RFID chips use low power radio signals to broadcast information about products as they pass through a supply chain. They can be used by merchants to accurately track the whereabouts of goods as they pass from factory to warehouse to supermarket shelf; and some sophisticated devices can even contain sensors to monitor the condition of perishable goods.
The efficiencies and cost savings that RFID can bring are increasingly attractive for companies wishing to streamline supply chains and also to those who are looking to implement the technology at the individual item level. At the end of 2006 analyst group Gartner predicted that the RFID market will see annual growth of over 50% in 2007 and will reach $3 billion in 2010.
US superstore Wal-Mart is seen by many as a RFID pioneer, forcing its top 100 suppliers to adopt the technology and, at a count earlier this year, having introduced around 9 million tags.
Meanwhile, in the UK, high street retailer Marks & Spencer is leading the way in its adoption of RFID technology. In November 2006 M&S announced plans to extend item level RFID tagging of clothes, following successful trials in 42 stores. This will mean rolling out tagging at a further 80 stores with an initial goal of completion by spring 2007. M&S initially piloted RFID tags back in October 2003 on a menswear range at a branch in High Wycombe.
RFID fact box
- Gartner predicts the RFID market will reach $3 billion by 2010
- In Mississippi, RFID was used to help identify victims of Hurricane Katrina
- The Malaysian Road Transport Department plans to implement RFID licence plates throughout 2007 in an attempt to curb car theft
- Scientists at University College London have created a new prototype RFID badge for tracking passengers at airports in order to imrpove airport security
- Construction businesses are adapting RFID technologies for the manufacture of high value construction products and to trace assets as they move around construction sites
However, not all RFID projects are quite as successful. Supermarket giant Tesco has had its fair share of publicity over the last few years around the piloting and implementation of RFID tags.
The supermarket chain has been experimenting with RFID for over a decade, and prior to 2005, implementations concentrated on tracking pallets and helping retailers monitor crates of items within the warehouse.
The real problem began when Tesco expanded item-level testing, arousing the anxieties of consumer privacy advocates, such as Consumers Against Supermarket Privacy Invasion and Numbering (Caspian), who argued that the potential to monitor items once they left the store infringed upon consumer confidentiality.
Whilst it can undoubtedly bring business benefits in terms of automating the supply chain, RFID technology comes with its fair share of teething problems, not least of which are the privacy concerns as highlighted in the Tesco case. But as proven by Marks and Spencer, successful implementation can result in a highly effective tool for business.
