Deloitte...arn't we on their fast 50 list-- Nearly Half of Canadian Retail and Consumer Corporations Anticipate Using RFID T --
Deloitte Explores Canadian Corporations' Stance on Radio Frequency Identification (RFID) Technology and Its Role in the Future of Canada's Retail & Consumer Sectors
RFID (Radio Frequency Identification) technology, and its potential impact on future business operations, seems to be getting the attention of Canada's big players in the retail and manufacturing sectors, according to Deloitte's new qualitative study conducted among senior ranking executives within the top 30 retail and consumer product companies in Canada. The report, entitled the '2004 Canadian Radio Frequency Identification Study (RFID)', commissioned by Deloitte's Consumer Business group, explores the Canadian
market's receptiveness, readiness and concerns relating to RFID technology.
"There is no doubt that RFID technology's most promising application area is not in the tracking of lost pets and kids, but in the supply chain and the retail environment," says Christian Stephan, Partner, Consumer Business Group, Deloitte. "RFID has the potential to take supply chain management a quantum leap forward from bar codes, which have been around for about 20 years, essentially by practically eliminating human intervention. However, we know
there are a number of major considerations, issues and challenges that Canadian manufacturers and retailers face when assessing or planning for RFID implementation. Every corporation needs to totally understand the uses and advantages that RFID can bring, and ultimately - what the cost-benefit return is
for their particular organization - before initiating RFID implementation.
Deloitte commissioned the 2004 RFID Study to gain a deeper insight and
understanding on where the Canadian retail and manufacturing market currently stands concerning RFID technology."
The 2004 RFID Study main findings:
Canadian corporations' awareness, understanding and action taken with RFID technology
According to Deloitte's study, the vast majority (73%) of Canadian corporations who participated in the study are aware of RFID technology, however, only 23% of the senior executives interviewed felt they were 'very' familiar with the technology, with nearly half of those interviewed expressing that they are only 'somewhat familiar' (43%). Only 14% of those who participated in the study stated that RFID technology had already been implemented to some
degree within their corporation.
Overall, nearly all of the senior executives from the Canadian retail and consumer corporations who participated in the study believe RFID will have some impact on their company (93%). Interestingly, all of the senior executives from the 'retail' companies stated they believe the technology will have an
impact on their company.
The vast majority (71%) of the Canadian corporations that participated in the study revealed they have already taken active steps with consideration to implementing RFID technology (including 43% that stated their company has researched the technology).
Probability, timing, triggers and benefits for RFID implementation. Nearly half of the corporations that participated in the study indicated a strong likelihood of implementing an RFID system (47%). Overall, the retail corporations expressed a stronger probability of implementing RFID compared to the consumer corporations that were interviewed for the study. Of the companies
that indicated they were likely to implement RFID, 50% believe they will implement an RFID system within two years. An additional 29% believe they will implement RFID within three to four years.
According to Deloitte's study, Canadian retail and consumer corporations consider the main determinants and considerations that will trigger RFID implementation within their corporations to be the following: in response to a client request (20%), the cost of the technology (13%), the value of the technology for tracking purposes (10%), and the ability of RFID technology to reduce operational costs (10%).
The Canadian corporations that were interviewed mentioned a variety of benefits they felt an RFID system could offer. The most commonly perceived benefit was that RFID would better control inventory (23%), while the second most common perceived benefit was that RFID can track goods in shipment/transit (20%). Other benefits cited included that an RFID system would be less expensive
than the current system (13%), the level of accuracy (10%), and better
operational performance than the existing system.
Of the senior executives who indicated they are likely to implement an RFID system, the most common planned function was deemed to be for loading and unloading within a distribution centre. Other functions cited were for shipping purposes, to tag and track pallets, to improve overall operational efficiency and for general tracking benefits.
The perceived challenges and obstacles to implementing RFID
To assess the possible (or perceived) roadblocks of implementing an RFID system, the corporations were asked what they thought would be (are) the main obstacles. Half (50%) of the senior executives who participated in the study specified that the cost or expense related to RFID is the biggest obstacle to
implementation. Other obstacles were cited as being the time and effort to set up the RFID system (17%), the technical support and assistance required to implement RFID (13%), 'big brother' privacy concerns (10%), and the effort required to transition from the existing system to an RFID system (10%).
Of the corporations that took part in the study, only 14% stated that they are already using RFID technology to some extent. From those corporations that are not currently using RFID, the primary reason indicated as to why they are not currently implementing an RFID system is that the corporations feel
there is currently no need or pressure to do so (23%). There were some Canadian retail and consumer corporations that indicated they are not implementing such a system due to lack of customer requests (17%). Moreover, there still appears to be some lack of knowledge and understanding regarding RFID (10%) and its effectiveness (10%), which may mean companies do not feel totally able to make an informed decision at this time.
In addition to discussing how much impact an RFID system would have on their company, the Canadian corporations that participated in the study were asked if an RFID system fit into their company's current business plan. Nearly half (43%) of the executives interviewed stated they felt that RFID would fit into their company's business plan.
Conclusion
RFID technology is very much in the initial stages of its evolution.
While Canadian retail and manufacturing corporations are certainly realizing the potential impact this technology could have in revolutionizing supply chain management, the study indicates that corporations are being cautious in sizing up the cost-benefit returns, and the appropriate timing before considering
implementing RFID technology as part of their business plans. It would appear that Canadian retailers and manufacturers are taking a vigilant 'wait and see' approach towards the evolution of RFID, and are awaiting an actual requirement to implement the technology as directed by clients and/or a reduction in the
costs of implementation. However, the study's findings infer that Canadian retail and manufacturing corporations are predicting a significant progression of RFID technology within the retail and manufacturing world within the next couple of years.
"For many companies confronting RFID, the task may seem both bewildering and daunting. Standards are still being created, areas of deployment are still being researched and costs are constantly under review," concluded Christian Stephan, Partner, Consumer Business Group, Deloitte Canada, "As a result, companies contemplating a move into RFID deployment need to take a long-term
strategic view, and lay a foundation that can be built upon effectively as the technology evolves - both for its own internal data systems and those of its key business partners. RFID has the potential to change the way businesses interact, rather than creating an overnight revolution, it will do so relatively slowly,
as different functionalities are adopted. Therefore, companies have time and opportunity to study RFID carefully, before making choices."
About the '2004 Canadian RFID Study'
The '2004 RFID Study' was commissioned by Deloitte's Consumer Business Group to explore and assess the Canadian market's receptiveness, readiness and concerns relating to RFID technology. Senior executives (including the Chief Executive Officers and Chief Information Officers) from 30 of the top retail and
consumer corporations in Canada participated in the qualitative study. The interviews and data assembly were managed by an independent research organization on behalf of Deloitte. For confidentiality reasons, the names of
the corporations that participated in the study cannot be disclosed.