Increased visibility in the supply chain is one of the many benefits that the much-hyped radio frequency identification (RFID) technology can offer to companies in the manufacturing and logistics space. By attaching a small RFID tag to the a container or product, items can be tracked through every stage of the supply chain, with a unique serial number within the tag allowing more intelligent interactions.
Frost and Sullivan has predicted a 33 per cent growth in RFID spending yearly, with a total of $3.6bn expected in 2006. RFID has a variety of applications and can be used across numerous sectors. The technology is even being used for judges in Mexico, in Norwegian theme parks and prisons in the United States. RFID is certainly a boom technology, but it can also offer some interesting benefits to areas such as the manufacture and distribution of pharmaceuticals.
The pharmaceutical industry is leading the way in the implementation of RFID. Lengthy and complex supply chains and the proliferation of counterfeit drugs are just two of the challenges facing the industry that RFID tagging will help to address.
The pharmaceutical supply chain can often be a lengthy and complicated process, with opportunity for error at every stage. RFIDs wireless capabilities allow the supply chain to become much more visible, cutting down any erroneous ordering or hold-ups in the process. The automated data capture offered by RFID means that when a shipment leaves the warehouse, its despatch can be electronically tracked with minimal effort. The information contained in the RFID tag is sent to a central database, from where the entire supply chain can be monitored. This can then be used by not only manufacturers, but also wholesalers and retailers to highlight any difficulties or stock shortages. If a distribution centre is running short on a particular product, this will be automatically detected and new stock will then be requested from the manufacturer.
RFID also offers an end to manual barcode scanning, which is needed to log the receipt or dispatch of every product. With a large number of products or shipments, manual scanning can be a laborious and expensive process, but if RFID tags are utilised, hundreds of items can be scanned each second. This kind of process automation is one of the key benefits of RFID, by which greater efficiencies can be introduced into the supply chain.
Wiping out fraud is another issue. Pharmaceuticals are expensive products, and can prove dangerous if administered incorrectly. For manufacturers, being able to prove the pedigree of their product is important. There have been many examples of counterfeit drugs entering the supply chain, and at face value, it is very hard to tell real and fake products apart. As each RFID tag contains a unique electronic product code (EPC), its history can be tracked from the time it left the factory to arrival at its destination. If the RFID code on a product does not match the manufacturers product database, or is a duplicate, it can be identified as a fake. Thus RFID can guarantee patient safety while ensuring that the correct drugs are administered to the right patients at the right times.
RFID also offers retailers some considerable benefits, both in-store and behind the scenes. For example, if a shelf in a chemists is equipped with an RFID reader, when stocks of a particular drug are low, the shelf will automatically recognise this and send a message to the warehouse IT system. This will then alert the supplier of the product that new stock is needed and a new batch will have automatically arrived in the warehouse by the time it is needed. Such a system will reduce the time taken for reordering stock, lower the amount of buffer stocks required and also give manufacturers a valuable insight into the retail environment.
Although take up of RFID is still at an early stage of adoption cross-sector, BTs customers have started to wake up to the benefits of the technology. If supported by a strong business case, and correctly implemented throughout an organisation or complete supply chain, RFID will not only add value internally to supply chains, but will also allow for improved customer service and in turn deliver higher profits and efficiencies. The next few years will be crucial, with customer demands and increased competition driving take-up. It will be up to the individual business to ensure that they are deriving maximum benefits from RFID.
Ross Hall is Chief Executive Officer of BT Auto-ID Services and is responsible for the delivery of RFID solutions to BT's major customers in the private and public sectors throughout the world. Ross joined BT in 2003 to lead its entry into the Auto-ID market. He has a financial background and after an early career in corporate finance got the opportunity to set up a brand new division within the corporate structure of Smith Kline Beecham. Since then he has been responsible for the establishment of more than 20 start-ups within the corporate arena and stand alone projects backed by venture capital. His experience covers a wide range of industries and market sectors including retail, healthcare, technology, education, media and public sector.