RFID in the retail Supply Chain
Nowadays there is a fresh wind blowing across the retail supply chain landscape, and its name is RFID, which is shorthand for Radio Frequency Identification. Handled properly, a RFID system solution can result in an evolutionary change incorporating legacy systems with the real-time supply chain management of tomorrow.
Early adaptor Wal-Mart is the prime force behind the change with its decision requiring 100 key suppliers to be ready to implement RFID by Jan 2005, and all suppliers by 2006. Companies such as Coca-Cola, Gillette, Johnson & Johnson, Kraft, Pfizer, Procter & Gamble, Unilever, and others are all climbing on board.
Just as the European marketplace led adoption of digital wireless cellphone technology, so too has been the case with early adoption of RFID in retail supply chain systems. United Kingdom retailer Marks & Spencer last year started adding RFID to the 3.5 million reusable plastic containers used to deliver produce, calling it the largest supply chain application of RFID technology in the world.
Smart IT managers are insisting on vendor solutions that are more open, flexible, and less risky, are easier to integrate with existing systems, and have faster ROI with a lower total cost of ownership. No longer will savvy clients accept proprietary closed systems from a single supplier that locks them into long-term and supposedly seamless solutions.
The challenge is to bridge the gap between what is working today and extending the role of Auto-ID technology into a fully integrated, open system that incorporates the most appropriate devices and IT architecture to suit customer applications.
The idea of automating the retail enterprise is not new. Bar codes have made a significant contribution to productivity since their general acceptant more than 15 years ago. They have grown steadily in use and usefulness. Barcodes are so ubiquitous that they are virtually transparent to users as they track parts and products through manufacturing processes, distribution channels, supply chains and retail operations.
Bar codes have been identified as one of the most significant automation technologies ever put to work. A study conducted by Hewlett-Packard over a decade ago on the effectiveness of automation technologies found that bar codes boasted the best return on investment of all technologies studied.
RFID tags are similar to bar codes as each employs an identifying code for tracking purposes, but bar codes are limited in that they must be in the line of sight and individually scanned with a reader.
RFID uses wireless radio transmissions to readers with a variety of ranges and material penetration characteristics. In general, the larger the antenna, and the higher the power, the longer the reading range. In all cases, the maximum power levels are capped by regulatory and safety limits.
- Low-frequency (125 kilohertz or 134 KHz) RFID will penetrate most packaging material, but have a short read range – usually from 1 to 30 inches depending on power levels and antenna sizes.
- High-frequency (13.56 megahertz) RFID is somewhat capable of penetrating packing materials and generally had an operating range of 4 to 40 inches.
- Ultra High-frequency (UHF) RFID is unable to penetrate many packing materials, and is greatly attenuated by water. In free air, UHF RFID tags operating at around 915 MHz can be read at ranges from 5 to 20 feet depending on reader and antenna, creating a large read envelope.
If barcode scanning is like spear fishing, then RFID is like fishing with a net. You scoop everything under your boat, whether you can see it or not. Then, you sift through the results to see if you want to keep what you’ve captured – Clarke McAllister, RFID Solutions Manager
According to Accenture, an RFID open systems solution can increase inventory turns by 10 to 15 percent. Greater inventory turns facilitate capital resource optimization, increased margin procurement and significant reductions in obsolete inventory levels.
Supply chain metrics postulate that every month inventory remains on the retail shelf 5% – 10% of its resale value and 7%-20% of its revenue contribution is lost. Retailers must manage on-hand inventory diligently to optimize profitability. Supply chain managers today must be better informed with accurate real-time data to stay competitive.
While managing inventories to lower levels, care must be taken to avoid out of stock (OOS) situations. Consumers cannot buy what isn’t there, resulting in brand switching and store hopping both of which reflect negatively on the retailer. RFID is an enabling technology that promises to help minimize OOS by affording full and accurate visibility of inventory levels in all parts of the retail supply chain.
RFID tags and readers are beginning to show up in more places than just the warehouse and shipping dock. Ski passes, toll cards, and employee access cards are becoming more commonplace. Advancement in both technology and standards, coupled with falling prices, are resulting in a rush to incorporate RFID into existing systems.
Info source: Evolution Or Revolution? Bridging The Gap Between Bar Code Legacy Systems And RFID In The Retail Supply Chain
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