Although sometimes cynically touted as a solution looking for a problem, the benefits of RFID are widely acknowledged. Early adopters of this technology have realised advantages in some, if not all areas of their business, making the business case for RFID a compelling one.
Companies with international reach, such as Wal-Mart and Marks & Spencer are using it to provide accurate goods tracking; ensure more efficient stockholding and demand forecasting; create simpler, more streamlined processes; improve overall efficiencies in the supply chain and even boost governance, writes Ashley Dugmore, MD of The Printer Distribution Company (PDC).
Adoption is expected to continue with the Wireless Data Research Group (WDRG) announcing that the market for RFID hardware, software and services will increase at a 23% compound annual growth rate (CAGR) from more than $1-billion in 2003 to $3-billion in 2007. However, transition from one management methodology and technology to another is never simple.
The local market is eagerly anticipating the adoption of RFID technology, which has the potential to increase efficiency and reduce shrinkage, just a few of the benefits. ICASA is in the process of finalising the bandwidth allocation for RFID, further driving interest in the local market.
When investing in RFID, local users should consider a number of issues. Many of these will relate to strategic issues that influence the adoption of any new technology, such as the current dearth of technical skills to install and support these solutions and the need for integration of RFID solutions with other systems – including current ERP systems and manufacturing applications – to achieve the desired supply chain-wide interoperability and functionality.
It is therefore imperative for the local market to investigate RFID as a technology, enabling companies to make informed decisions.
As the technology is relatively new to the supply chain environment, empowering yourself with knowledge is key in going forward.
There are important matters regarding the technology itself and how it is implemented that will impact the long-term success of RFID for organisations and for South Africa as a whole.
Standards play a particularly important role, especially how data in encoded in RFID tags for it to be accepted worldwide.
This forms the basis for compatibility across the supply chain and components such as readers and tags should work in a heterogeneous environment.
Reader types and tags must also suit the application for the maximum benefit to be derived.
Learning as much as possible about these standards and ensuring equipment is ratified by the EPCglobal – a body that leads the development of industry driven standards for the Electronic Product Code (EPC) – will ensure a smoother transition to RFID in the supply chain.
Solutions that offer ease of transition from legacy to new systems should also be considered.
To maximise the benefits of RFID the whole supply chain environment should be involved. This includes the retailer, its manufacturers, transportation and logistics among others.
If implementing a pilot site, it is beneficial to drive participation from ‘front and behind’ partners such as the supplier and retailer. This extends the benefit down the supply chain, and delivers not only internal benefits but external ones too.
For example, an external benefit is achieved when a transportation agent collects goods from the manufacturer and makes use of the same tag attached to goods until it is delivered to the last link within the supply chain. All components within the supply chain make use of on a RFID tag, thus reducing costs.
It should be noted that RFID is not a “one size fits all” technology, and each application must be evaluated individually to establish the correct approach and solution.
To ensure a successful choice, speak to industry players that are in the know and adhere to guidelines and products endorsed by recognised standards bodies such as the EPCglobal, and ensure your strategy makes provision for the transition to new systems.
The supply chain stands to benefit significantly from RFID which, if implemented correctly, can be a valuable tool to increase efficiencies, reduce losses and deliver a smoother operation. Rather than assessing the cost of the solution, establish the savings by implementing RFID within your environment.
* RFID uses a radio frequency tag, reader and an antenna that emits radio signals to activate the tag and read and write data to it.
* RFID enables companies to reduce risk of non-compliance and meet corporate governance requirements.
* In the US, RFID technologies use the 915Mhz channel, while the European Union (EU) makes use of 866Mhz band for RFID. Collectively, these ranges fall within the Ultra High Frequency (UHF) band. It is expected that ICASA will approve both for the South African market.
* Standards that dictate how data is encoded in RFID tags are particularly important for RFID to be accepted worldwide. The Electronic Product Code Global (EPCglobal) is a body that facilitates the development of industry-driven standards for the Electronic Product Code (EPC) – the standardised numeric codes for items in the EPCglobal Network.
* Key components of an RFID solution include: tags, readers, label printer/s with integrated RFID encoding capabilities, middleware and ERP systems.