Background Of Supply Chains And Rfid example essay topic

RFID, which is radio frequency identification, uses tiny tags that contain a processor and an antenna and can communicate with a detecting device. RFID is intended to have many applications with supply chain and inventory control to be the drivers of utilization. RFID has been around for a long time. During World War II, RFIDs were used to identify friendly aircraft. Today, they are used in wireless systems, for example, the E-Z passes you see on the turnpikes.

The major problem until recently has been cost for RFIDs. Tags have been at a cost of 50 cents, which makes it hard to utilize or really unusable for low priced items. A company based out of California called Alien Technology has invented tags for less than 10 cents a piece on large mass runs. The major benefit expected from RFID is its potential for revolutionizing the supply chain management, but RFID could have many applications, ranging from payment collections on highways, to finding lost kids in amusement parks, to preventing cell phones from being stolen. The RFID tag itself is about the size of a pinhead or grain of sand.

The tag includes an antenna and a chip that contains an electronic product code. Industry professionals expect the RFID tag to eventually replace the bar code as identification system of choice. The electronic product code stores much more information than a regular bar code that is capable of storing information like when and where the product was made, where the components come from, and when they might perish. Unlike bar codes, which needs a line-of-sight to be read, RFIDs do not need a line-of-sight. There are two types of RFID tags call active and passive. An active tag uses its own battery power to contact the reader.

It works greater distance than passive tags, but has a drawback because of the larger size. A passive tag does not require a battery, but it derives its power from the electromagnetic field created by the signal from the RFID reader. This generates enough power for the tag to respond to the reader with its information, while the range is smaller than active tags, having no battery make the tags useful life almost unlimited and the size much smaller than active tags. In any event, the key feature of the technology is the ability for an RFID-tagged object to be tracked instantly from anywhere in the world, provided that the reader is in range. The tags have been used in high cost applications such as the EZ Pass on highways and security-ID badges to enter building and rooms. As stated above this was a major obstacle, but the costs have been driven down recently and because of this implementation and standardization is upon us.

Several factors will determine the speed with which RFID will take off. The first factor is how many companies will mandate that business partners use RFIDs. This is a major obstacle because many companies because many companies are not on up to date and / or have non-compatible systems. Also high support is needed for the information systems.

So a company must invest into a capital, which many companies may not believe they can spend it on, not only on software and hardware but people to implement and support. Spending the money is inevitable, so maybe the best solution would be to package a service using. NET... NET is the Microsoft Web services strategy to connect information, people, systems, and devices through software. The Microsoft. NET is a key part of realizing Microsoft's goal to provide customers with great experiences-any time, any place, and on any device, including RFID readers.

Another factor is the success of attempted legislation to limit the amount of information on the tag or to force removal of tags when a customer pays for the items. One of the biggest fears is if the tag remains active after the purchase of a product, this could potentially enable marketers with the ability to track information about the product after it leaves the store. More legislation will be attempted to protect the privacy of consumers, but as of right now there is a major lack of industry standards. Due to the lack of industry standards regarding the use of personal information that could be encoded on the chips, many privacy advocates have called on companies to state their intended use of technology. In fact, the Privacy Rights Clearinghouse called the Federal Trade Commission to regulate the use of RFID. As of yet, no federal agency has come forth to regulate the usage of the technology which is spiking the organization o groups like Consumers Against Supermarket Privacy Invasion and Numbering that wants to stop the use of RFIDs as we speak.

This group has a dedicated website at web Although there are these factors mentioned above, using RFID will improve supply chains and that is key in the ongoing development of the tags. With that in mind let me explain a little about supply chain and its current state. Supply chains are flows of material, information, money, and services from raw materials suppliers, through factories and warehouses, to the end customers; includes the organizations and processes involved. The term supply chain comes from a picture of how the partnering organizations are linked together. Currently IT (Information Technology) provides two major types of software solutions for managing supply chains- planning, organizing, coordinating, and controlling supply chain activities. The first is ERP (enterprise resource planning) software, which helps managing both the internal and external relationships with the business partners.

