Time for RFID: Applying RFID in the Supply Chain

RFID technology has the potential to change the way supply chains are managed, but in order to be effective businesses need to take a holistic look at the deployment.


The third issue — accuracy of detection — is a function of chip technology and implementation architectures. Active tags with on-board battery tend to have longer range and hence, can be detected more accurately from distance. Passive tags on the other hand, have shorter range. Passive tags are also hard to detect when next to metal and water, objects that absorb radio energy. How the system is deployed can also affect the accuracy of detection. In an environment with multiple readers, there is always the danger of one tag being read by multiple readers. This can be avoided in the software that resides in a reader or the Savant.

The Role of Business Process Re-engineering
Ultimately, the success of a technology is dependent on the amount of innovation the business community drives around it. If suppliers use RFID simply as a replacement for bar codes, the use of the technology and its benefits will be limited. Also, if the suppliers only tag the cases going to Wal-Mart and the DoD as they leave their warehouse (i.e., "slap-n-ship"), they may forego the benefits of RFID with their other customers, such as being able to alert the consumer to potentially affected meat packages or signal manufacturers of potential stock-outs of popular items. The efficient deployment of RFID technology requires that companies — suppliers, manufacturers and distributors — look at it as an enabler of doing business differently, and see how they can solve key customer issues or gain a competitive differentiator using this technology.

The first step in this process has to be a holistic assessment of current business processes and issues, understanding the RFID marketplace, and training key employees. The second step is to identify focused pilots that can provide a tangible return on investment (ROI), which, in turn, can serve as the role model for determining which key business processes can benefit from RFID and how. A key factor here is the computing infrastructure needed for such a deployment. With so many RFID-enabled objects transmitting their whereabouts on a continuous basis, a great burden likely will fall on a company's back-end computing infrastructure in terms of collecting and filtering the information and routing it to the proper decision support system. As a result, the robustness and reliability of the system are key requirements for a successful RFID project.

Privacy Concerns

With new technology and capability also come new responsibilities. The prospect of a razor manufacturer being able to track every individual cartridge pack has many consumer advocates concerned about consumer privacy and the potential misuse of customer information. In reality, the short range of such small tags, the type of information being contained in the tags (only product-specific information, no individual consumer information) and the potential benefits of the technology make such concerns non-existent.

However, businesses should take this matter seriously and view it as a critical factor in adopting the technology. Businesses that explicitly indicate when they are selling products containing RFID tags, as well as the intended use of the technology, are more likely to find a receptive audience. It never hurts to educate consumers, especially when such a hefty investment is at stake.

To summarize, RFID technology has tremendous potential to change the way business is being done and the way supply chains are managed. However, in order to do this effectively, businesses need to look at the RFID deployment holistically, being aware of the issues surrounding cost, standards and privacy. For a company embarking on this journey, a basic training of the RFID landscape and an assessment of its internal capabilities is the best way to get started. One thing is certain, though — the journey may be long, but the starting point has definitely arrived.

About the Authors: Manish Bhuptani is a director and Shahram Moradpour is a senior director of Market Development at Sun Microsystems. They focus on market and partnership strategies for Sun in various emerging and established markets. Frequent speakers on emerging technologies, they also evaluate the business impact of technology solutions.

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