This Week in SCDigest:

October 18 , 2007 - Supply Chain Digest Newsletter
SupplyChainDigest - Your first stop for supply chain information

Become a Sponsor Click here for information on how to become a Sponsor
Send to a Friend Send this newsletter to a friend. Click here!
Not already subscribed? It's free! Click here.

Archives | Events | Feedback

Featured Event:

Sponsored by: LogicTools

APICS 2007 is celebrating 50 years of you!
This year’s conference is all about you and what you need to succeed in the marketplace, make your company more competitive, and further your career.

Mark Your Calendar
for the
2007 CSCMP Annual Conference

October 21-24

First Thoughts by Dan Gilmore, Editor

RFID – My Turn

As most readers know, we’ve covered RFID in several columns this year. This includes the controversy over the Wall Street Journal article that was very negative on Wal-Mart’s RFID program (See Does RFID Have Issues?), and then the subsequent passionate and articulate case for RFID in the consumer goods-to-retail supply chain made in SCDigest by Procter & Gamble’s Dick Cantwell, delivered in two parts that have been perhaps our most popular articles of 2007 (see full interview).

I promised back then to share my perspective on RFID in more detail, and here it is.

While bar coding will be with us for enough years to be, for the sake of our discussion, “forever,” I think it’s pretty clear that RFID’s eventual benefits will come to dominate the automatic identification market. Why? Because we are simply moving everywhere to automate the heck out of everything and take the human being as much out of it as possible. If we’re going to point our key fobs to buy gas or use our fingerprints to pay for groceries in a millisecond without need for a credit card, we’re going to increasingly expect that we shouldn’t waste time manually scanning bar codes, whether it’s at retail point of sale or the warehouse floor.

Gilmore Says:

"Frankly, once the supply chain has delivered the product to the retail DC or store, its job and worries are largely done. So, for now in consumer goods to retail, the marketing function ought to be the one championing RFID and attending the conferences."

What do you say?

Send us your comments here

But that’s a future state, to be realized over time, not the here and now.

The weirdness with RFID is that in the US, it has kind of been divided into Wal-Mart … and everything else. In Europe, I see Metro Group and to a lesser extent Tesco obviously making some moves, Tesco more cautiously (prudently?) and Metro more aggressively – the Wal-Mart of Germany, in terms of RFID (and presence, actually) – and encountering lots of hurdles to its RFID vision.

It’s of course really, really interesting that no US retailers have done much of anything with RFID other than Wal-Mart. There was vague talk from Target about a looming mandate early on (2004) - then nothing. Some are in fact huddling, waiting for the right moment.

Outside of retail, or Wal-Mart, RFID is starting to thrive. While there is still some element of companies or individuals grabbing onto RFID and looking for a problem to solve with it, what’s emerging is that RFID is just becoming one more tool in the automation systems tool bag for data collection requirements – and with valuable new capabilities. Indeed, a couple of years ago, after a story we did on use of RFID in the disk drive industry to track work-in-process, a West Coast VAR told us he gets RFPs for similar RFID-based systems in the high tech manufacturing sector several times per month. Routine.

The only downside here is that people looking to make a career out of RFID should be cautious that before long, just as bar codes before them, RFID will probably sooner than we expect become a fairly routine technology to use in business applications. There will always be room for specialized knowledge, as there still is in bar codes, but the need for and value of that really specialized knowledge will shrink. But the next 3-5 years or so will still be good for RFID experts.

So, my current summary views (with some repeat from the above) on RFID are as follows:

