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October 4, 2001

In this Issue:

Beyond Barcodes

Radio frequency ID technology creates new supply chain BI

Checklist

Trends to keep your eyes on

In an August Research Alert entitled "Understanding Which Consulting Firms Will Make It Through the Downturn," AMR Research outlined positive factors to look for when evaluating the life expectancies of consultants and integrators competing for IT projects:

Profits
Healthy client list, including repeat business
Project focus on one or more key industries, including domain expertise
Projects balanced between focused efforts and breadth of services offered
Portfolio of project, maintenance, and outsourcing work
Stable value proposition that adapts to market changes, but avoids reinvention
One or more solid relationships with healthy technology vendors
Bid pricing that is not desperately low.

New streams of BI data and reduced distribution costs are available to companies within the supply chain who adopt radio frequency ID (RFID) technology. In conjunction with International Paper and Revlon, SAMSys Technologies Inc., a manufacturer of multifrequency and multiprotocol RFID readers, has created prototypes of "smart shelves" for retailers. Smart shelves provide BI where none existed before.

Smart shelves consist of RFID readers, a touch-screen terminal, and RFID tags on each item. Each individual product has a unique Stock Keeping Unit (SKU) identification number to help retailers analyze customer touchpoints. Retailers can determine which products on a shelf are examined by customers and in what order. This valuable marketing data is sent to a central database for back-office analysis. In-store customers use the touch screen and RF reader to obtain additional product information. Then, retailers can use this customer interaction to suggest higher-end products and accessories to help increase product margins.

Retailers can amend product identification numbers to reflect their display location within plan-o-grams to obtain additional data about the best-selling locations within their stores.

RFID technology reduces distribution costs because it reads multiple SKUs simultaneously at distribution points, negating the need for worker intervention to check products in and out of the warehouse. RFID technology, with accuracy close to 99.99 percent, also reduces costs associated with correcting data errors and omissions caused by misreading barcodes through either human error or damaged bar code labels.

Venture Development Corp. (VDC), reports that the RFID industry will grow at about 24 percent annually through 2005, rising from 2001's market value of $1.2 billion. VDC also sees RFID tag prices falling about 20 percent in 2002.

— David Butler

David Butler (djbutler@ix.netcom.com) covers technology issues from the Silicon Valley region.

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