A recent series of articles in a variety of media, from the Wall Street Journal to Supply Chain Digest, has touched off a renewed firestorm of debate about whether RFID is delivering ROI to consumer goods manufacturers. (See RFID Program at Wal-Mart Going Slow, Wall Street Journal Says; Xterprise CEO Rebuts Negative WSJ Article; Wall Street Journal Gets at Least Part of RFID Story Wrong; Investment Company RW Baird Says WSJ Article on RFID Slowdown at Wal-Mart Part Right, Part Wrong; Just what is the “Sweet Spot” for RFID?).
Now, TechTaget is reporting that George Chappelle, CIO of consumer goods and food manufacturer Sara Lee, told attendees at a recent CIO conference that the ROI for manufacturers isn’t there yet, largely due to performance issues and tagging costs.
"It has to work better than it does today," the on-line publication quotes Chappelle as saying. "That might not sound like the most technical explanation in the world, but it doesn't work well. Until it works an order of magnitude two, three or four times better than it does today, it's never going to deliver on some of the benefits that everyone -- including myself -- agrees exist."
Chappelle also notes the large cost factor in doing “slap and ship” tagging as part of distribution processes, necessary because volumes are still far too low to justify tagging as part of production. Sara Lee, like other CPG companies, is shipping tagged product to only a few Wal-Mart DCs, and is not seeing much action from other retailers.
"Other retailers have not followed [Wal-Mart]," he said. "I used to get letters all the time, 'What's your plan for RFID?' I have not seen a letter in over a year."
The immaturity of the technology is also still a big issue.
"You can't operate an efficient supply chain on [current levels of] read rates," Chappelle said. "As bad as our processes are today, as paper-driven as they are and as time-consuming as they are, they are accurate. This [RFID] is not accurate enough to depend on." Sara Lee has had particular difficulty in reading tags with its refrigerated food products…