Evan Schuman's StorefrontBacktalk

Many large retailers are “ill-prepared” to handle the likely flood of data expected from RFID implementations, and many haven’t even mastered their current bar-code systems, according to a new report from analyst firm VDC (Venture Development Corp.).

“OK, we’ve now got most of our suppliers finally on board with automatic identification and data capture technologies via bar codes. Sure, let’s throw RFID at them, too,” said Mike Liard, RFID research program director at VDC. “You’ve got to address Problem A before you start addressing Problems B, C and D.”

Once RFID (radio frequency identification) is operating at the item level, “Wal-Mart will push something like 7 Tbytes [terabytes] of data every day,” Liard said. “Imagine that cycling through your system, or even a piece of that cycling through your system.”

VDC’s point is that rather than replacing bar codes, RFID will co-exist with them for quite some time. Many IT executives may not be factoring that in when projecting network load and other operational issues.

Liard has praise for Wal-Mart for pushing the industry to move ahead with RFID deadlines, but he questions whether the unrealistic deadlines aren’t going to end up doing more harm than good.

“Did they really think we were going to surmount and get over these problems by Jan. 1, 2005? We have disastrous technology performance issues,” he said. “We have few standards. We don’t have UHF having proven itself in the supply chain yet on a performance level nor on an ROI [return on investment] level.

“You’re dealing with open-loop versus closed-loop applications. Closed-loop applications are a lot easier with RFID technology. So, yeah, they’ve bitten off quite a lot,” Liard said. “Have they bitten off more than they can chew? I think they’re going to have to make a statement on that come Jan. 1, 2005.”

VDC found that today’s retail IT systems are not yet up to the task of handling RFID in a sophisticated, integrated fashion.

“We’ve got very archaic legacy systems that may not be able to handle the influx of data,” Liard said. “Often, these are very disjointed systems that may not have centralized computing. You may have different folks doing different things at remote sites where things are not necessarily networked together.

“We need to be dealing with lots of integration?integration with warehouse management systems [WMS], ERP [enterprise resource planning], supply chain execution systems,” he said. “RFID is a complex technology, and it brings its own set of issues and challenges to systems integration.

“End-users have to ask, ‘Where do I tie it into my enterprise? Do I do it on the back end? Do I do it on the front end? Do I do it with my warehouse management system or do I attach it to my ERP? A lot of those questions just haven’t been answered yet.”

Most of today’s RFID deployments have been limited to entry-level RFID efforts, where the data management issues are more controllable. Limited successes in today’s trials may not accurately predict what will happen at the next stage, which Liard projects will happen from late 2005 through the middle of 2006.

“Today, we’re dealing with read-only, serial-number, license-plate model technology with RFID. We’re not yet embracing read/write technology for RFID,” Liard said. “When we do embrace the read/write functionality, you’re going to increase the amount of information that is going to be pumped through your enterprise. You’ll then have a whole other set of security risks.

“Who has access to this information? Who has the right to change this information? How am I going to share this information with my partners? The challenges start to multiply, as does the amount of data,” he said. “That’s when things become really interesting.”

VDC’s Liard suggested that retail IT execs are not bringing in a group that’s varied enough to manage the RFID trials and that the people usually left out are those who will be the most directly impacted.

“The problem is that you have some end-user organizations that don’t have what I think you need to have: one guy from IT and one guy from ops looking at RFID technology,” Liard said. “Some folks just have their IT people looking at it. It shouldn’t just be the IT guys and the C-level execs signing a check over.”

“It needs to be an ops guy from distribution or inventory. Who’s going to be using RFID? It’s the guy on the shop floor.”

Another IT exec caution involves vendor relations. There is little doubt that the young RFID community is going to be in for some massive consolidation over the next two years, a mixture of acquisitions and going-out-of-business sales.

While that fact alone is not necessarily a huge problem, many of those middleware vendors are pushing highly customized, proprietary approaches. When companies need to quickly migrate away from a company that was implementing RFID in a non-industry-standard fashion, it could get messy.

“There are lots of willy-nilly partnerships and a lot of empty news releases out there today. Who cares?” Liard asked. “If company XYZ disappears and you were using them, you’re going to care a lot.”