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Seven Reasons to Act Now

Most companies will need to deploy RFID before long. What you do—or don’t do—today could mean the difference between saving millions of dollars each year and wasting a fortune on a bungled implementation.
By Bob Violino
Sep 21, 2003—By Mark Roberti

Sept. 22, 2003 - Few opportunities come without risk, and radio frequency identification is no exception. Yes, it has the potential to dramatically improve supply chain efficiencies, cut costs and reduce out-of-stocks. But there are still many questions surrounding the technology. Will the hardware you buy today be obsolete in a year? How long will it take for tag and reader prices to drop? Is the technology mature enough to deliver highly accurate information under real-world conditions?

These are important questions, and in a perfect world, you’d have all the answers before making a deployment decision. But any company that makes, moves or sells products—and wants to remain competitive in tomorrow’s market—needs to take steps today to plan for an RFID deployment.

If you’re one of Wal-Mart’s many suppliers, you have little choice but to embrace RFID technology. The retailer is requiring its top 100 suppliers to begin, in January 2005, putting RFID tags carrying Electronic Product Codes on the cases and pallets that they ship to its distribution centers and stores. The rest of its suppliers will have to tag shipments by the end of 2006.

If you’re not one of Wal-Mart’s suppliers, you might wait until one of your customers forces you to get with the program. That might seem like a smart strategy. After all, many "first movers" on the Internet went belly up, while those who proceeded more slowly didn’t fare as badly. Problem is, the complexities of deploying RFID can’t compare with the relatively easy task of creating a business-to-business Web site.

And while you’re waiting, other companies, including some of your competitors, will be deploying RFID technology. It’s a complicated endeavor that will require cooperation among senior executives in IT, engineering, operations and supply chain management. Here are the seven reasons why it’s critical to start planning now.

1. Installing an RFID system is a black art.

Many articles about RFID make it sound simple. Put tags on your products and readers on your dock doors and—viola!—perfect information. It doesn’t quite work that way. Getting enough power to the tag so it can reflect back a serial number can be a black art. Radio waves are absorbed by water, reflected by metal and blocked by electromagnetic interference.

These are not minor issues that you’ll overcome in a couple of weeks. Wal-Mart has been experimenting with RFID for more than a decade. It has a lab in Rogers, Ark., where it tests tags and readers in a warehouselike environment. The company is building a larger facility so it can test RFID systems with all of its many types of conveyors and dock doors. Every company will face different problems because their facilities are all unique. It’s critical to give yourself time to understand and address the issues associated with tag-to-reader communication.
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