Jul 21, 2003July 22, 2003 - Logistics and warehouse management software vendor V3 Systems is teaming up with RFID equipment vendor Alien Technology and systems integrator Xterprise to jointly market and implement RFID technology for consumer goods manufacturers and suppliers.
The three companies will begin offering software, RFID readers and systems integration sometime over the next few weeks. They plan to target mid-tier manufacturers and suppliers now faced with meeting Wal-Mart's deadline for putting RFID tags on pallets and cases by January 2005 (see Wal-Mart Draws Line in the Sand).
"Retail suppliers want RFID for compliance and they need technology that can be quickly implemented in a supportable package," says Paul Weiss, co-founder and CTO at Charlotte, NC-based V3 Systems. The vendor says it has about 60 customers, including third-party logistics companies, that have deployed its warehouse management system (WMS) in several hundred sites around the world.
By bringing together WMS, RFID infrastructure and systems integration, the partners believe they can offer customers a lower-cost route to deploying RFID. "A lot of these mid-tier companies haven't upgraded their systems for years, and they don't have $5 million to spend on new systems," says Weiss. He expects average contracts, which will in many cases add RFID to existing systems, to cost $400,000 to $450,000 for the total package.
That price would include software from V3 for up to 20 users, (including installation and training), 20 dock door readers, 10 handheld readers and 10 smart label printers. Xterprise will provide installation and consulting services for up-front business process requirements. RFID tags will be sold separately.
Teaming to offer an integrated solution promises to take much of the complexity out of deploying RFID, according to Weiss. "Having one provider [Xterprise] responsible for the entire deployment minimizes the risk for the customer," he says. It should also mean quicker deployments. Weiss expects most installations to be completed in around 60 days.
Many suppliers are clearly concerned about finding ways to meet Wal-Mart's compliance demands, but the new partners maintain that customers are also keen to see clear cost savings from any RFID investment. One key issue for many of them is in penalty charges, or charge-backs, made for unwanted or incorrect shipments to retailers.
"It's a huge issue for suppliers," says Xterprise President Dean Frew. "The saving in charge-backs alone provide the payback for deploying RFID."
Frew says the partners are working with one supplier with annual revenue of $56 million. The company estimates that it could save $1.1 million per year in charge-backs alone because of the greater accuracy of RFID-managed shipments.
V3 says it's already in talks with potential customers and that the contracts for the first installations should be signed by the end of this quarter. The vendor did not have to develop any new software to link its systems to RFID data collection, because Xterprise will be responsible for developing and deploying middleware that will plug into V3 systems at each installation.
According to Xterprise, the partnership came together because all three members of the partnership have already committed to working with Microsoft's .Net web services technology.
