Vendors and manufacturers are calling for the IT channel to step up research into Radio Frequency Identification (RFID), following the announcement that a standard is on the brink of being finalised in Australia.
RFID allows passive electronic tags that hold information about a shipment or product to be fixed to merchandise. The technology has been tipped to revolutionise supply chains as the tags can hold a small amount of data - currently around 2KB - that can be updated via radio signals.
Currently, RFID readers are limited to low power in Australia due to the possibility of the tags interfering with mobile phones. But this could all change soon as industry bodies expect a licensing agreement on frequency spectrum to be reached by January 1, 2005.
A global standard for the tags is also being submitted to the International Organisation for Standardisation (ISO) in September.
According to EAN, the global standards association developing the Electronic Product Code (EPC) used in RFID, Australian distributors should start investigating before local standards are ratified.
"The use of RFID in the supply chain is inevitable," EAN's general manager of standards development, Fiona Wilson, said.
"At the moment Australian companies have got the luxury of time to monitor the situation and be more controlled in their implementation."
She said that the roll out of RFID-enabled supply chains in other countries had been dogged by a "slap and ship" attitude, where suppliers were forced to react quickly to large retailers' requests for tags to be used on shipments.
HP's channel in the US is already fully RFID compliant, and its local RFID specialist, Matt Gould, claims it will only be a matter of time before Australia catches up.
"Anyone with a warehouse should be looking into RFID," he said. "When dealing in low-margin products distributors have got to drive costs out of their supply chain.
"HP would not generally ask that our distributors RF-enable their warehouses.
"We expect it's more likely to be the other way around - the channel will probably soon start to require it of us."
Hardware manufacturer, Acer, is also looking into RFID, according to local marketing director, Raymond Vardanega.
"We are waiting for the price points of both the tags and the handsets to come down to a realistic level," Vardanega said. "The benefits are clear. It's dependant on costing - nothing more."
Reaction from distributors spoken to by ARN has varied. While some acknowledge the technology and have begun research and development, RFID is yet to appear at all on some to-do lists.
Managing director of Express Data, Ross Cochrane, said his company was already familiar with the technology.
"Our people have attended briefings on RFID - generally the reaction has been extremely positive," he said. "We'll be looking to invest in anything that is going to provide better efficiency and higher levels of control."
Cochrane said that although none of ED's vendor partners were using RFID tagging yet, a couple had expressed interest in it.
Tech Pacific has also started looking into the benefits of the technology.
"Large retailers will be the first to ask us to put tags on our palettes - it'll be driven by the Coles-Myers of the world," Tech Pacific operations analyst, Sanjay Acquilla, said.
"We think RFID will become a part of our business over the next two years."
Hitech Distribution's marketing manager, David Hein, said he felt that once legislation was finalised and costs reduced, he would be interested in taking research further - but he didn't expect vendors to suddenly demand RFID.
"I don't envisage our partners banging their fists on the table and asking us to restructure our warehouse," Hein said.
Peacock Bros Australia is a developer of RFID technology and a leading importer of RFID handsets.
Managing director, Neil Crump, warned the IT channel to start looking at the technology now or miss out.
"All suppliers will have to use RFID in their labels or the big buyers just won't buy from them," Crump said.
"We're two years away from vertical growth, but people are changing the way they're thinking. We're trying to educate suppliers that RFID is a streamlined and simple technology."