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Stuart Scott, Director of Marketing and Business Development for Intermec Technologies, explains what early adopters stand to gain from this emerging technology.
Radio frequency identification (RFID) is one of the hottest technologies of the moment. RFID offers companies the ability to create smoother, more cost effective supply chains to maximise their business operations and add value to their bottom line. However, as the fog which generally accompanies the introduction of a major new technology like RFID clears, companies must navigate the difficult route towards adoption, avoiding being too cautious on the one hand, and too sceptical on the other.
you can tag a container of multiple products such as a carton or a pallet, so you can track these assets as they move through a supply chain and minimise the number of containers lost.
In order to fully understand the risks and benefits of investing in RFID technology, one must have a clear understanding of how RFID works. From a technological perspective RFID is about tags and readers. Electronic tags, which contain memory and an antenna and readers that can read the data stored on the tag. If you attach the tag to a product, and store on it an Electronic Product Code (EPC), which is a unique product identifier based on standards developed by the EPC global Network, then the product takes on a unique electronic identity. For example, a can of baked beans could have a tag on it that contained information as basic as who manufactured it and its own unique number, or as complex as what locations it has passed through in the supply chain and how it was disposed of. Similarly, you can tag a container of multiple products such as a carton or a pallet, so you can track these assets as they move through a supply chain and minimise the number of containers lost.
Without the use of RFID, some organisations would not have the capability to either see where the pallet was shipped to, or respond to this error in real-time.
This visibility of products and other assets through the supply chain depends on the readers being integrated into existing operational systems. For example, if a pallet of stock was shipped to the wrong location, alerts could be sent to a transport management system, and re-routing of the pallet could be undertaken. Without the use of RFID, some organisations would not have the capability to either see where the pallet was shipped to, or respond to this error in real-time. Consequently, this could have a negative impact on their customer service performance indicators such as on-time and in-full delivery.
With RFIDphysical and information flows converge to create intelligent physical assets
Traditionally, information about a products location in a supply chain was tracked by paper, EDI or more recently via the Internet. The products move physically, but as they are generally separated from the information about them, there is the potential for the two to be inconsistent. With RFID, though, physical and information flows converge to create intelligent physical assets, which constitute discrete information systems within the larger organisational information environment. So assets are no longer dumb, unable to understand who they are, where they are, or without the ability to communicate this information to a third party.
One of the most commonly attributed benefits of RFID is that of improving customer service. Customer service requires the individualities of customers to be taken into account in the experience they have when purchasing a product. With fast moving consumer goods that are innovative and fashionable, responding rapidly to changing patterns of demand is crucial. RFID tags on products, cartons and containers can help supply chain managers know exactly where inventory is and direct it to the changing points of consumption quickly. This can address one of the challenges that affect retailers and manufacturers alike: on-shelf availability.
technical problems should be largely surmountable over the next few years, with factors such as read-ranges and reliability of tags all benefiting from innovations amongst RFID system suppliers.
An additional benefit of RFID is that it can also reduce costs and wastage within a supply chain. Costs are lowered as the increased visibility of products through the supply chain helps eliminate human error as well helping preventing products being lost or stolen as readily. Further savings can result from the removal of manual processes due to automatic scanning of assets, rather than the manual scanning of bar codes.
Given the relative infancy of the RFID market, challenges in adopting the technology are not altogether uncommon. Some companies report problems in the areas of interference, reading range and the quality of RFID tags. However, although challenges do exist for companies implementing RFID, technical problems should be largely surmountable over the next few years, with factors such as read-ranges and reliability of tags all benefiting from innovations amongst RFID system suppliers.
So what can early adaptors expect from RFID? History sadly suggests that initial increases in efficiency and productivity driven by new technologies such as RFID do not typically result in permanent increases in industry profitability. Instead, they raise the bar of industry norms, which are in due course passed on to the end customer in lower prices and better service. In the meantime, though, early adopters can gain competitive advantage while the transition to the new technology is in progress, which can deliver market share improvements, profitability improvements or both.
Stuart Scott is director of Marketing & Business Development, Intermec Technologies. He manages marketing communications, product marketing, business development and training programmes within the Europe, Middle East and Africa territory. Another of his key responsibilities includes building Intermecs alliance programmes to develop the supply chain specialists expanding network of global business partners. He has also been instrumental in positioning Intermec as an emerging leader in radio frequency identification (RFID).