Archive for June, 2011

Item Level RFID Initiative receives $400K-plus sponsorship from Impinj, Motorola, three others

Thursday, June 30th, 2011

The Item Level RFID Initiative received a major shot in the arm this week when Impinj, Motorola, Tyco, Avery-Dennison and Checkpoint Systems all signed on as Platinum sponsors of the initiative. The exact amount kicked in by each firm wasn’t available today, but it is believed the checks from the five RFID vendors total well into the high six figures.

(Click here for RFID 24-7′s prior coverage of the Item Level RFID Initiative)

The Item Level RFID Initiative, a consortium of retailers (Wal-Mart, Macy’s Kohl’s, Dillards and more) and industry vendors, was unveiled in November to jump-start the use of item level tagging in retail. The group, which operates under the wing of standards group VICS, operated on a budget of about $40,000 last year. Behind its new Platinum sponsors, that budget will be expanded 10-fold this year and next, allowing the group to accelerate development of guidelines and standards, as well as promote the group to a broader set of retailers and vendors.

ILRI will also be seeking Gold and Silver sponsorships. The move makes sense for suppliers like Impinj and Motorola, who have the most to gain by a faster adoption curve.

In other ILRI news, the Retail Council of Canada has become a member of the group, representing the first foreign interest to be granted membership. Retailers like Gerry Weber in Germany have already reached out to join the group. ILRI will also launch its own web site in July. Stay tuned to RFID 24-7 for more details.

University of Dayton RFID research spawns temperature sensing solution

Tuesday, June 28th, 2011

Academic research is driving new use cases in the RFID sector. Already this month RFID 24-7 has reported on research initiatives out of the University of Cincinnati and the University of Pittsburgh that are destined to revolutionize the healthcare industry.

Now, the University of Dayton Research Institute is in the spotlight. The school, long a pioneer in RFID research, says that American Thermal Instruments of Moraine, Ohio, has licensed University of Dayton Research Institute researcher Bob Kauffman’s SMART technology to develop and manufacture monitors that will report unsafe temperature changes in products ranging from perishable items like fruit to train wheels while they are in transit.

Utilizing the SMART (Status and Motion Activated Radiofrequency Tag) system, monitors for perishable items such as food and medicine will be located in shipping containers for transport from production facility to distribution center to store shelf. Similarly, monitors for transportation applications will be attached to components whose controlled temperature is critical to the integrity of the vehicle.

A handheld scanner can be used at checkpoints along the way to quickly and easily check for temperature issues without having to open packaging. According to the University of Dayton web site, the RFID system could be on the market within 18 months, if not sooner. The company has already signed clients from the restaurant and transportation industries to use the temperature monitors.

“Temperature changes affect the taste, freshness, appearance and viability of food products,” says ATI president Randall Lane. “Every hour that a case of lettuce spends in temperatures that are too high means one less day of shelf life, which is significant for a produce company that ships more than seven million cases a year.

“But there are also instances where unsafe temperature fluctuations cause more than just expensive waste. They can be dangerous. For example, we monitor heart stents, which are made of metal. If a stent gets too hot in transit, it won’t open up and work properly once it’s been implanted. A case of vaccines worth millions of dollars can be rendered useless if they’re allowed to warm up for even a brief period of time.”

Walmart delays item level deployment; tag predictions for 2011 drop 51 percent

Thursday, June 23rd, 2011

Analysts at VDC Research have detected a slowdown by Walmart and other retailers when it comes to the deployment of item level RFID. When retailers met at the NRF show in New York in January, they were very bullish on item level RFID in announcing the Item Level RFID Initiative.

However, since that date, Wal-Mart’s deployment for women’s apparel has been delayed by approximately two quarters, shifting demand to Q4 and Q1 2012. VDC has downgraded its transponder forecast for the retail sector to 2.1 billion for 2011.

According to VDC, the delay pertains to ensuring that the supply chain has adequate support, time and resources for a successful deployment. It appears Wal-Mart does not want to repeat the previous issues and challenges they encountered when implementing RFID in their supply chain.

Macy’s and American Apparel are also not scaling as quickly as anticipated.

