Half retail supply chain may get RFID tagged by 2005: study

About half of Australia's major retail supply chain companies will have been involved in Radio Frequency Identification (RFID) tagging pilots or projects by the middle of 2005, if a recent European study is any guide.

Eelco de Jong, Netherlands-based RFID practice chief at LogicaCMG, said the service provider had found a big leap in RFID activity in a survey of 50 retail supply chain firms between October 2003 and March 2004.

"We saw a real sharp increase in experiencing RFID. This year, 2004, 50 percent of the organisations had been involved with continuing pilots of RFID," de Jong said.

The companies had been from the United Kingdom, Germany, France, Belgium, the Netherlands and Ireland. The study -- which had focused mainly on RFID tagging on packaging or returnable-transfer items such as pallets and roll cages -- had been the largest of its kind done on RFID in the European retail sector, he said.

Malcolm Risby, MD of the industry, distribution and transport group at LogicaCMG Australia, said LogicaCMG had been travelling Australia this week presenting the findings of the study to members of the Australian Retail Association (ARA).

Feedback received suggested that Australia paralleled Europe's position on RFID adoption a year ago. "In Europe, there was a lot of interest but very little actual activity back about 12 months," he said.

Since then, Europe seemed to have entered what LogicaCMG saw as an "irreversible" progress towards RFID adoption, he said.

"Here, they don't need to be convinced as to value. They know it will happen. It will have a huge impact," Risby said. "Where there are difficult issues, they are soluble. [But] few have concrete plans to do pilots."

De Jong said Australian retailers and supply chain companies LogicaCMG had spoken to had shown strong interest in RFID. Although LogicaCMG has a vested interest in promoting technology, everyone had agreed RFID was coming, he said.

"But there is a difference of opinion about how to do things. Some want to let Europe do all the planning and then to do it very quickly in the Australian market. Others are more of the view that they want to start planning for themselves as soon as possible," de Jong said.

Companies that had adopted RFID so far had found it gave different and better benefits to what had been expected. However, changes to business processes had been broader than anticipated, he suggested.

In Europe, the service provider had been doing a fair amount of consulting around RFID and expected Australia to follow a similar pattern. LogicaCMG Europe had also been involved in a project tagging aeroplane parts for Airbus Industries, de Jong said.

"We were working with SAP on doing RFID tags for parts of planes. The business driver was the service cycle for those different parts," de Jong said.

"Sometimes parts would end up in Frankfurt and the information for those parts would end up in Hamburg."

Adopting RFID would enable Airbus to keep the parts and the critical information on those parts together, by incorporating the information on RFID tags, he said.

"It was a very interesting project not only because of the business case but because it was one of the first where RFID was integrated into a back-office system," de Jong said.

Risby conceded that no local deals had yet been nailed. "But I think we will in the next three months," he said.

LogicaCMG saw RFID as a natural extension of work it already did, such as data capture and specifically, barcode data capture services. The service provider also had expertise in Radio Frequency infrastructure for warehousing, which was yet another related field, Risby pointed out.

"What I'm looking at is very much moving things towards RFID business," Risby said.