RFID Technology Rapidly Growing in Supply Chain Importance

RFID

It may be a bit of a stretch, but it’s not altogether unreasonable to suggest that Max, a sickly 14-year-old poodle who recently was dognapped and held for ransom, owes his life to a post-World War II Soviet spy technology developer.

Max’s owners refused to pay the $400 ransom that was demanded, and the old dog simply was turned loose on the streets. That’s where a kind soul found him and took him to a local vet where the Radio Frequency Identification (RFID) tag embedded under his skin years ago was read, leading to his owners being called and Max being returned to them.

It’s safe to say that RFID technology, the precursor of which was developed by KGB technicians in 1945, has been slow to catch on. Even though it has been commercially available since the 1970s, only in the past decade or so has it begun to find significant uses beyond lost pet identification. In 2011, it was still just a $6.4 billion-a-year industry. Last year, it grew an impressive 17 percent to $7.7 billion.

But hold on to your hats, because the industry is expected to grow to around $20 billion by 2015 (more than a 200 percent growth rate over five years). That is, in large part, because corporate executives with supply chain management responsibility are figuring out lots of new, effective ways to use RFID technology to reduce costs.

Everyone knows that airlines are rapidly switching to RFID-tracking of bags (No more lost baggage!), and that governments around the world now are issuing new passports embedded with RFID chips. But ABI Research expects supply chain management organizations’ use of RFID technology to lead RFID growth at a rate of 37 percent over that same five-year period. The technology is finding all sorts of new uses in the manufacturing and purchasing process, in distribution and the warehouse, and even in the motor pool.

From Motor Pools to the Medical World, RFID Coming Into Play

That’s right, the motor pool. Companies are now using RFID transmitters in both the fuel tanks of their trucks and other corporate vehicles and in the nozzle of their private gas and diesel pumps to reduce fuel waste and fuel theft by employees. Companies long ago stopped paying workers to sit all day and all night by their motor pool gas pump. But that opened the door for unethical employees to begin topping off the tanks of their personal vehicles after filling up the company truck (motor pool pumps often are located in out-of-way locations for safety reasons, but that makes employee theft all the easier). But the newly innovated RFID-powered pump control system accurately tracks how much fuel is pumped into each vehicle, eliminating any opportunity for employees to redirect some fuel to their own cars.

Fresh food distribution companies also are biting into RFID technology in a big way. Advances in the technology now make it possible for certain kinds of RFID signals to pass through fruits, vegetables and raw meats, all of which contain lots of water. That wasn’t possible before because water absorbs and effectively blocks older types of RFID signals.

The medical world also is investing heavily in cost-saving RFID technology. Hospitals are using it to keep tabs on patients’ movements throughout hospitals, to better manage their inventories of beds and equipment, and to track medicines given to each patient. Beyond that, RFID tracking allows hospitals to work with drug makers and medical supply producers in lowering costs. By tracking and sharing more precise data on usage of everything from prescription drugs to surgical gloves and gowns, the companies involved can more cost effectively manage the production, shipping and storage of those expensive, and in some cases potentially dangerous items.

All That RFID Data Needs Management

Of course, the rapid spread of RFID technology into supply chain operations means companies also need to respond quickly by acquiring new data and supply chain management applications. That’s because RFID is a technology, not an application. RFID tags and readers should be understood as frontline tools that, apart from applications and systems designed to accept and process RFID data, are about as useful as a hammer in a lifeboat in the Pacific Ocean.

Given industry’s – and the world’s – rapid shift to mobile and Wi-Fi communications environments, it is imperative that supply chain companies adopting RFID technologies also adopt sophisticated yet easy-to-use, easy-to-maintain, and easy-to-customize mobile software applications.

After all, companies need every individual along the supply chain empowered with the command visibility they need to do their jobs, serve customers and grow revenues.

  • Comments & Discussions

    Kyle Ephraim ,

    Interesting article. As a student at the University at Buffalo seeking a degree in Business Administration with a concentration in Supply Chain Management, I am always interested in new technologies that will affect SCM. I look forward to more articles on RFID trends.

    Thanks!
    Kyle Ephraim
    https://plus.google.com/114491067289114652307/about

    • Comments & Discussions

      ahmad gaad ,

      Interesting and informative article.

      • Comments & Discussions

        maira pee ,

        Thanks to share this informative news,this is useful for me because i relate with this field.