26/05/05 Beyond the Supply Chain: The Impact of RFID on Business Operations and IT Infrastructure (David H. Williams)

Another technology is coming straight at you, and while it may not considered a priority or even applicable to your company, it has the potential to profoundly impact your business and IT infrastructure.
That technology is radio frequency identification, usually known as RFID. What is RFID? Essentially, it's composed of two main elements: an RFID "tag," which is a microchip for information storage and an antenna, and an RFID reader or "interrogator" that reads the information on the tag from distances ranging from inches to dozens of feet.

The information on the tag can contain everything from a read-only unique identifier, such as an Electronic Product Code, to a continually updated history of the product, asset, document, animal or person to which the tag is attached. This information in turn is tied to back-office databases that, with the proper real-time and off-line analysis tools, can provide major benefits, not just in the supply chain but also in safety and security, asset management and process improvement.

While RFID technology has been around a long time, growth and applications were limited by high tag costs, which depending on the technology could approach several dollars per tag or much more for specialized applications.

The environment changed dramatically in late 2003 and early 2004 as various entities, led by Wal-Mart Stores Inc. and the U.S. Department of Defense, established RFID mandates that their major suppliers must meet to do business. These mandates are playing a major role in accelerating the cost declines and improving the performance of the technology. This is enabling the application of RFID well beyond the traditional supply chain of manufacturing, warehousing and distribution.

The Wal-Mart and DOD mandates -- technology and quality standards and implementation deadlines -- have pushed RFID from the proverbial minor leagues to the World Series. For these entities, RFID supplements product bar codes and may eventually replace many of them. It enables pallet, container and even item-level tracking throughout the store or facility, reducing out-of-stock situations, loss and theft. And it generally improves inventory management and real-time integration with suppliers.

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