Tesco rolls out RFID solution

The British retailer has just implemented an RFID solution to identify roll cages delivering inventory to retail stores. Does this signal a new approach to RFID in the supply chain?

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 9/25/2007

Are you boiling the ocean, or making a cup of tea?

When it comes to the adoption of new technologies—like RFID in the supply chain—it’s an important question.

If you were around for the Internet boom and bust, as I was, you might recall supply chain collaboration. It was the hot technology du jour. The vendors supplying collaboration software talked about everyone connecting electronically with all of their customers, transportation providers, vendors and their vendors’ vendors.

That was boiling the ocean.

As the market for technology imploded, companies discovered it takes a lot of heat to boil the ocean. More recently, they’ve discovered it only takes a little bit of heat to make a cup of tea. Instead of collaborating with every supply chain partner, they are now looking for ways to automate the most important transactions with their most important partners. That can often be accomplished with modest investments and a rapid ROI that will pay for the next step forward.

They’re making a cup of tea.

Something like that seems to be happening with RFID. I spoke the other day to Paul Cataldo, vice president of marketing for OATSystems. He described a new RFID solution being implemented by the British retailer Tesco.

Now, if you remember the first reports about RFID in the retail supply chain from three or four years ago, early adopters were going to boil the ocean: There was talk of tracking every pallet, carton and item through the supply chain with passive RFID tags. They called it the Internet of things.

Tesco, on the other hand, is making a proper cup of tea. Instead of tagging cartons and containers, Tesco is putting a passive RFID tag on roll cages; containers are loaded onto the cages, which are then rolled through the store as inventory is put away on shelves.

The RFID tag is little more than an electronic license plate that identifies a specific roll cage. The system, however, knows what cage is destined for which store. “If someone tries to load a cage on the wrong truck, a local display alerts the operator, who can take a corrective action,” Cataldo explains. An RFID reader at the store acts as a backup to catch any roll cages that made it on the wrong truck despite the alert at the DC.

It sounds simple. Rather than investing in a lot of software infrastructure, hardware and databases to track millions of products, Tesco makes a minor investment to identify its inventory of roll cages. The payoff? Tesco avoids costly discounts from having too much inventory in some stores and lost sales from having too little inventory in others.

As the RFID market continues to mature, tag and hardware vendors expect to see more cup-of-tea solutions, and fewer projects that boil the ocean.

“It’s fair to say the supply chain market started out with some unrealistic expectations around technology and adoption,” says Scot Stelter, director of product marketing for Alien Technology, one of the leading providers of EPC-type passive RFID tags. “Instead of trying to layer RFID across their entire supply chain in one fell swoop, they’re using the technology to solve a specific business problem.”

And, Stelter adds, “They’re applying good old-fashioned ROI to the projects, getting a modest return, and moving on to the next thing.”