“These delays have caused us to revise our estimates and forecasts for the EPC UHF market downward in 2011 as well as adjust the growth rates in 2012 and 2013,” says Andrew Nathanson, Practice Director at VDC Research. “These changes were limited primarily to transponders in the retail sector. Passive EPC applications outside of retail remain on par with our earlier expectations. We strongly feel that these delays should be considered a temporary bump in the road.”

Click here to read the full VDC report and the updated retail predictions.


Russian retail alliance to open grocery “store of the future”

Monday, June 20th, 2011

The use of item level retail tagging is exploding around the globe in apparel retail and other specialty retail sectors, and now a new alliance in Russia is researching the viability of RFID for grocery stores.

Grocery stores were one of the first sectors to look at RFID, given the high amount of perishable items stocked by supermarkets. However, much of the early research determined that ROI might not be high enough, given the low dollar value of many items stocked at grocery stores. However, as the price of deploying RFID decreases, some of those value propositions increase, and grocery is once again looking at RFID.

The group in Russia hopes to launch a grocery “store of the future” in 2013. According to a report in Nanowerk News, the project has a budget of 350 million rubles, equal to about $11.4M U.S.

An excerpt from the Nanowerk News:

In 2013, assuming successful development of the RFID technology, the project will open Russia’s first model grocery store for the future. X5 Retail Group will provide the platform. The project will also develop sector standards, which are prerequisites for changing the regulatory and legal framework for retail production and trade.

“Cost of the RFID tags is the greatest barrier to their broad use. Once RFID in retail trade begins on a large scale, the cost of the tags will decline and RFID will be extended to other economic sectors. With project success, Russia will become another large market for RFID tags, and that will give Russian microelectronics producers the opportunity to enter an arena where sales are forecast at up to 50 billion tags per year,” Andrey Malyshev explained. “We expect this project to foster demand for nano-enabled products and other RUSNANO projects related to RFID technologies.”


Avery Dennison readies for NFC onslaught by introducing line of NFC RFID inlays

Thursday, June 16th, 2011

It’s still too early to tell how just quickly NFC-enabled smart phones will be deployed around the globe, but some predictions call for 100 million being in use by the end of this year, with 500 million deployed globally by 2015.

Although the forecast remains unclear, Avery Dennison isn’t wasting any time preparing for the eventual onslaught of NFC technology. Today Avery announced its N-Zone™ line of near field communications (NFC) RFID inlays, designed to support the proliferation of innovative, high-performance NFC applications expected to spread across the globe.

NFC uses short-range wireless technology for a wide variety of new mobile commerce, information exchange and social networking applications that will simplify tasks like buying movie tickets and ticketing for public transit. For example, some of the initial uses for the Avery NFC inlays will be the transformation of ordinary product labels and store environments into powerful media for branding and new customer experiences, as well as in “smart” posters and NFC-enabled mobile devices.

“NFC is reaching the tipping point,” said Maggie Bidlingmaier, global director of sales and marketing at Avery Dennison RFID. “NFC-enabled smart phones are rapidly proliferating, and consumers will quickly demand applications that the technology makes possible. Our N-Zone NFC tags were designed specifically to power these rapidly emerging solutions.”

The first products in the N-Zone line of NFC inlays utilize NXP’s ICODE semiconductors. Jeff Fonseca, NXP’s NFC global business development director, said, “Combining Avery Dennison’s inlay design expertise and our ICODE®, Mifare™ Ultralight™, and DESFire™ line of products to create best-in-class NFC inlays is a natural progression of our strategic relationship.”

NXP and Avery Dennison are both members of the NFC Forum, the industry’s standards group.

Retailers hope RFID will curb $340B out-of-stock issue

Tuesday, June 14th, 2011

Why are retailers like Walmart and Macy’s so anxious to deploy item level RFID technology? For starters, out-of-stocks are robbing them of more than $430 billion in sales each year. A new study from IHL Group says that major retailers could improve sales by close to 10 percent by entirely eliminating out-of-stocks.

While RFID can’t do that on its own, it’s no wonder retailers like Walmart, Kohl’s and Dillard’s are pursuing item level tagging with such vigor. The IHL study says that more than one in five shoppers leave consumer electronics retail outlets empty handed because of out-of-stocks.