  • RFID is a great and increasingly routine technology in many applications, especially so-called “closed loop” systems. It’s used where it makes sense, and delivers the best solution and ROI. The number of places where it does so in these applications is growing as awareness, understanding and price-performance improves. And Wal-Mart played a role here, even if indirectly.
  • The extreme trend towards eliminating the human element will continue to drive this forward. Procter & Gamble, for example, noted to us how they have taken a huge amount of time and labor out of the process for transferring product from plants to third party warehouse operators by switching from bar codes to RFID and thus eliminating manual validation at the hand-off point.
  • Wal-Mart simply bet it could dramatically move the whole industry down a curve in terms of cost and adoption much faster than it would naturally progress – and it turned out it was mostly wrong. Not totally wrong, but mostly. And to some extent, it actually goofed the whole industry up. Note, just for example, former Wal-Mart and DoD focused Alien now (belatedly but smartly) targeting closed loop applications with its product strategy, where Intermec is making hay.
  • The fact that, to the best of our knowledge, no CPG company applies tags to cases for its own internal benefit says quite a bit, actually. Combined with the lack of other retailers in the RFID boat yet, and it’s pretty clear that the powerful value prop is simply not here yet in that market. Everyone must be pretty dumb, if it is.
  • I agree with Dick Cantwell, Kimberly Clark, and now it appears Wal-Mart itself (See Wal-Mart is Changing Its RFID Tune, Launching a New Set of Pilots) that there is great potential in improving store execution of promotional activities and displays, and that this is where the ROI is right now. My initial reaction was that this poor store promotional execution could be solved in other ways, but Cantwell argues strongly that every other method has been tried and failed, and I’ve never run a retail operation. So let’s just agree with this. It’s probably right.
  • These benefits – better execution of store promotions, better targeting of store sales rep activities based on in-store inventory information – is quite valuable… to the CPG company marketing or brand manager. Frankly, once the supply chain has delivered the product to the retail DC or store, its job and worries are largely done. So, for now in consumer goods to retail, the marketing function ought to be the one championing RFID and attending the conferences. They can stand to benefit a lot from better sell-through insights and execution of their programs.
  • If the marketing/sales benefits drive over time the ROI of tagging, the supply chain and logistics functions should obviously see how they can “tag” along and get some additional benefits in moving and tracking product. But for now, supply chain in consumer goods to retail is simply not driving the train.

I spend a lot of time thinking about all this. If I have it wrong, please let me know.

I'll see many of you in Philadelphia at the CSCMP conference next week!

What’s your take on Gilmore’s RFID perspective? So far, has RFID been Wal-Mart – and everything else? Has that been good or bad for RFID adoption? Is RFID in consumer goods to retail more right now about marketing than the supply chain? Let us know your thoughts at the feedback button below.

Let us know your thoughts.

Want a printable version? Go to:


Dan Gilmore


Workforce Management in the Supply Chain Videocast Series

Interest in LMS?

You'll Benefit from this Four-Part Videocast Series

Part 1: Getting Real Results from Engineered Labor Standards

View the Entire Series Schedule and Register Today

Hot Topics in
Supply Chain
Videocast Series

What key new issues and technologies are coming to the forefront of Supply Chain?

Part 1:Leveraging the Green Supply Chain

Featuring Patty Moore

View the Entire Series Schedule and Register Today


This Week’s Supply Chain News Bites – Only from SCDigest

October 18, 2007
Supply Chain Graphic of the Week: Supply Chain Collaboration Framework

October 18 , 2007 Supply Chain by the Numbers; October 18, 2007


Wall Street finished out last week with a general, although slight, upward trend, however, our Supply Chain and Logistics stock index’s results were mixed.

In the software group, Ariba continued its steady upward movement with an 8.1% gain. In the hardware group, Intermec was up and Zebra was down.   In the transportation and logistics group, most of the movement was negative with Yellow Roadway suffering the greatest injury (down 4.9%).    

See stock report.


Print Version Here

Cover Story:

Are Distribution and Material Handling System Audits a Good Value?

The S&OP Report

by: Tom Wallace

Sales and Operations Planning: Going Global?

Inter-Entity Planning Brings New Challenges, but Benefits of Global Coordination are Huge

The Executive View

by: Gene Tyndall

Green Transportation and Logistics - How Are We Doing?

"Green" Movement May Serve as Catalyst for Improved Transportation Collaboration and Innovation

Guest Contribution

by: Jim Barnes
President, EnVista

The Do's and Don'ts of Designing a World Class Distribution Facility

What You Need to Know to Complete a Successful Design


Q. What supply chain metric is abbreviated as "GMROI"?

A. Click to find the answer below


Reader Question: Can Bucket Brigades Work with Mechanized Order Picking?

Reader Question: Is there a True Global RFID Standard?

See our expert answers at the links above. Share your knowledge or perspective.

Or, ask your question


Do use an RSS reader? Do you have a MyYahoo! or personalized Google page? For these and more you can have SCDigest delivered right to your personal pages, all week long.

You can subscribe to our RSS feeds in two ways:
Copy our RSS link into your RSS reader - it's easy!
Click on a button below to quickly add it to your favorite reader.
Add to My Yahoo! Subscribe with BloglinesSubscribe in NewsGator Online

Feedback is coming in at a rate greater than we can publish it - thanks for your response.

