The Hindu Business Line : Keep 'em moving

IMAGINE the sheer joy of buying your groceries without having to endure long queues to pay your bill. Well, delays such as waiting in line while the bar codes of your items are scanned — a wait sometimes made longer if the attendant has to manually enter the price — will soon be a thing of the past.

Thanks to Radio Frequency Identity (RFID) technology, hassle-free shopping might soon become a reality. The facility generates automatic billing while simultaneouslyupdating the retail outlet's inventory; the cost of goods is then charged to the customer's credit card.

With the retail industry getting more competitive, retailers are pressured to reduce costs and maintain a high level of service. Some of the challenges that retailers face are inventory accuracy, shrinkage or theft, inaccurate order filling, lower inventory replenishment rate, high labour cost, incorrect demand forecast and improper handling of date sensitive inventory.

RFID-enabled solutions can increase certainty of demand signals by 10-20 per cent, a 10 per cent reduction in labour and a five per cent increase in inventory accuracy, according to Dilip Dhanuka, General Manager-Products and Technology Group, Patni Computer Systems Ltd. In a store-level pilot conducted by US apparel retailer Gap, where apparel items were tagged with passive RFID tags, results indicated that the store inventory accuracy went up considerably.

A key benefit for the retail industry is automatic identification of individual objects and automatic data capture, says U.B. Pravin, Senior Vice-President, Head Retail Business Unit, Infosys.

The working of the technology runs thus: A tag containing a small memory chip surrounded by small antennas is used in identifying a product and a reader that communicates with the tag by way of radio waves that sendenough energy to the tag for it to send its information back.

RFID technology was first used during World War II when the British placed a transponder in their aircraft to distinguish it from the enemy craft.In the late 1960s and early 1970s, the need for security and safety led to further development of RFID tagging of equipment and personnel. The late nineties witnessed efforts by the MIT Auto-ID centre (now the EPC Global Inc), which pioneered the standardisation of RFID technology leading to creation of the Electronic Product Code Network of standards for RFID.

Led by the Electronic Product Code Network that is spearheading the standardisation effort for RFID, firms such as Wal-Mart and the US Department of Defense are using this as a platform to embark on various RFID initiatives, though this has run into issues regarding privacy concerns raised by consumer groups.

"As regards the controversy surrounding the privacy concerns relating to tagging items in the retail store many of them are unfounded and show a lack of awareness.But it certainly is an important issue and must be addressed before the ubiquitous RFID adoption," says Pravin.

While globally, retail giants lead by Wal-Mart have started implementing RFID technology, in India this is yet to happen given the high costs of implementation. "Indian users are beginning the evaluation and pilot deployment of RFID applications in limited numbers," says Ray Kloss, Director-Industry and Product solutions, PeopleSoft. "India has just started using bar codes and we are far from adopting RFID technology in our industries. In order that the EPC network be deployed and exploited in the country, there is a need for availability of license fee spectrum in the ultra-high frequency band which will allow operation of RFID systems based on EPC standards," explains Pravin.

The high cost of investment is another deterrent. Typically, the cost of investment for a complete RFID deployment ranges between $1 million and $20 million for basic and high-end RFID tagging. Tags cost between 50 cents to more than a dollar and readers vary in cost starting upwards from $200 to several thousand dollars. But efforts are on to reduce the cost of tags in the range of 20-40 cents for a passive read-only tag and tag manufacturers are fast approaching that cost.

On the IT front, Indian firms like Infosys, Patni, Cognizant, TCS and multinationals alike have teams working on RFID-enabled solutions and services. For instance, Patni is currently working with a few Wal-Mart suppliers on feasibility study and pilot projects to evaluate the benefits of RFID. "Patni hopes to soon be part of the Software Action Group of EPC Global," says Dhanuka. PeopleSoft too has RFID solutions that allow organisations to comply with mandates announced by Wal-Mart and the US DoD.

According to Siddhartha Mukherjee, Vice-President and Head-Retail practice, Cognizant Technology, IT vendors can get involved in RFID projects as technology service providers who provide the hardware and embedded software services required for RFID implementation. Application software vendors will have to upgrade their software to make use of the vast amount of data made available through RFID tags and consultants and systems integrators who would define the business processes involving RFID.

Interestingly, RFID is estimated to be a $3-billion market within five years, according to estimates of the Wireless Data Research Group as the sophisticated tracking technology being replacing the cheaper barcode.

Mukherjee foresees a trend that will see the emergence of global standards for RFID, lowering of tag costs and improved tag reading. "This is an exciting time in looking at this technology because it is just the beginning of it," says Ben Gaucherin, CTO, Sapient Corporation.

preetim@thehindu.co.in

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