Supply
chain technology has, for some time, been based on the traditional bar-code
technology familiar to ordinary shoppers and consumers, but recently the
software capability has been expanded to also use radio frequency
identification (RFID) technology. While radio ID tag-enabled software is
still just a miniscule part of total supply chain management (SCM)
providers’ revenues, more and more user companies and software vendors are
adopting this technology (see SCE Leaders Partner To See Beyond Their Portfolios). This
technology, which has been on almost everyone’s lips lately, seems to be heading
for the mainstream and boardroom priorities, almost directly from scientific
labs—its making its way, of course, with a number of caveats due to the
technology’s current imperfection level.
RFID
technology consists of tags or transponders, which transmit electronic
product codes (EPCs) and communicate wirelessly to other devices over
radio frequency (RF) waves. Attached to physical objects, including the
actual product as well as the cartons, pallets and containers in which they are
shipped, the tags should uniquely identify the items, as readers communicate
with the tag via RF. In a distribution center (DC), once within range
of a reader, the data will presumably be captured, accepted, and then executed
against by a SCE solution.
Consequently, for retailers and other vertical industries, RFID tags
potentially present enormous opportunities to improve supply chain operations,
such as:
- Reduced stock outs due to supplier vendor managed
inventory (VMI) and/replenishment
- Automated proof of delivery
- Improved security of products
- Warehouse labor reduction
- Expedited cross docking
- Improved physical counts and reconciliation
- Improved work in process (WIP) inventory and aging/quality
control
- Improved returns processing and credit note handling
- Complying to legal regulations for tracking and tracing
- Increasing the speed within the supply chain
This is Part One of a two-part note.
Part Two will discuss early adopters, the challenges they face,
and make user recommendations.
