Sidebar: Tesco Adopts Measured Approach to RFID

By Carol Sliwa

January 24, 2005 12:00 PM ET

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Computerworld - NEW YORK -- While Wal-Mart and Target Corp. are asking hundreds of suppliers to affix RFID tags to shipping pallets and cases, U.K.-based Tesco PLC is taking a more pragmatic approach to using the technology.
Tesco isn't interested in tagged pallets and cases at the moment, said Colin Cobain, the retailer's IT director. He noted that the technology isn't yet able to read all cases on a pallet. And Tesco doesn't have conveyor belts in its distribution centers, which would allow the tags to be read more easily, according to Cobain.
"I'm a great believer in 'Do what you can do, and don't worry about what you can't,' " he said during an interview at the National Retail Federation's annual convention here. "There's a lot of fuss being made about the cases that you can't read. So what? Don't roll those out then."
Another reason Tesco is postponing the use of RFID technology for pallets and cases is because "suppliers haven't really figured out their business cases within their operations yet, and we don't want to add costs to the supply chain, because at the end of the day, customer will pay it," Cobain said.
He instead looked for areas where he thought Tesco could reap immediate benefits from RFID tags, which he prefers to call "radio bar codes," and where the technology would perform well.
One Tesco pilot involves putting RFID tags on DVDs and electronic games in two stores. Cobain said benefits quickly became apparent, since fewer items were stolen and workers were more productive because they knew exactly where to find products. Plans call for Tesco to expand the rollout to 10 stores by midyear. But with that area of the business growing, the project won't produce a payback until the tags can be applied automatically, he added.


Colin Cobain, IT director at Tesco PLC

Tesco's largest RFID project, called Secure Supply Chain, involves tagging blue plastic containers stacked on wheeled dollies that the company uses to deliver "high-value" goods picked in its distribution centers to stores. The retailer has rolled out the technology to 14 stores and one distribution center, and by the end of this year expects to be live in more than 1,400 stores and over 30 distribution centers, according to Cobain.
"The accuracy of the stock records is much better," Cobain said, "and we're also getting an infrastructure which we can then use for multiple future uses. We've got this bigger picture in our heads, and this is an important part of that."
Tescothis month announced an agreement with ADT Security Services Inc. to buy more than 4,000 RFID readers and 16,000 antennas for dock doors and merchandise receipt points at stores and distribution centers. The retailer also expects to finalize a deal within weeks for the purchase of millions of tags, Cobain said.
For now, Tesco's major RFID projects don't rely on supplier participation, and Cobain said that at the moment, "it's not at the top of my priority list" to mandate it.

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