Transforming Supply Chain Management with RFID

RFID is a generic technology concept that refers to the use of radio waves to identify objects (Auto-ID Center, 2002). It is part of a range of technologies such as bar codes, magnetic strips, smart cards etc, used for automated data collection to augment ERP system activities.

The first Radio Frequency Identification (RFID) device was developed in 1973 and since then has continued  on a trajectory toward widespread adoption and impact. Firms that have developed innovative solutions in packaging and further developments in the technology will inevitably lead to overcoming any initial package/pallet scanning problems. Research conducted by IDTechEx called ‘RFID Forecasts, Players and Opportunities 2014-2024,’ expects that the RFID market will reach $30.2 billion in 2024.

Firms have adopted RFID as a solution to a variety of problems, such as Unilever who used RFID to move, handle and track products in its warehouse, while Wal-Mart have experimented with RFID for a long period of time to track stock-outs and manage stock more effectively. RFID represents a significant investment in technology and implementation, however collaboration of supply chains may enable firms to both reduce this investment and intensify their data capture through amplified supply chain visibility.

RFID the tool behind supply chain collaboration

If retailers could collaborate and share RFID adoption costs with their suppliers, there is a scope for savings beneficial to all parties. Through the increased tracking of products on a unique level and the sharing of information across the supply chain, firms will be able to anticipate consumer demand more accurately. Furthermore, if RFID is applied during the production stage of the supply chain, waste can be minimised through increased visibility, reducing the risk of carrying lower levels of stock for retailers. From a warehousing perspective the technology can bring about productivity benefits and reduce stock through improved forecasting on consumer demand.

There is no question that the past few years have pointed towards the need for collaboration amongst the supply chain for retailers, in order to cope with the unpredictability of customer demand alongside an unstable economy. RFID could potentially become a key tool behind this collaboration and enable sharing of information required in the modern retailers supply chain.