Myth 2

By Larry Dignan  |  Posted 2004-02-09 Print this article Print

: Wide Adoption"> MYTH 2: RFID Will be Widely Adopted in 2005
Experts say Wal-Marts mandate—along with the very different RFID requirements of the Department of Defense (DoD), which are also taking effect in January 2005—is certainly enough to drive adoption of radio tags. But companies will still utilize bar codes for the foreseeable future—a fact Wal-Marts Langford acknowledges. Meanwhile, there are a slew of companies waiting for best practices to emerge before deploying tags. (See Planner, p. 45) Analysts estimate it will take at least three years before a paint-by-numbers guide on how to implement radio systems will emerge, says Hudson. "Wal-Mart and the DoD are the exception—not the rule," says Adam Fein, president of Pembroke Consulting, a Philadelphia firm specializing in distribution. Feins argument is that wholesale distributors such as Cardinal Health, Sysco and W.W. Grainger arent going to be in a hurry to adopt radio identification. Heres why: Distributors purchase products from manufacturers at bulk discounts. They assume the market risk, reselling the goods for a profit to retailers. With radio identification, its possible that these middlemen could be cut out of the process. Manufacturers and retailers would know the balance of supply and demand in real-time and, as a result, could choose to deal directly with each other.
Wal-Mart can more readily force RFID adoption because it buys directly from manufacturers already. Other retailers, operating through distributors, may not have the clout to line up their supply-chain partners behind RFID. "Its the golden rule," Fein says. "Whoever has the gold rules."
Check out eWEEK.coms Database Center at for more database news, views and analysis. At NYK Logistics, for example, a company that operates a Long Beach, Calif., facility shipping goods to Target, general manager Rick Pople does use wireless technology to track inbound ocean freight and outgoing trailers in real-time, but he isnt planning any RFID pilots. One reason, he says, is that the technology is limited by distance. But the bigger issue is client demand. "For us, it doesnt make sense to track at the pallet level," Pople says. The only thing that would prompt him to start an RFID pilot is a mandate from Target. "If Wal-Mart were a customer Id probably be talking about the virtues of RFID, but it isnt, so Im not," he says. Next Page: Myth 3, easy standards.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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