The use of radio frequency identification (RFID) tag systems in manufacturing is now providing a payoff to companies -- despite early concerns about privacy issues and technological hiccups as the wireless technology has been rolled out.
That was the message Tuesday from a user panel at the RFID World conference in Grapevine, Texas, that looked at the myths associated with RFID implementations. While still not fully mature, RFID is rapidly becoming a stable, proven technology that has quantifiable return on investment and can deliver unique visibility into the supply chain, users said. But that added visibility comes at a price.
"In reality, it costs money," said Jim McMasters, senior vice president of IS at Tandy Brands Accessories.
When the fashion accessory maker partnered with Wal-Mart Stores on a vendor-managed inventory project, Tandy Brands found working with RFID relatively easy. But, "anything you do is going to cost some money," McMasters said.
He sees RFID use as a chance to be on the cutting edge of new technology. But to succeed, a 100% commitment to such projects -- and the support of senior management -- is needed. Additionally, there must be a plan in place to exploit all of the data provided by the tags, said McMasters.
Clothing manufacturer VF Corp. chose to wait for the price of RFID tags to drop before implementing the technology, said James Jackson, director of vendor relationship management at the company. However, because it took several years for VF to launch its RFID program, the company and its business processes changed, as did the need for the RFID systems, Jackson said. The company shifted to doing more contract manufacturing abroad rather than making clothes domestically, making the need to track merchandise from factory to distribution center "someone else's problem," he said.
However, RFID-generated data can be useful if merchandise tied to the Super Bowl or some other time-sensitive event is sitting in a back room at a store and not being sold in a timely manner, he said. The company can contact the store and find out why inventory is still on the shelves. It's also allowed VF to reduce the charge-back fees imposed by Wal-Mart when it doesn't receive an ordered item; With data from the RFID tags, VF is able to verify that a given item was, in fact, shipped and arrived.
VF now plans to launch an RFID initiative that will allow it to track merchandise at the item level, said Jackson.
All four of the panel members noted concerns about how data generated by RFID could be abused and pointed out that privacy advocates have voiced opposition to the technology. J. Kevin Brown, director of IS at Daisy Brand, which makes sour cream products, dismissed those fears -- and the notion that companies could use data from RFID chips to "corrupt the world." Companies today can't even get complete reads on tagged merchandise in small areas, and anyone implementing RFID should not expect every tag to be read, he said.