“What it comes down to is that there is no good way of counting your items at this point in time,” says Zander Livingston, CEO and co-founder of Truecount Corp., and a pioneer in apparel item level retail tracking. “It’s tedious on the employee, it’s manual labor and employees can easily be distracted, so there are significant problems with trying to manage your inventory with human beings, particularly if you have lot of turnover. So nobody is ignoring RFID any more.”

[Click here to view RFID 24-7's previous coverage of retail item level tagging]

There are varying reports about the pace of item level tagging at the retail level. Some analysts are calling for explosive year-over-year growth for the foreseeable future. In its 2010 report, VDC Research predicted that retailers would consume 800 million tags in 2011, and 3.4 billion by 2014. Given developments that have taken place over the last year, those estimates will likely be lifted in VDC’s next report. ABI Research, meanwhile, predicted in February that the footwear and apparel sectors would consume 750 million item level tags this year.

However, some tag manufacturers say that major retailers are not adopting as quickly as anticipated. But the intent is certainly there. Major retailers banded together in November to unveil the Item Level RFID Initiative, a group chartered to spread the pace of item level adoption.

And Livingston, who founded his RFID software and services company last year, says his firm signed on four retailers in May alone, although they are mostly Tier 2 and Tier 3 players.

“People are paying attention to RFID now,” he says. “Obviously the smaller retailers can move much quicker and those kinds of companies can jump in and make decisions quickly and see more immediate results.”

Livingston says that he is seeing increased action with retailers of mobile concert items such as T-shirts and hats that travel from venue to venue. The items need to be counted each time they enter and leave a concert venue, creating huge labor costs. RFID can accomplish the task much quicker and more accurately.

“They jumped on this solution immediately,” says Livingston. “They just have really bad inventory numbers and it’s a perfect opportunity for RFID to come in with handheld mobile devices to do cycle counts for them.”

Truecount is also working with a pair of Tier 2 sporting goods stores. Livingston expects those rollouts to be complete sometime this summer. In addition, Truecount is negotiating with a dozen more clients, including a major Tier 1 retailer.

The IHL study outlines how bad the out-of-stock issue is. The study says that the amount of revenue lost to retailers each year through distortion totals $778.5 billion worldwide. More than half (56 percent, or $433.4 billion) is a result of out-of-stock items.

The report says that retailers are in denial about out-of-stocks, and that the true rate experienced by consumers is almost 18 percent, about three times higher than the out-of -stock rate claimed by the retail industry. The report says that Radio Shack has an out-of-stock rate of 22.7 percent, and that Office Max was at 30.6 percent, equal to a loss of $1.96 for each customer entering the store.

North American apparel stores experience about $23.5 billion in annual out-of-stocks, and $16.2 billion in overstocks. “We talk anecdotally about RFID as a help, but the biggest issue is poor planning and lack of staff execution at the store level,” says Greg Buzek, an analyst with IHL. “RFID typically would help about $12 billion of the $39.7 billion inventory distortion problem for apparel retailers in North America.”

According to the Item Level RFID Initiative, EPC tagging can lead to much greater inventory accuracy, moving the industry average from 63 percent to 95 percent. Inventory productivity could be increased by 96 percent, improving from 200 items per hour to 12,000 items/hour with RFID. Item level tagging can also reduce the time it takes for an associate to find a product by 18 percent. Finally, out-of-stocks can be reduced up to 50 percent, with a sales lift of anywhere from 2 percent to 20 percent resulting from item level tagging.

“I’ve always said that a misplaced item is equivalent to not having it available at all,” says Livingston. “There is a breakdown at every level, from the supplier to the DC, the DC to the store, and then store to store transfers. The more times humans touch it, the more distortion you’re going to get because humans are just not 100 percent accurate. So for every one item you are off, it creates two points of distortion within your inventory.

“But once you put in RFID and become confident with the system and you know you are at 99.9 percent inventory accuracy, you will look for that missing item because the system says you have it, and you will always find it.”

Intelleflex white paper examines six key benefits of XC3 technology

Monday, June 6th, 2011

Click here to view and download the white paper.