Supply Chain Frontiers issue #8. Read all articles in this issue.
The Future of RFID on Both Sides of the Pond
In March, the European Advisory Council of the SC2020 Project met in Neuss, Germany, at the Future Store, a working supermarket equipped with a range of technological innovations including RFID, operated by The Metro Group, Germany's largest retailer.
Radio Frequency Identification Technology (RFID) has generated a lot of noise, but the major process changes that will make it a groundbreaking development still elude the supply chain community. Finding that process depends on many factors—including which side of the Atlantic Ocean you happen to be on.
While businesses in Europe and the United States are in hot pursuit of the process keys that will unlock the full potential of RFID, they have very different approaches to the chase. "The contrast became very clear during the latest meetings of our Supply Chain 2020 Project's council meetings," said CTL Research Director Larry Lapide, who heads the multi-year MIT SC2020 research project.
The project's European Advisory Council (EAC) met in Neuss, Germany, on March 22, 2005, at The Metro Group RFID Innovation Center. The meeting was hosted by EAC member Axel Hopp of METRO Group, Germany's largest retailer. METRO is also at the forefront of RFID technology, with its RFID Innovation Center and its Store of the Future. The aim is to convene SC2020 council meetings at what Lapide describes as the "Meccas" of supply chain management. The U.S council recently met at the Austin, Texas, headquarters of Dell, "for this EAC meeting we were hosted by METRO, Europe's RFID technology Mecca," Lapide said.
The Store of the Future is a working supermarket equipped with a range of technological innovations including RFID (for more information on the futuristic supermarket see the account of CTL Director Jim Rice's visit to the facility published in the June, 2004 issue of Frontiers). "METRO is deploying the technology in the store to enhance the shopping experience and to test RFID in demand-side applications," explained Lapide. The retailer's RFID Innovation Center is housed in a distribution center and houses mock-ups of a clothing store and a back-room distribution operations. In effect, the Center is looking at the technology in both front-end demand and back-end supply environments.
"This is very different to the way the technology is being developed in the United States," pointed out Lapide. Leading proponents such as Wal-Mart are largely focused on the back room, he suggested, the supply side. As an EAC member pointed out, "the Europeans are taking a broader view that encompasses people, process and tools, while Wal-Mart is concentrating on the tools and the back-room operations".
The contrasting styles are reflected in the way respective development programs are being executed. Wal-Mart and the U.S. Department of Defense are wielding mandates while METRO is relying much more on consensus-building. "Wal-Mart told us to (adopt the technology), METRO asked us to," observed an EAC member. "It is better to be asked than to be told," said another member.
According to Lapide, the differences are symptomatic of the way Americans and Europeans approach new technology. Europeans tend to be measured while Americans are more accustomed to hype. Collaboration comes more naturally to Europeans who have to work across a patchwork of geographies and national cultures.
Which approach will be the first to discover the Holy Grail of process transformation is an open question. "Neither approach is right or wrong, and either or both of them could achieve the large-scale adoption of RFID that so far has not materialized," Lapide said.
The Supply Chain 2020 Project's Industry Advisory Council has 26 members and its sister organization, the European Advisory Council, has 14 members. For the full list of members and details of Council meetings, as well as information on joining the project's research community, go here. Larry Lapide can be contacted at: llapide@mit.edu. The next IAC meeting is scheduled for September, 2005.