Gillettes Fusion Launch Makes a Good Business Case for RFID

After nearly a decades worth of breathless predictions, futuristic fairy tales and the distant promise of super-streamlined global supply chains, the world has finally grown weary of the relentlessly hyped technology known as RFID. Perhaps the fatigue was inevitable. RFID holds great potential, but the road to adoption is a long and costly one. And yet stories of a life full of detailed supply-chain data and free of printed bar codes continue to assault technology executives from every direction.

The reality of RFID, of course, is far less sexy. Only after being bullied by powerful retailers have manufacturers reluctantly agreed to slap-and-ship pallets, crates and boxes of product with RFID tags. RFID readers get crushed by forklifts and clumsy warehouse employees. And many of the tags are rendered unreadable by product packaging or poor placement. Meanwhile, little or none of the data being generating gets put to good use. RFID is most definitely a work in progress.

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Thats why Boston-based Global Gillette (formerly the Gillette Co.), the market leader in razors, took a more measured approach to RFID during the launch of its new Fusion brand in February. The company was well aware that consumer goods manufacturers, like the retailers they supply, are still in the learning phase of electronic product codes, the product information stored on RFID chips. Gillette, fresh off its $57 billion acquisition by Procter & Gamble Co., decided to test RFID to track the pallets, cases and displays sent to just two of its retail partners. And only 400 stores and four distribution centers were involved in the pilot.

Gillette executives concentrated their efforts on tracking "display compliance": making sure the in-store promotional displays that adorn retail store floors were set up in time to coincide with Fusions massive marketing and ad campaign. "Maybe we will eventually get to things like smart check-out, or the ability to know where in the store the product has been placed," says Dick Cantwell, EPC program leader for Procter & Gamble. "But were very satisfied right now that if we can have promotional display compliance executed on a broad basis across retailers, there will be significant benefits." In other words, Gillette figured it was better to learn how to walk before they run.

Indeed, the Fusion launch yielded interesting data that will be of use to Gillette and its parent company going forward. The Fusion pilot even paid for itself, according to Cantwell, in increased sales at stores that were brought into compliance through Gillettes technological vigilance. But the launch also raises questions about the degree to which RFID technology can ultimately address both the divide between manufacturer and retailer, and the gross inefficiencies that still exist in retail execution. And it does nothing to solve the biggest obstacle to widespread RFID adoption in the consumer goods business: cost.

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