RFID: Critical In Supply Chain Management

Radio Frequency Identification, popularly known as RFID, made a slow start
since the '70s. But, now that corporates are aware of its benefits, mandates
for it standardized are being issued. This will result in reduction of prices
and thus, greater adoption of this technology. It can translate into reduced
inventories, improved service levels, lessened loss and waste and bettered
safety and security.

Business has always been like a race. Some take it as a sprint, where speed
is everything. Others term it as a marathon, where endurance and perseverance
count the most. I believe it is a blend of both.

An enterprise does need to sprint at the right speed and at the right time to
take a considerable lead over other players in the market. It has to show high
qualities of endurance and pertinacity to maintain the same. Without striking a
correct balance between the both, the enterprise can either burn itself out or
end up lagging behind.

Organizations around the globe understand this mantra of success and are fast
adopting proven, progressive technologies as they strive to attain nirvana -
the ability to do business real-time.

One
such progressive technology enabling corporates to evolve into real-time
enterprise is RFID or radio frequency identification. This technology is fast
revolutionizing the process of automatic identification of objects and helping
enterprises enjoy real-time supply chain visibility.

Understanding The Basics Of RFID

For the uninitiated, RFID is a broad term used for a host of technologies
that use radio waves to automatically identify people and objects that are
tagged with RFID transponders or microchips. It is a technology that is enabled
by a combination of such RFID tags and an open, global network for identifying
entities with those tags.

With microchips embedded in various types of media, companies can track any
kind of good that has an RFID tag attached to it, regardless of whether that
product is in the product life cycle or in the supply chain. Such a chip usually
contains a serial number identifying a tagged entity. It has an antenna that
reflects radio waves back to an RFID reader. The reader converts the reflected
radio waves to digitized information that is fed to computers for further
processing.

With such a detailed process taking place, this technology is fast evolving
as a critical component of an enterprise's supply chain strategy. It offers
many benefits, including the ability to automate inventory handling. It thus
reduces the labor required, while facilitating the flow and exchange of data as
it moves through the supply chain from point of production to point of
consumption. RFID provides real-time status and visibility, resulting in reduced
inventories, improved service levels, lessened loss and waste and bettered
safety and security.

Barcodes Vs RFID

RFID goes beyond barcode technology by bringing greater intelligence and
productivity to the supply chain. It is an 'always-on', pervasive technology
that allows supply chain partners to gain visibility regarding where their
products are in the supply chain. Unlike barcode readers, which can only read
one tag at a time, RFID can read multiple tags automatically at the same time,
which in turn improves productivity by eliminating manual scan processes.

Additionally, barcodes can only identify the product and its manufacturer. A
barcode on one milk carton is the same as on any other of the lot in a retail
outlet, not able to identify, which one might just expire first. On the
contrary, RFID offers the ability to track inventory at the item level,
providing intelligent, real-time inventory status. These tags and labels can be
applied to cases and pallets at the time of packing and shipping of outbound
shipments, enabling the consignee to achieve 'hands-free' receiving of
inbound materials, ingredients and finished goods.

In fact, RFID deployment can very well go beyond outbound shipping compliance
and extend more value to the enterprise. It satisfies regulatory requirements
enforced primarily by the US corporations and government for tracking sensitive
and regulated goods. That apart, RFID can alleviate observation of movement of
high-value and regulated products through production, as well.

Booming In Recent Times

With more and more practical benefits becoming apparent, this technology is
making an interesting transition from battlefields, where it used to be
deployed, to corporate boardrooms. The applied knowledge of radio frequency
identification per se dates back to 1970s; however, it took off commercially not
so long ago.

Now,
a question arises that if this technology has been around for so long and is so
great, then what held it back from taking off. Simply put, until now it has been
prohibitively expensive and too limited to be practically deployed for
commercial purposes. Though ratified standards for low-(around 125 KHz) and
high-frequency (13.56 MHz) RFID systems have been in place since long, most of
the companies are far more interested in using newer Ultra High Frequency
(UHF)(860-960 MHz) RFID systems in their supply chain, as it offers
comparatively much longer read range.

An RFID reader running on UHF can have a read range of anywhere near 20 feet
under good conditions. However, standards for UHF technology weren't evolved
and established until recently. Lack of proper standards for the technology was
hampering its widespread adoption. Another major impediment RFID technology
faced was the astronomical price-tag of the RFID chips and readers.

Need For Standards

Corporates realized that deploying them in large numbers could rudely turn this
cutting-edge technology to a bleeding-edge one. Nonetheless, off late, mammoth
channel masters such as Walmart and Target and federal government entities such
as US Department of Defense are relentlessly pushing for wide scale adoption of
RFID automatic identification. They are issuing mandates to standardize RFID
deployment as a new industry shipping standard.

An increase in demand for RFID deployment, triggered by these mandates and
evolved standards for UHF such as ISO 18000-6, will pave the way for major
upheaval in the present cost structures of RFID systems. We will soon witness
considerable decrease in prices of RFID tags, antennas and readers, resulting in
a wide scale mass adoption of the RFID technology. We will soon witness a supply
chain revolution taking the world by storm, empowering an enterprise to track
anything, anywhere, anytime.

The author is Director Marketing, SSA Global, India. He can be reached at ravi.kathuria@ssaglobal.com