The Business System Spectator

The U.S. Department of Defense (DoD) has ordered its entire source base to start use of radio regularity identification tags (RFID), january 2005 effective. DoD’s mandate follows an identical mandate by Wal-Mart on its largest 100 suppliers. Since these two mandates are going to drive quick adoption of RFID technology over another couple of years, let’s have a glance at RFID and what it means for manufacturers and vendors.

RFID technology allows products to be recognized far away, by means of a tag that, when energized by radio waves, responds with identification information. You’ve probably already seen RFID in another application. It is the same basic technology used in proximity gain access to control cards, which unlock a hinged door when waved in the overall section of a cards audience. RFID tags in supply chain applications are similar except that the RF signal is stronger, allowing goods to be discovered at a larger distance.

The RFID standard being followed by DoD is equivalent to that being adopted by Walmart, so there will be only 1 standard for suppliers to adhere to. The brand new standard is called the Electronic Product Code (EPC), which is under development by the Uniform Code Council (UCC) and EPCglobal, a new business under UCC.

Benefits of RFID. The RFID tag is affixed to the product Once, case, or pallet, any participant in the source chain may use RFID visitors to automatically identify and track them, untouched by individual hands. The ultimate benefits are huge for productivity savings, increased data accuracy, timeliness, and presence. At the risk of over-simplification, shipments into a warehouse could essentially announce their appearance and result in complementing against advance dispatch notices or purchase orders.

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Likewise, shipments out of the warehouse could identify themselves and induce pick verification and advanced dispatch notice to the consignee. Manual effort in taking physical inventory would be greatly reduced. Think of it as bar-code data collection on steroids. Costs of RFID. RFID isn’t cheap. The Walmart and DoD mandates will demand large opportunities in RFID infrastructure by suppliers.

Since the infrastructure must be in place before applications can be developed to consider advantage of it, suppliers themselves will see little immediate come back on this investment, other than being able to continue to do business with DoD and Walmart. 100,000, not counting the price of integrating RFID readers into existing warehouse management systems to check bar-code readers or manual transaction entry.