Gillette's Fusion Launch Makes a Good Business Case for RFID - ' A Difference of Opinion '

Though Gillette purposely limited its use of RFID during the launch, the technology showed its youth on occasion. "There's a great deal of fine-tuning going on at each location, because of radio interference, process-flow problems, RFID tag readers that get turned off or run over by forklifts," says Cantwell. But even if the technology were to work flawlessly, the RFID data from the Fusion launch highlighted a significant rift between manufacturers and retailers, one that RFID is meant to address.

"Sometimes compliance doesn't mean the same thing to the manufacturer as it does to the retailer," says Jeff Woods, a research vice president at Gartner Inc. Woods points to a trend at some retailers, aimed at giving the store managers more autonomy and allowing them to make decisions about which products will sell to their particular set of customers. "There are complaints that a lot of money is being spent at the corporate level, between manufacturers and retailers, only to have those decisions undermined at the store. The reality is that you're not going to fire a store manager because he didn't put out the display of Gillette razors." Woods says the use of RFID can provide valuable data that manufacturers and merchandisers can use to make their case to store managers. But he says there is a long road ahead. "Store execution is out of control," says Woods. "Finding compliance problems is wholly different than addressing them. This is a business challenge."

Wal-Mart admits as much. "Part of our culture is to allow our associates to be merchants, to know their local markets and serve their communities," says Langford. "It's the local team that ensures we're featuring the right products." Langford says there are corporate initiatives, such as the Fusion launch, that are pushed across the entire Wal-Mart chain of stores. "But we always allow space for local flair."

There is also the issue of when and how RFID is rolled out to the broader supply chain. Manufacturers are naturally inclined to roll out RFID one product line at a time. Retail stores, on the other hand, want to install the physical infrastructure that reads the tags site by site. "This creates a conundrum," says Cantwell. "There's no way a manufacturer can tag everything at once, and there's no way a retailer can install everything and start reading everything at once."

Cantwell spends a considerable amount of his time evangelizing for better partnerships between manufacturers and retailers. He repeatedly preaches patience and collaboration. "We are very much in the early days of this technology," he says. "We have to learn together. The partnership is critical."

To that end, P&G has developed a complex timetable for tagging its thousands of products. The intent is to inform retailers about which P&G products are on the RFID fast track and why, while others lag behind. It's called the EPC Advantaged Strategy, and it effectively places each of P&G's products into three buckets: EPC Advantaged, EPC Testable and EPC Challenged. Fusion landed in the advantaged category thanks to its high value and the ease with which it can be tagged. Cantwell says Swiffer sweepers are in the testable category, for which the company is still determining the business case. And challenged products include low-value items, or items with packaging that makes RFID impossible, such as Cascade dishwasher detergent, which uses a foil liner.

The eventual goal at both P&G and Wal-Mart is to tag all of their products. But that goal will have to wait until the cost of RFID tags themselves, and the infrastructure needed to read them, drops significantly. "It's all about the price of tags," says Cantwell. "It's almost exclusively cost-driven. We're going to find ways to do it cheaper."

In the meantime, tracking product-display compliance is a practical, cost-effective way for suppliers to get into the RFID tagging game. It even has the potential for a real return. Waiting until RFID becomes ubiquitous is not a good option, says Cantwell. "I see a lot of CIOs looking at RFID and saying, 'There are just too many unknowns. I'm just going to wait until it's proven.' That would be a mistake. You should be developing competency and understanding, and working on your business cases, or you're going to find that you're significantly behind the game when you decide to move."

And the hype marches on.

Sidebar: Thinking Out: Loud Filippo Passerini