A window on RFID

Comparing the last two ProMat materials handling shows says a lot about RFID in the supply chain.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 1/26/2007

“I’m a big believer in cultural analysis,” says Steve Simmerman, vice president of marketing and business development for Swisslog, a provider of automated materials handling solutions and software. “When you look at the way RFID was promoted at ProMat two years ago compared to this show, something has changed.”

It’s not that exhibitors weren’t demonstrating new RFID products at their booths at ProMat 2007. They were. The technology continues to march forward. But RFID was no longer the focal point of the show the way it was at ProMat 2005.

What was missing was the sense of urgency—the feeling from vendors and the first wave of Wal-Mart suppliers that they had to figure RFID out now or fall hopelessly behind.

What changed?

In part, Simmerman believes the fact that suppliers were expected to absorb the cost of implementing RFID technology played a role. “What I still hear over and over from distributors is that they’ve worked for years to take 30 cents out of their costs, and now they have to add it back in,” he says.

Given the relative expense—and complexity—of using RFID when bar codes are cheap, reliable and easy to implement, most suppliers opted for a compliance solution rather than roll the technology out in their own operations.

“When you look at the total cost of ownership, it made more sense to minimize the expense and satisfy the customer,” says Simmerman.

Now that the first 100 Wal-Mart suppliers are familiar with the technology, RFID strategies are emerging.

“We’ve got customers who originally planned on installing tagging systems in every DC,” he says. “Now, they’re centralizing their compliance business into one DC.”

And, manufacturers and distributors continue to look at RFID for closed-loop processes inside their four walls. “We’re working with a large bank in China that is going to tag totes of money in their DC,” says Simmerman. “The readers will be integrated with the automated materials handling system and they’ll use RFID instead of bar codes.”