Mixed bag for pallet tracking
By Staff -- Modern Materials Handling, 1/1/2005
The vision for using RFID tags to track pallets and cases in the retail supply chain is compelling. What company wouldn't want real-time visibility into the inventory levels of its products in its retail customers' DCs and on their shelves? But the economics aren't there yet to justify widespread adoption.
In fact, for some companies, the operational savings generated by RFID technology may not justify the investment in infrastructure even if the RFID tags are free.
That is the conclusion of "A Balanced Perspective: EPC/RFID Implementation in the CPG Industry," a study conducted for the Grocery Manufacturers of America by A.T. Kearney.
The study analyzed the business cases for RFID at 24 large North American consumer product goods (CPG) companies.
"While the vision for EPC/RFID is compelling, the analysis suggests that very few CPG manufacturers, if any, can generate a positive return on investment for widespread EPC/RFID deployment at the pallet and case level with today's tag prices… many [companies] do not project a positive return even if tags were free," says the report.
To turn those numbers around, several issues must be addressed:
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Manufacturers and retailers need to collaborate to clearly define how new processes will drive improvements.
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Tag costs must decline.
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More retailers must commit to deploying EPC/RFID.
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The performance of the current generation of technology must improve.
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Retailers mandating the adoption of RFID "address the unfavorable economics for manufacturers and unequal distribution of costs and benefits through cost sharing and other means."
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