Wal-Mart’s adoption of RFID (Radio-frequency identification) technology has given them a competitive advantage over other retailers by streamlining their logistics operations and therefore transferring the money saved on to their customers. By using their bargaining power to require its suppliers to start labeling their packages with RFID tags or face penalties Wal-Mart is making RFID the standard. Target has followed Wal-Mart’s strategy and in 2005 issued a mandate for all suppliers to begin putting RFID tags on all pallets and cases by spring of 2007.
Major retailers will not be able to compete in operations cost if they do not decide to begin implementing RFID technology. This gives those that do the competitive advantage of cost leadership and a head start when new technologies are introduced.
Wal-Mart has made RFID the standard and the technology has begun to appear in other products. MasterCard’s Pay Pass has been a big success by allowing customers to simply wave their card over a reader rather than hand the card to the store employee. Motorola has partnered with MasterCard in a joint venture to test RFID technology in its hand held devices to act as a payment method for low cost purchases. It has even been rumored that the next generation iPhone will offer a RFID reader allowing users to sync to iTunes simply by tapping their device to their computer.
As RFID technology becomes mainstream it opens a whole new market for companies to capitalize on its popularity. There will be a need for companies to manufacture the hardware needed to use RFID. Not only is there a need for the RFID tags themselves but also the various readers. From handheld devices to large readers at various places through a store will be needed. Point of Sale terminals (POS) will need to be installed for those companies that use RFID technology in its sales.
It will be interesting to see where RFID will be incorporated next.