The other is SCM (supply chain management) software, which helps in decision making related both to internal segments and to their relationships with external segments. Supply chain management can be defined as the management of all the activities along the supply chain, from suppliers, to internal logistics within a company, to distribution, to customers, which also includes ordering, monitoring, and billing. So how can RFIDs improve supply chains? Well, if everyone along the supply chain from the retailer to manufacturer to the supplier has the tags, automatic alerts can be sent within each company and between companies. The need for counting inventory would no longer be needed and also the other companies would have visibility to the current state of the other company's inventory. The benefits can tier down the supply change and additional benefits like rapid check outs can be used that will eliminate the need to scan each item.

Other benefits are real time information about merchandise, ability to control inventory, ability to prevent theft, and expedite processing of relevant information. So now that there is some background of supply chains and RFID, let us look at a case from Wal-mart that looks to be leading the adoption of RFID. In April of 2004, Wal-Mart launched its first live test of RFID-tracing technology. Wal-Mart used one distribution center, seven stores, and twenty-one products from participating vendors. In this case, RFID chips are attached to cases and pallets.

When passed near an RFID reader, the chip activates, and its unique product identifier code is transmitted back to an inventory control system. Cases and pallets containing the twenty-one products featuring RFID tags are delivered to the distribution center, where RFID readers installed at the dock doors notify both shippers and Wal-Mart what products are stored. RFID readers are also installed in other places, such as conveyor belts, so that each marked case can be tracked. The readers have an average range of 15 feet that were installed. Wal-Mart set a January 2005 target for its top 100 suppliers to be placing RFID tags on cases and pallets destined for Wal-Mart stores. On March 14, 2005 Wal-Mart announced that it was 100% RFID compliant because the system has proven to improve supply chain, reduce theft, increase sales and reduce inventory costs with over and under stocking materials, and gain visibility and accuracy throughout Wal-Mart's supply chain.

This is a major milestone, because it is estimated that nearly 70 billion is lost in the retail sector in the United States every year, due to lost in the supply chain or being stored in wrong stores. The next step Wal-mart wants to go with is individual tagging, but this plan brings up privacy issues and more important accuracy and reliability issues because this was tried but only 60% of the tags were read correctly. With that in mind, what does the future hold for RFID. Well as stated and supported earlier the future looks bright for RFID. Most of issues at hand seem to be outside the technical world with marketing problems, false promises, and a lack of standards.

From an information technology standpoint, the greatest technical obstacle is getting everyone on board. This is where Wal-mart missed a great opportunity with a stream of revenue income. The company should have set a standard by offering a complete package included the software and communication linking software mentioned above. One suggestion that could have been would be Wal-Mart could have joint ventured with another company that was better with the IT solutions. Wal-Mart manages about 460 terabytes of data about customers and products and has advanced SCM and ERP solutions in place they are accustom to dictating what suppliers do. In summary, Wal- Mart miss missed a great opportunity to be an innovator and set the standard for Supply Chain Management.

In summary, once these obstacles are remedied, RFID will become "the next big thing". RFID will be a leading solution to a major issue that has the United Sates losing an estimated 70 billion dollars in the retail sector in the United States every year. So to put in perspective, a few million in software and hardware and human resource capital is well worth the cost saving potential of this great system.

Bibliography

RFID Gazette Retrieved April 20, 2005 web RFID Retrieved April 20, 2005 web Journal Retrieved April 21, 2005 web Net Australia: Where Technology Means Business Retrieved April 21, 2005 web Past, Present, and Future Retrieved April 21, 2005 web 'RFID%20 tagging%20 future " Turban, Efrain, Lieder, Dorothy, Mclean, Ephraim, and Wether be, James (2005). Information Technology for Management: Transforming Organizations in the Digital Economy 5th Edition. New Jersey: John Wiley & Sons, Inc.