SN ASKS: UNDERSTANDING RFID

POTOMAC FALLS, Va. -- One of the most talked-about -- and least understood -- technology topics on the retail agenda is radio frequency identification. Over the past several years, Joy Nicholas, founder and principal consultant for Cascades Retail Technologies here, has worked on educating retailers on the complexities surrounding RFID and the Electronic Product Code (EPC), as well as other new technologies.

POTOMAC FALLS, Va. -- One of the most talked-about -- and least understood -- technology topics on the retail agenda is radio frequency identification. Over the past several years, Joy Nicholas, founder and principal consultant for Cascades Retail Technologies here, has worked on educating retailers on the complexities surrounding RFID and the Electronic Product Code (EPC), as well as other new technologies. Prior to starting her consulting practice last year, she was the vice president of research and emerging technologies for the Food Marketing Institute, Washington. At FMI, Nicholas advised companies on emerging retail systems technologies and represented the supermarket industry in various technology initiatives and global standards programs. She also acted as the co-chair of the Massachusetts Institute of Technology Auto ID Center EPC Alliance, was a founder, and continues to be a board member, of the Network of Executive Women, and serves as current chair of the Food Marketing Advisory Board at Western Michigan University, her alma mater. Nicholas also worked in IT and other management positions for over 21 years in the food retail and food-service industries at such chains as Ralphs, Denny's and Taco Bell.

SN: How much concrete interest in RFID are you seeing among retailers?

JN: Other than retail adoption leaders, I have seen minimal interest in RFID among retailers in the last five years. I do know a few retailers have been sending people to training courses. Some are setting up meetings with RFID vendors under the radar to begin to understand RFID. Some are beginning to develop long-term strategies that address RFID. A few are experimenting with pilot tests and mini-trials. The majority are taking a wait-and-see approach, most likely because they're overwhelmed with other technology projects and competitive issues, or don't have the resources to engage at this time.

SN: From your training, what areas of RFID are retailers most deficient in?

JN: I think retailers are most deficient in understanding the physics of RFID and the role of RFID in the electronic product code environment. There are many types of tags and readers, and retailers don't seem to understand that "one size" does not fit all applications in the supply chain.

SN: For a midsized retailer, what steps would you recommend for getting started with RFID?

JN: Understanding the physics of RFID is critical. Beyond that, I recommend midsize retailers look at their receiving and inventory management operations first because they can conduct many tests and work through several business cases behind the scenes using tags on cases and pallets. Data synchronization is critical to developing a strong discipline regarding data accuracy, but I don't believe retailers have to wait until their item data is in sync with supplier data before getting started with RFID.

SN: Should retailers involve their suppliers in RFID trials or do it themselves?

JN: I strongly believe in collaboration in the retail industry. Suppliers who are already in the game can provide education and innovation to retailers, leading to a win-win solution.

SN: Should retailers wait until Generation 2 standard tags and readers are in the marketplace before doing any RFID trials?

JN: No. While Gen 2 tags are recommended for widespread deployment, much can be learned using the Class 0 and Class 1 tags already in the marketplace.

SN: How long can a midsized chain wait before it falls into a competitive disadvantage?

JN: This is pretty impossible to predict. However, I believe the operational efficiencies and labor cost reduction that the adoption leaders will realize over the next five to seven years will be a significant competitive advantage.