Are you ready for RFID?
Francis J. Quinn, Editorial Director -- Logistics Management, 7/1/2003
It's coming, just as sure as next year's April 15 tax deadline. We're talking about automatic identification technology, better known as auto ID. The most promising form of auto ID is an RFID (radio frequency identification) tag that transmits product-information signals to computers. These tags enable real-time identification and tracking of shipments at the container, pallet, and ultimately even the individual product level. (For more on this technology, see the feature article on page 65.)
How can anyone make such a confident assertion about the future of RFID, given that it's a new and comparatively untested technology? Easy. When Wal-Mart last month announced that it would require its 100 top suppliers to put RFID tags on incoming pallets and cases by January 2005, RFID's future was assured.
The Wal-Mart decision is absolutely huge. No other company comes close to having Wal-Mart's market power. And no other retailer pushes the envelope on technology quite as aggressively or as effectively. In fact, Wal-Mart's action has likely advanced the adoption of RFID technology by a matter of years.
So what are the implications of this inevitable movement toward RFID and related auto ID technologies? For consumer products companies that supply retailers like Wal-Mart, the answer is obvious. They will have no choice but to embrace RFID and make the necessary investment in equipment and systems. In effect, that investment will simply be the ante to play the game.
But in the long term, the impact of RFID technology will reach well beyond the direct suppliers to the big retailers. Increasingly, upstream players in the supply chain will be pressured to embrace RFID technology because the potential benefits of adoption are so compelling. Specifically, knowing with certainty where and how much inventory is moving through the pipeline brings tremendous cost, operational, and service advantages. Further, as channel leaders like Wal-Mart continue to push the technology and as the price of RFID tags continues to drop (as is expected), the pace of adoption will accelerate and the scope of applications will expand.
How far will RFID technology extend in the supply chain? There's no reason to believe that it won't go all the way back to the raw materials stage and continue right through to the retail shelf. Don't be surprised if before too long we start seeing RFID tags on basic raw materials like lumber, hoppers of iron ore, and bushels of corn. And it's just as likely that an RFID tag will end up on the box of toothpaste or pair of socks you bring to the checkout counter. Thanks to this new technology, the much-hyped prize of real-time visibility throughout the supply chain may finally come within reach. Are you ready to reach for it?
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