RadioFrequency Identification (RFID) is the next generation identificationtechnique. RFID has various uses and one of them is Inventory management.Before RFID mega stores all around the world used Bar codes or QR codes (2 Dimensionalvariation of barcode).
Bar codes were a great success in the industry but ithas some draw backs. Bar code does not give us beyond visual range (BVR)identification. The Bar-code needs to be in the visual range of the scanner inorder to get scanned. With ever growing complex supply chains it had become theneed of the hour to implement a new identification technology which makes useof BVR techniques. RFID was the answer to this problem. RFID allows the productto be visible at all times.
Visibility means knowing when the shipment or delivery of goods will bepicked up, where the shipment is at every step of its journey, and knowing thefull details of the status, condition, and time of its delivery and acceptance.The meaning of visibility in the transportation context is probably the easiestto understand. Visibilityof information and or inventory, in actionable detail, in real time or near realtime, on events, orders, inventory, and shipments, up and down multiple levelsof a supply chain. In a broader sense, visibility is the increase of availabledata that can be analysed to make recommendations and determine strategies toimprove and strengthen the supply chain.Wal-Martwhich is the world leader in supermarkets was the first one to implement thistechnology. With more than 11000 stores operating worldwide and thousands of productWalmart needed a system to track its products hassle free.
From ware-house toports to trucks and to stores, Walmart needed to track all of its products atall times. By keeping track of all the products Walmart has improved its supplychain significantly. Wal-Mart hadinitiated its plan to employ RFID technology in its supply chain in June 2003.
Subsequently Wal-Mart reinforced its plans and actively asserted on definingthe RFID standards it will be implementing. The specification of the followingRFID components was laid out in November 2003 with EPC specification, type ofChip that would be installed, and the Distribution centres that will acceptRFID tagged products. The company initially introduced RFID to track pallets ofmerchandise travelling along its supply chain, including at warehouses.Wal-Martuses radio frequency tags for keeping its shelves stocked. Its supply chainswork smoothly when sales are ready, but often break down when confronted by asudden surge in demand, especially when Wal-Mart campaigns a special promotionthat causes its shoppers snap up all the promotional items. The RFID tags canchange that by providing real-time information about what is happening on storeshelves. Wal-Mart succeeded in adopting RFID to boost its supply chain hascaused reducing the bullwhip effect and improving opportunities in the supplychain.
RFID technologies are perfect and errorless. If Implemented RFID technologies can eliminate all inconsistencies in supplychains.RFIDtechnologies can provide several advantages in supply chain management throughbetter traceability and improved visibility of products and processes all alongthe chains. Increase of efficiency and speed of processes, improvement oninformation accuracy, reduction of inventory losses are some of theseadvantages.
There have been important implementations conducted by pioneercompanies such as Wal-Mart. But the RFID technology still remains a luxury asit is very costly and only multibillion dollar companies such as Walmart. Wal-Mart isable to offer consumers an every-day-low-price largely in part because it isable to control its costs.
The cost of its products, however, is not only afunction of its efficiency or lack of it but also the efficiency/inefficiencyof its suppliers. Because of the volume of products sold by Wal-Mart, it has agreat influence over its suppliers and often pressures its suppliers to findways to lower costs. Though it has a large influence over these suppliers, itis impossible for Wal-Mart to operate without their assistance, and thus it isimportant for Wal-Mart to maintain mutually beneficial relationships with itssuppliers.
Sharing benefits and costs in, instead of mandating the use of,technology implementations is an effective way for Wal-Mart to cultivate amutually beneficial relationship with its suppliers. The novelty and frailty ofcertain technologies like RFID, however, sometimes preclude a timely andeffective implementation of them. A technology’s benefits are felt the more itsuse is standardized throughout the marketplace.
Once unit cost has decreasedand privacy issues have been resolved, many more companies will be able toimplement RFID as an effective means to improve supply chain managementefficiency.The componentsused in this technology are getting cheaper and smaller day by day. This showsthat this technology will revolutionize supply chains all around the worldresulting in more efficacies. In future many other companies all around theworld will be able to incorporate this technology. This would result in lesswaste of resources and would contribute to a green future. RFID is the futureof supply chain.