Retail Report: The RFID Revolution
With RFID inventory control set to become the standard, RFID technology now moves toward tracking point-of-purchase displays.
By Marie Redding, Senior EditorRadio-frequency identification (RFID) technology is set to become much more widely used over the next decade, and Wal-Mart is pioneering the trend. The giant retailer has declared that its top 100 suppliers must incorporate the technology on their supply pallets by January 2005.
RFID tags inside shipping cases can be read wirelessly by a scanner, which will help Wal-Mart track inventory and know instantly when items need to be reordered. This means of efficient inventory control will also benefit manufacturers, which miss out on sales when their products are out of stock.
This is just the beginning of the RFID revolution. RFID tags are expected to one day replace bar codes on individual products. When scanned, an RFID tag can report much more data than a bar code can, such as its entire route from the factory to the store. And other roles for RFID tags are emerging.
VeriSign, the company that manages the Internet's main directory of domain names and addresses, was selected as the directory manager for EPCglobal, which sets the standards and administers the RFID tagging network. EAN International and the Uniform Code Council, the same institutions that manage the Universal Product Code network, jointly run EPCglobal. EPCglobal currently has 100 members, including Gillette and Procter & Gamble, but membership is expected to rise dramatically in the next several years.
One advance currently emerging is its use in point-of-purchase (POP) advertising and displays. Start-up Goliath Solutions is implementing this technology now. According to the company's research, $17 billion is spent annually by manufacturers to produce, distribute, and monitor promotional displays and signage. Yet, it is only approximately 50% of the time that these displays are set up correctly and on time. Manufacturers and marketers must currently rely upon retail sales staff or outside audit firms to ensure the proper placement of displays in retail stores.
Goliath Solutions has come up with a more effective means of monitoring setup time and location of POP displays in retail stores. A small RFID tag, designed by Goliath, is incorporated inside the display. Once the display is set up in the proper location in the store, the tag will automatically be monitored to provide proof-of-placement, throughout the entire time it is set up. The RFID tag transmits this information to a wireless network of in-store readers. This information is sent directly and instantly to manufacturers through a Web-based notification system.
"You'll have accurate information in minutes," says Dave Shoemaker, group vice president, strategic marketing, at Checkpoint Systems Inc. The firm, widely recognized as a leader in integrating RFID technology into packaging, announced on February 3 its $2.5 million investment in Goliath Solutions.
Shoemaker says, "RFID technology will enable cosmetic manufacturers to be sure that their displays are set up on time and in the right spot. If they aren't, manufacturers can call retailers and have them set up immediately. It enables you, as the manufacturer or marketer, to keep track of how your money is being spent."
Checkpoint will make design engineering, manufacturing, and field service resources available to Goliath to help drive its growth in the retail market. George W. Off, chairman, president, and CEO of Checkpoint Systems, says, "We are excited about our partnership with the company. It enhances our opportunities as a full turnkey solution provider of RFID supply-chain applications from source to shelf."