The issues raised at the recent NSGA Management Conference about the standardization of source-tagging may be answered sooner rather than later after Wal-Mart made the announcement last week that they will start to require its suppliers to be radio-frequency identification (RFID) compliant by 2005.
The move will most certainly pave the way for other retailers to start utilizing the new inventory-tracking technology that is expected to replace bar codes.
The smart chips, about the size of stamps, can contain information such as warranty and expiration date that can be read using radio signals. A portable reader can scan more than 100 tags as a cart loaded with tagged items is rolled passed a set of RFID antennas.
While analysts say the chips are still considered too expensive for massive use and the lack of a standard has been a concern, they see upside in the WMT move.
“Wal-Mart’s (decision) will advance the standards issue, given the volume it involves; it may help the economics as well,” said Peter Barry, an analyst at Bear Stearns.
The Gap ran a test with Texas Instruments RFID product and reportedly realized a 15% increase in sales in the test stores “because they knew where the product was within the store”, said Bill Allen from TI.
Microsoft is also getting into the act, announcing recently that it is joining Auto-ID Inc., saying it will develop software for RFID applications.
No wonder RFID was the talk of the Retail Systems conference last week in Chicago.