We're really behind again - bear with us. But keep the letters coming! In the next few weeks, we'll start adding feedback right on specific story pages, so you can see what others are saying.

Our Feedback of the Week is from the always insightful Steve Murray of Supply Chain Visions, responding to our review of the excellent book Dragons at Your Door: How Chinese Cost Innovation is Disrupting Global Competition.

We also will start this week to include Feedback from our Supply Chain Megatrends pieces part 1 and part 2 - that includes a nice letter from Jim Uncheat of Cambar guessing after the first five what the next five would or should be.

After several pieces we written lately regarding fuel surcharge controversies and legal action, Chuck Green wants to know just what in the heck a fuel surcharge really is. We think this is a fine question.

Geoff Cobleigh of Logility agrees with our Living Supply Chain columnist Dr. John Gattorna that we should look at segmenting customers by supply chain requirements, but says that's not likely to happen soon in most companies.

Keep the dialog going! Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedback of the Week – On China's Dragons:

China’s growth is staggering yes, particularly to those industries and employees who have been negatively impacted. But, not surprising.

China presents a conundrum to other geographies, particularly the US. In the beginning, the State Department and Chambers of Commerce presented China as a glorious opportunity for new business. Think of the millions of potential customers. They downplayed the competitive aspect, which now proves that China is the global manufacturing leader, and along with other Asian nations will soon also be, if not already, the global engineering center. Perhaps soon also the global innovation center.

Where does that leave the US? Will it simply be the global consumer nation? Or, will the US manufacturing engine continue to find ways to reduce costs and increase value to the customer, while at the same time China and other low cost countries see increases in wages, etc., which tend to balance the playing field?

I expect that we will see a balancing effect, perhaps not for another 10 years or so, but certainly at some point. Asia and China will grow in strength and will primarily serve their own local consumer requirements. They will continue to export, but not at the unbalanced rate we see currently. They will of course also import, but never at the levels that were suggested a few years back.

At the same time the US and other countries will see a move back to center with respect to consumer preferences. Local manufacturing will become more competitive and will ultimately regain much of the lost ground. But there will be other threats from Latin America and Africa to consider.

Steve Murray
Senior Research Analyst
Supply Chain Visions

On Supply Chain Megatrends:

I like your first five. I will give you what I thing the next five should be.

Collaboration: A ten year old concept that is finally getting traction as the opportunities between supply chain participants in the fulfillment of the end customer’s needs are greater than what can be rung out of internal operations.

Optimization: Visibility that does not lead to new optimization opportunities is a waste. Short cycle planning optimization is the killer application being set up by RFID and other visibility driven systems.

Globalization: True restructuring of companies from multinational organizations to global organizations is driving a realignment of supply chain thinking and processes. The global pursuit of low cost components and manufacturing, the global ability of logistics to facilitate the integration of sources of supply with demand driven markets, and the ability to align highly differentiated markets efficiently with supply sources requires new organization structures.

Parity: Standards of employee health and welfare expectations are being applied globally. While global living standards will always vary, the expectations that products are not made by children, slaves, or in sweatshop conditions will be driven by end consumer demand.

Green: While we still have a long way to go the environmental impact of supply chains will need to improve. Green impacts energy costs, landfills, production techniques. There is still only one planet to live on. We have to make it last.

I am looking forward to your next five.

Jim Uchneat
Executive Vice President
Cambar Solutions

On Fuel Surcharges:

You hit most but not all of the points in this so-called Fuel Surcharge program(s). Just like an un-documented person, what exact document are we talking about? Same thought here. What is the Fuel Surcharge? A Bill, a Law, a voluntary sign-up program or a buyer beware fine print negotiable charge?  What is the current legal description or definition of Fuel Surcharge?

Chuck Greene

On Slotting Software:

I’m on the same page as you are with slotting software “junk in = junk out”---I would like to know what you have come across as far as what is the best, user friendly, software that is out there now. Would like to know what the Industry likes.

Don Spencer
Eastern Region Inventory Manager

On Aligning Supply Chains by Customer Requirements

I agree with Dr. Gattorna's premise. However, most companies are a long, long way from being able to benefit from this type of realignment.

Geoff Cobleigh
Regional Manager
Logility, Inc.


Q. What supply chain metric is abbreviated as "GMROI"?

A. Gross Margin Return on Inventory.

Copyright © SupplyChainDigest™ 2003-2007. All Rights Reserved.
To Unsubscribe: Click Here
PO Box 714
Springboro, Ohio 45066