Skip to comments.Retailers Plow Ahead With RFID Chips
Posted on 05/21/2006 9:35:29 AM PDT by Nachum
The roots of radio-frequency identification technology stretch at least as far back as World War II, when transponders helped distinguish between Axis and Allied aircraft. Over the years the concept has been greatly miniaturized, landing RFID technology in such settings as animal tags, toll-collection devices, passports, keyless entry systems for cars and wireless credit cards.
But perhaps none of these projects will have as much impact for consumers as the adoption of RFID in the supply chains of huge retail stores.
Mega-retailers led by Wal-Mart Stores Inc. (WMT) have gotten their biggest suppliers to add RFID chips to pallets and cases shipped to stores. Now, rather than having people with bar-code scanners walk around to take inventory, RFID readers in warehouses can automatically tally items on the fly.
RFID is expected to yield substantial savings largely by reducing the frequency of the following scenario: A customer goes to a store for an item, only to find its shelf empty, even though replacement stock lurks somewhere in the back. It's one of the costliest problems in retail.
Simon Langford, Wal-Mart's director of logistics, distribution and replenishment systems, explains that a bar-code scanner can register that certain items have entered a store's back room. But not until one of the items gets scanned at checkout does the store typically get an update. In between, the item might be on a store shelf or still sitting among back-room clutter.
In the more than 500 stores where Wal-Mart has integrated RFID, radio tags give additional insight - they inform employees when supplies enter the storeroom, when they leave it for the sales floor and when their emptied cartons are taken to the trash.
A University of Arkansas study last year determined that these stores saw a 16 percent reduction in the times that products were missing from shelves. But Langford said that figure understated RFID's true power, because the study included popular items that sales staffers already were sure to replenish. When the research examined only items that Wal-Mart sold less than 15 times a day, the out-of-stock reduction was 30 percent.
Wal-Mart hopes to see even greater improvement soon by giving employees handheld RFID scanners that will direct them precisely to cartons of products they need to bring from the storeroom.
Eventually, individual products in Wal-Mart and other stores are expected to get their own RFID tags to give stores even clearer views of their inventory.
"That's really where the supply chain gets most messy," said Kevin Ashton, who helped drive RFID development at the Massachusetts Institute of Technology and now heads marketing for ThingMagic LLC, a maker of RFID readers.
Some high-value items like TVs and pharmaceuticals already have their own tags. But most item-level tagging is a decade away.
First, tag prices must drop below their current 5-to-7 cent range. Work also still needs to be done to master wireless interference issues that can arise in RFID-dense environments. And developers have to assure the public and retailers that data on the tags are secure and not invasive.
"We're seeing the RFID industry get a little bit more mature every day," Ashton said. "We don't view the RFID market as some overnight sensation."
If the legislators are not going to ban them, then at least, they should require manufacturers and retailers to inform the customers where the chip is placed with instructions on how to remove or disable it after they leave the store.
Any hope for an rfid arrow shaft so that shot deer don't go unfound?
I used to be a big technocrat.
I've lately been wondering how foolish it was for anyone to have left the farm life, for any reason at all.
if you don't have a reader it is effectively disabled.
Thats easy...Try having diabetes without technology.
Thats easy...Try having diabetes without technology.
You really can't have diabetes for long without technology. Without technology what you mostly have is funerals of diabetics.
I see the sadness, but also the price. It grows every year.
In the past couple of years, since Walmart's RFID plans became public, I have been looking for stock opportunities in this field. I haven't found any publicly traded companies that are pure plays. This article mentions ThingMagic LLC, and I went to their website and they talk about "generous stock options" for prospective employees. But I can't find that company listed on any exchange or OTC.
Maximizing profits, reducing overhead. Does that necessarily mean lower retail prices? Or higher earnings? Both? Pro'lly 5/3/2/1 -- Exec bennies/inventory expansion/ROI/retail buyers. Naw, scratch retail buyers . In fact, cut ROI in half and raise bennies to 8 and buy more RF chips with the remainder.
They seem to be owned by Tyco Electronics. http://www.rfidsolutionsonline.com/content/news/article.asp?docid=afbb9716-4640-4961-ae4f-b50f0d41243b&VNETCOOKIE=NO
LOL. Reminds me of the story about the rich Wall Street banker (WSB) and the poor Mexican fisherman (PMF). The WSB is on vacation and notices the PMF brings in quite a haul whenever he chooses to go fishing. He begins telling him that if he fished every day, bought a few more boats and hired some help, he could greatly increase his volume. Then, if he moved to the States and began a fish processing plant, he could eventually take it public, get rich & retire.
The PMF asked what would he do then. The WSB replied that he could then move back to his village, kick back and go fishing whenever he felt ...
Exactly my point.
My point, such as it is, is the fact that nothing stops technology. This is particularly true for a capitalist system where technology often provides an edge in a competitive marketplace.
Stem cell research, to cite one example, had its gubmint funding cut. So what happens? You get three states (CA, MA and NY) dumping a ton of money into the kitty to establish themselves as the biotech capitals of the country.
Yeah, there are casualties and unexpected consequencesin the march into the future, but the march will continue. And it'll continue either here in the U.S. or elsewhere.
Thanks for the info, but in the article you linked it is not ThingMagic but M/A-COM, Inc. that is mentioned as a business unit of Tyco Electronics.
If you understood how these really work, you would not be concerned.
Thank you, good and robotic citizen of the State.
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