ICT and e-Business in the Pulp, Paper and Paper ... - empirica

Pulp, paper and paper products
tracking along the supply chain towards their own customers (e.g. in the food industry,
which delivers to retailers).
Packaging industry: customer demand as a key driver
In the packaging industry (NACE 21.2), RFID adoption is mainly driven by customer
requirements, in particular from companies in the consumer goods industry and large
retail chains. They are increasingly considering the use of RFID to improve their supply
chain processes, which includes packaging producers. Thus, packaging producers
typically implement RFID to comply with customer demand rather than proactively as a
means to further improve their own business processes.
Customer pressure is usually exerted by retailers upon consumer goods producers, e.g.
in the food and beverages industry, 92 which pass on this pressure to their packaging
suppliers. The large retail chains have the bargaining power to force members of their
extended supply chain to adopt their standardised RFID related processes.
General ICT capability matters
Among manufacturers of P&P (NACE 21.1), several players have taken the initiative on
their own and opted to become an early RFID adopter. Examples can be found in case
studies presented in this report (International Paper, Stora Enso). Others, while also
being advanced users of ICT in their operations and B2B exchanges, feel quite
comfortable with a "stand-by" strategy. An example is Mayr-Melnhof Karton AG, an
international producer of cardboard and packaging solutions, who argue that they are well
prepared to adopt RFID "if the market should demand it". 93 For the time being, they think
that costs are still too high (in particular for RFID tags) and would negate yielding a
positive result over the current use of barcode technology, if all costs and benefits are
considered. This raises some important questions:
It is debatable whether the strategy of early adoption is to be recommended, and
whether companies that decide to delay RFID implementation until customers
demand it gain advantages. Companies have different opinions about the 'right
time', i.e. when the technology has reached the right status of maturity for investment.
A critical factor in that respect is whether adoption at any point of time is possible,
or whether this move needs to be prepared and suitably timed well in advance.
There is no clear answer to these questions. Analysts and industry experts take different
positions, having good arguments for either option. In their White Paper, BearingPoint, a
consultancy, addresses the broad issues manufacturers are facing with regard to RFID
and concludes that "a good-sized hill stands before those manufacturers who have been
told by their customers to implement radio frequency identification (RFID). Companies
large and small that sell goods (…) to the nation’s largest retailers will be learning
firsthand that lighting up crates and cases with RFID is more than an incremental
92
93
Cf. e-Business W@tch Sector Study on Food and Beverages (2006), available at
www.ebusiness-watch.org ('resources').
Interview with Erasmus Pachta, Manager Electronic Solutions & Services, on 27 March 2006
138