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RFID-A critical component in supply chain strategy

Mass adoption will help bring down the costs of implementing RFID systems worldwide, says Ravi Kathuria

Mass adoption will help bring down the costs of implementing RFID systems worldwide, says Ravi Kathuria

Business has always been like a race. Some take it as a sprint, where speed is everything. Others look at 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 time to take a considerable lead over other players in the market, and has to show qualities of endurance and pertinacity to maintain the same. Without striking a correct balance between the two, the enterprise can either burn itself out or end up lagging behind. Organisations 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 in real-time. One such progressive technology, enabling corporates to evolve into real-time enterprise is RFID or radio frequency identification. This technology is fast revolutionising the process of automatic identification of objects and helping enterprises to enjoy real-time supply chain visibility.

What powers 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, and has an antenna that reflects radio waves back to an RFID reader. The reader converts the reflected radio waves to digitised information that is fed to computers for further processing. 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, thus reducing labour 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 better safety and security.

RFID benefits

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. In addition, 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 expire first. On the other hand, 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 receive inbound materials, ingredients and finished goods 'hands-free'. In fact, RFID deployment can well go beyond outbound shipping compliance and extend more value to the enterprise. Apart from satisfying the regulatory requirements enforced primarily by the US corporations and its government, for tracking sensitive and regulated goods, RFID can enable the observation of movement of high-value and regulated products through production, as well.

Applying RFID

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 (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 about 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 hurting its widespread adoption. Another major impediment RFID technology faced was the astronomical price-tag of the RFID chips and readers.

Implementation dynamics

Corporates realised that deploying them in large numbers could rudely turn this cutting-edge technology to a bleeding-edge one. Nonetheless, of late, mammoth channel masters such as Walmart and Target and federal government entities such as the US Department of Defense are relentlessly pushing for wide scale adoption of RFID automatic identification, and issuing mandates to standardise 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. A supply chain revolution will take 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