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RFID: What's The Real Value?

By Michael Vizard  |  Posted 2007-10-02 Print this article Print

When it comes to RFID and other tech investments, first isn't always best.

In retrospect, it was probably less than reasonable to expect Wal-Mart to meet its overly aggressive goals for rolling out RFID. As detailed in this month's cover story by Mel Duvall, the retailer is lagging behind its own timetable for the internal RFID rollout while the vast majority of suppliers that were supposed to comply with its RFID mandates are still trying to figure out why they should invest now in what can only be described as an immature technology.

Wal-Mart's RFID investment has not been a complete waste. The company is deriving significant benefits from the project, even if there's no immediately tangible payoff. For example, the original assumption was that the best place to apply RFID in the supply chain was at Wal-Mart distribution centers. But based on experience, Wal-Mart has determined that the distribution centers are already pretty efficient and that the real value to be derived from an RFID investment won't come until it pushes the technology out to the store level.

In essence, this is a classic case of a technology being applied to a business process without the analysis required to determine where that technology might best improve the business overall. It's also a classic example of an overly ambitious approach to an emerging technology that stands in sharp contrast to the approach taken by another Fortune 50 giant...

In a case study that appears only at baselinemag.com, Mel Duvall takes us behind the scenes at Dow Chemical, which relied on a more methodical approach to winnow out from more than 450 proposed RFID projects 10 that company executives expect may actually have a big enough impact to justify the investment. Most of these projects involve the relatively simple tracking of large containers of chemicals in transit on the nation's railway systems, which, given the size of the tank cars on the rails, create an ideal environment for deployment of first-generation RFID tags. In other words, the technology is right-sized to the task at hand.

It's human nature to get excited about the potential of something new like RFID, but caution is usually the better part of valor when it comes to emerging technologies. That said, we're hopeful the next generation of RFID tags and related technologies will finally live up to the technology's much ballyhooed potential.

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