding into Mexico, Central America and South America. Latin American retailers are experimenting with RFID in their own supply chains because they are concerned that international retailers will implement RFID to achieve the efficiencies they've realized in other regions and, as a result, be able to sell products more cheaply than local retailers. At the same time, some retail suppliers are hedging their bets and experimenting with RFID now because they believe Wal-Mart and Latin American-based chains will mandate that they RFID-tag products or shipments sometime in the near future.

Another factor spurring RFID adoption is the growing number of free-trade agreements in the past few years between Latin American countries and the United States, Europe and Asia. There's a new push to turn companies in Mexico, Central America and South America into international suppliers of low-cost manufactured goods and fresh foods, and that has convinced governments and businesses in the region to look to technology to keep prices low, improve order fulfillment and accuracy, and provide better assurances about food safety and traceability for foreign buyers. In addition, companies want to deploy RFID to more efficiently capture oil, ores and other natural resources, one of Latin America's largest export industries.

"We're seeing tremendous growth [in RFID] in Latin America," says Matt Ream, senior manager for RFID systems at Zebra Technologies, the Illinois-based RFID printer company. "The economies down there are, by and large, getting better. The GDPs [gross domestic products] are higher than in previous years. A lot of things are going on with the creation of free-trade agreements. Free-trade agreements work both ways. They give us more opportunities to sell products there, but it also opens up the doors to sell their exports to the U.S. and other regions, as well."
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