Unlocking RFID's potential

CIOL Bureau
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BANGALORE: Revealing its top 10 predictions for 2005, inCode, a global wireless technology and business consulting firm, pointed out in a presentation that in the interests of homeland security, governments will have to move closer to allowing RFID tags on containers that pass through customs at international ports and national borders.


Last year, global buyers, such as Metro, Wal-Mart, the US Department of Defense, Tesco, and Albertsons, mandated their top 100 suppliers to affix EPC-enabled RFID tags at case/pallet levels from January 1, 2005, and for all suppliers by 2006. Wal-Mart alone is poised to increase its sourcing from India to US $5 billion by 2010 from the current US $700 million. Evidently, RFID is a major trend globally. However, it will be a while before RFID emits strong signals in India though it is optimistically believed that 2005 will be the year of RFID pilots in India.

Let us look at some of the issues that impede rapid adoption of RFID! Price and awareness of its usefulness look to be the main inhibitors. However, RFID solutions have the potential to emerge as one of India's largest IT exports. Indian exporters must pro-actively take steps at adopting RFID. Besides industry segments like seaports, airports, railways and pharma companies, small and medium automotive ancillary companies, and other manufacturing companies stand to gain through significant transformation, which RFID will bring to their supply chain through product visibility and information sharing, using the Internet.

What does this mean for Indian companies? They will need to comply with international mandates for adoption of RFID tags on consignments to remain on their supplier lists. This includes exporters of virtually all retail products, such as medicines, home furnishings, auto components, general merchandise, leather, garments, etc. As an example, Ranbaxy Laboratories is already in the advanced stage of adoption of EPC-based RFID tags in response to Wal-Mart's deadline operative from January 1, 2005.

Studies in the retail sector have indicated that retailers can expect 25 percent reduction in inventory levels, near 100 percent reduction in theft and fraud and a minimum of 3-4 percent increase in sales. What it also means is that manufacturers who produce these goods and services also stand to benefit through increased sales, complete inventory visibility, enhanced labour efficiency and real-time track and trace of goods.