RFID pilot to target SMB suppliers

To push small and medium-sized businesses (SMBs) onto the RFID bandwagon, Singapore is conducting a pilot project involving local supermarket suppliers.

SINGAPORE--To push small and medium-sized businesses (SMBs) onto the RFID (radio frequency identification) bandwagon, Singapore is conducting a pilot project involving local supermarket suppliers.

Led by EPCglobal Singapore and Spring Singapore--a government body that establishes industry standards--the project will help the top 20 SMB suppliers of Singapore's largest supermarket chain NTUC Fairprice, set up inventory systems based on RFID technology. The pilot project is slated to begin in September this year, and will last for nine months.

Recognizing the budget constraints of SMBs, Spring Singapore will offset 50 per cent of the cost of setting up their RFID infrastructures. Funding approval for RFID tags will be assessed on a case-by-case basis, said Tan Jin Soon, executive director of EPCglobal Singapore. The funds will come from the S$45 million (US$27 million) Domestic Sector Productivity Fund, he added.

The cost of RFID equipment such as tag readers and gantries is estimated to be about S$80,000 (US$48,136), while back-end inventory systems alone may cost about S$90,000 (US$54,153), according to Tan.

"The pilot project will help to connect SMBs with the retail chain masters, as well as assess the productivity impact of such a connection," said Loh Khum Yean, chief executive of Spring Singapore during the EPCglobal/RFID Forum here today. "We strongly encourage suppliers to participate in this pilot together with their respective retailers,"

Tan said Spring Singapore will be engaging a handful of RFID solution providers, who will set up the RFID infrastructure for each supplier in the pilot project. Bringing a group of SMB suppliers together will also establish more bargaining power, making it possible to achieve higher cost reductions in acquiring the RFID equipment, he added.

More importantly, the pilot project will serve as a showcase of RFID deployment among SMBs, Tan said. "If I'm a cooking oil manufacturer and find that another cooking oil manufacturer is using RFID (to streamline logistics and cut costs), I'll also want to do it."

Loh noted that electronic product codes will also help address two major challenges: out-of-stock situations and shrinkages--both at the store and the warehouses.

"It will also help to ensure that customers can purchase what they need from their retail stores whenever they need to do so," he added. "Spring believes our retailers, wholesalers, suppliers, manufacturers and logistics providers can expect significantly improved productivity from successful implementations in Singapore."

NTUC Fairprice, which has more than 100 stores, expects the pilot project to reap big benefits. "At the warehouse, there are tremendous benefits because the goods can move much faster," said Dickson Yeo, NTUC's assistant general manager for warehousing and logistics. "Jobs at the warehouse will also be revolutionized."

For example, workers at NTUC's warehouses can quickly identify RFID-tagged cartons before sending them to a particular store. In the past they had to spend time searching for stocks at the warehouse, Yeo said.

And once the cartons reach the store, they pass through the store's gantries with RFID readers. This can reduce pilferage because the supermarket will be able to ensure the right number of items reach the store, he explained.

In addition, Yeo said, RFID technology also helps the supermarket chain determine the expiry dates of perishable goods quickly by retrieving this information stored in the tag.

However, Susan Chong, Spring Singapore's standardization division director, said the important aspect of the pilot project is not just about sticking RFID tags on goods. Rather, it is to introduce new work processes to SMBs so they can automate and streamline logistics.