Tesco Plc has inked a deal with Tyco Fire & Security's ADT Security Services to buy 4,000 radio-frequency identification readers and 16,000 antennas for delivery by May. The equipment will be used in the retailer's initiative to outfit its stores and distribution centers throughout the United Kingdom.
The three-year contract extends a 15-year relationship between Tesco, the U.K.'s largest retailer, and the Tyco division that originated with its Sensormatic product line of security systems and electronic article-surveillance products. Support and service for Tesco's distribution centers and stores are still under negotiation. Financial terms weren't disclosed, but analysts estimate the average cost for an RFID reader today ranges between $2,000 and $4,000.
In this deal, Tesco will deploy several ADT antenna designs with ADT's Sensormatic SensorID Agile 2 reader, a multiprotocol and multifrequency RFID reader that the Tyco Retail Solutions Group co-designed with ThingMagic LLC, a technology design and development company that provided the intellectual property.
The project also includes Device Commander, an application that synchronizes the devices on the RFID network. It will sit on the physical layer between the readers and OatSystems Inc.'s middleware infrastructure. Device Commander enables remote firmware upgrades to all readers on the network, monitors RF noise, and delivers alerts to IT administrators when it detects readers that aren't performing properly.
Synchronization between devices is important when maintaining a well-performing RFID network, especially in Europe where only 10 channels are available for transmissions, versus the 50 channels in the United States, says George Reynolds, VP of RFID for Tyco Fire & Security. "The radio-frequency signal jumps back and forth until it finds a clear channel to transmit on," he says. "In Europe, there are only 10 channels available, so you can imagine the difficulty a large distribution center might have trying to synchronize how the devices communicate."
During the first phase of implementation, Tyco will supply readers at dock and merchandise-receiving doors for 1,300 Tesco stores and 35 distribution centers throughout the United Kingdom to track cases and pallets of products. The deployment aims to improve customer service, increase product availability, and cut operating costs.
It's not clear when suppliers will be asked to join in. But about five months ago in an interview with InformationWeek, John Clarke, Tesco's CTO, said several suppliers such as Procter & Gamble would join in by the end of 2004. No mention of supplier participation was made in the prepared statement released by ADT and Tesco Monday.
Some analysts say the decision to build up Tesco's internal infrastructure and broaden the deployment from a pilot project into a full-scale operation before requiring suppliers to step in is a positive move. "Tesco's decision to build-up its infrastructure before bringing suppliers onboard will most likely lead to a more robust business case," says Gartner analyst Jeff Woods, "because if they have to pay for their own tags they're probably more rigorous with their assessment."