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Four years on RFID Street
Issue #126 | Dec. 7, 2007 | by Marcus West
It’s that time of year when perspectives and year-end wrap-ups are as unavoidable as visions of sugar plum fairies. Especially now that this is our fourth December, in this new wave of RFID looking back four years is a lifetime.
Remember, the end of 2004 is shortly after the Wal-Mart and Department of Defense mandates kicked off the RFID Gold Rush. We were there, having gone through a couple of newsletter names before landing squarely on “RFID Street.”
On December 2, 2004, we wrote, “A consistent mistake made by those not finding an ROI is the refusal to change. ‘It works the way it is, so why change it?’ Hence the slap-and-ship solution. If all you do is add a few steps to a process, of course it's going to be more expensive. . .
“The attitude adjustment must start at the top. The C-suite execs must support the adoption of RFID technology. That means adequate resources and money. The key word here is ‘adequate’. . . It is equally important that middle management get off their high-horses and stop preaching there is no room for process improvement within their facilities. . .
“Here's the kicker: it's not just about RFID. When I walk into a facility, I talk to the people doing the work. The longer they've been there, the more ideas for improvement they have. The best ideas for RFID technology have come from 10-year operations veterans who are ready for a new tune.”
We were all about creative approaches and open attitudes from the beginning.
At the end of 2005, we wrote about Wal-Mart’s announcement that they “realized ‘a 16 percent reduction in out-of-stocks.’ . . . also ‘that the biggest benefit (of RFID to consumers) will be better merchandise availability’. If that's true, then the measure in improvements to out-of-stocks is import, not only to the retailer, but to the consumer.”
We calculated that with $20 billion in out-of-stock costs calculated by the Grocery Manufacturers Association, that would be $3.2 billion industry savings alone, not counting Wal-Mart’s other competitors. We covered the Nov. 14, 2005 effective date of the DFARS clause beginning RFID tagging as a part of relevant contracts.
Last year, Dec. 15, 2006, we wrote, “Many companies, both big and small, that had high hopes for their products and services have dropped out, saying there’s not enough revenue to sustain their business. Others stagger along, claiming they are struggling to break-even. Yet, 2006 proved to be an outstanding year for those that had the right formula. I talk to some companies that are so busy implementing RFID projects they can hardly keep up.
“The rapid sunset of Class 0 and 1 surprised many and forced the acceptance of Gen 2 as a single standard across the supply chain. A tire manufacturer stated, ‘The fact that we can program a single number on a tire tag and it can be used by Wal-Mart, the U.S. DoD, and a bunch of other trading partners, is huge.’
“This standardization is also helping drive costs down. The cost of passive RFID tags is at an all time low; but the big question is, how much lower can prices go without huge volumes?
“Another unanimous consensus among everyone I’ve talked to is that closed loop asset tracking is the fastest growing industry segment and that’s not going to change in 2007.”
Indeed, 2007 was The Year of the Closed Loop, which is pulling the RFID sleigh into the year’s end.
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