Organised retail sector will spearhead adoption

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: RFID technology is going to be the dark horse in corporations’ bid to reduce costs, optimise supply chain processes and improve productivity and profits. Independent market analyst Datamonitor has predicted that RFID technology, including hardware, software and services across all verticals, will be a $6.1 billion market by 2010, three times that of today. Globally, countries like the US, UK and Japan are leading the way in deploying RFID technology, though China is expected to close the gap by 2009, according to the report. The benefits that RFID technology offers are manifold and include - improved efficiency and visibility, lower costs, lower inventory levels yet constant product availability, better asset utilisation and increased sales through better out-of-stock goods management.

The main driver of the technology all over the world has been the retail sector. With Wal-Mart mandating the use of RFID amongst its top-100 suppliers, and others like Tesco, Metro, JC Penny, Gap and Marks & Spencers joining the RFID bandwagon, the technology is well on its way to establishing a stronghold within the retail sector. In India, with the impending FDI in retail, this has profound implications for the Indian suppliers, who will have to follow the global mandates. Some like Pantaloon and Madura Garments have already done pilots of RFID and have definite plans to roll out the same within their supply chains.

The biggest challenge for the Indian retail industry is its huge unorganised market, which accounts for a staggering 97% of the whole industry. An organised retail format is an important prerequisite for deploying RFID technology.

Within India, the automotive sector has piloted use of this technology. Ashok Leyland is preparing to deploy RFID within its assembling centers.

A further testimony to the fact that the technology is being taken seriously, is its deployment in strategic sectors like defense —the US Department of Defense (DoD) has mandated the use of RFID tags at the case and pallet level amongst all its suppliers so that it can have complete visibility of all its goods and assets. The Indian army could benefit hugely from adopting RFID technology.