Dr. Dobb's | Best Buy's Spin On RFID

Best Buy's Spin On RFID

Best Buy is just months away from using tags on some shipments to improve its supply chain and customer service

October 17, 2005
URL:http://drdobbs.com/best-buys-spin-on-rfid/172301897

Best Buy Co.'s radio-frequency identification deployment, three years in the making, will go live in January. Nearly 80% of its hundreds of suppliers, which are responsible for generating 80% of the company's $27 billion in annual revenue, will begin shipping cases and pallets tagged with passive RFID chips to two undisclosed distribution centers and from there on to five of the 700 stores in the chain.

Best Buy has big plans for the emerging technology, including RFID tagging at the item level as early as February with the participation of suppliers such as iriver America Inc., which makes portable music devices. These ambitions led Best Buy to open an RFID lab in Minnesota in 2003; it has developed 10 to 12 supply-chain and product-location applications tied to RFID and its inventory system.


Best Buy's RFID plans include item-level tagging as soon as February. Photo by Sacha Lecca

The complexity of electronics, in part, is pushing Best Buy to item-level tagging. Home-theater systems with flat-panel plasma televisions require specific cables, speakers, and DVD players. Best Buy also wants to help customers more easily locate stock. Real-time tracking software under development would let consumers quickly find the location of a particular electronics item or accessory through an in-store kiosk. "We want customers to have access to a touch screen or kiosk in the aisle, or on a PDA device or shopping assistant on the cart, where they can quickly locate the item and understand how the components fit together," says Paul Freeman, EPC RFID program director at Best Buy.

Other apps would send a replenishment signal to a supplier after a product is scanned at the point of sale or track a product through its warranty, return, and repair cycle (see "Eye On You: Privacy Is Still An Issue," Oct. 10, 2005).

The brainstorming surrounding item-level tagging includes looking at using tags that operate at different frequencies than are in use today, such as 13.56 MHz, in hopes of finding one that works better with liquids. Best Buy also is exploring a cost-effective way to build the antenna piece of RFID tags into stores' metal shelves.

Better Relationships
For the January deployment, Best Buy expects a big improvement in supplier relationships. "Suppliers only know when a product is scanned ... into the point-of-sale software, and they don't know if it's a shipment from a week ago or a month ago," Freeman says. With RFID, they'll be able to download data that tells them when a shipment arrives at a distribution center, store receiving area, and store floor. Best Buy has installed OatSystems Inc.'s Oatxpress software to manage RFID reader internal data flow and Oataxiom software to filter data for suppliers that will be retrievable via a Web portal.

The company will sort out plans to expand its RFID deployment to other distribution centers and stores after it studies the read rates of its pilot test and considers how easy it will be to migrate to the next generation of RFID technology, known as Gen 2. Freeman declined to provide detail on the company's RFID spending but says he expects a return on its investment in readers, tags, and software in two to five years. Says Freeman, "We'll be able to buy more but carry less inventory, so the amount of inventory moving through our stores would increase."