Cisco and T-Systems will jointly develop RFID (radio frequency identification) systems for the retail and logistics sectors, the companies said yesterday.

Initially, the two companies will focus on Germany, but plan to roll out jointly developed RFID systems in other European markets, said T-System spokesman Paul Baur. The partners haven't set a definite time frame for deployments.

In recent months, T-Systems, the international IT services arm of German telco Deutsche Telekom, has teamed with several industry heavyweights, including Intel, to help develop and deploy RFID systems.

Numerous retailers, including Germany's Metro and Wal-Mart in the US, view RFID as a way to manage the huge flow of merchandise in and out of stores more effectively, while at the same time reducing inventory losses and labour costs. The technology, for instance, allows warehouse personnel to instantly read an entire pallet of goods with an RFID chip-reading device.

Like retailers, logistics and manufacturing companies have also shown huge interest in RFID for improving their supply chain management systems.

RFID tags are computer chips equipped with miniature antennae. The technology enables non-contact transmission of product information such as price, manufacturer, expiration date and weight via a radio frequency. Many experts believe the tags will replace barcodes over the next decade.

T-Systems provides IT services to about 60 multinationals, including DaimlerChrysler and Volkswagen, and 160,000 smaller companies.