Additional Retailers/Homeland Security Drive RFID

Germany’s Metro Group, the world’s third largest retailer, has moved ahead with radio frequency identification (RFID) technology, saying it has already achieved a 99% read rate on over 50,000 pallets it has processed. This, says a report by Transport Intelligence, is just one indication of the force driving RFID technology forward.

The highly publicized RFID requirement set by U.S. retail giant Wal-Mart Stores resulted in a first wave of Wal-Mart suppliers working fast and furiously to meet a January deadline for compliance. More suppliers to Wal-Mart will be covered in the second stage of its RFID initiative. At the same time, more retailers are beginning to roll out plans to use RFID.

But in addition to the retail initiatives and requirements set by the U.S. Department of Defense, the U.S. Department of Homeland Security (DHS) could also provide some momentum for the technology. A report by A.T. Kearney suggests RFID users could benefit to the tune of $1,200 per container in accrued benefits.

DHS has stated it would be moving swiftly towards a customs environment in which containers which had RFID tags fitted would be eligible for special expedited ‘green lane’ clearance, reported Transport Intelligence. The tags would reveal whether anyone had tampered with the container seals while the shipment was enroute.

Despite this there are still many companies, both manufacturers and logistics service providers, which are dubious over the return on investment (ROI) case for RFID and will opt for only partial implementation. Transport Intelligence noted many experts believe that if the technology is confined to the transportation and warehousing element of the supply chain, without more comprehensive enterprise wide data collection, it will lose much of its effect.

A study by Accenture suggests the greatest cost element involved in the process stems from management software and integration -- accounting for up to 80% of total costs. Tags cost between just 2-8% of the total, hardware between 7-10%. Tag costs will be an on-going expense.

Express carriers such as DHL and FedEx aren’t out of the picture, according to Transport Intelligence. They are merely waiting until there are clearly defined technology standards. DHL has plans to roll out the technology in 2007.

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