RFID Reshapes Supply Chain Management

RFID will be a major advance in supply chain management, but enterprises will need to do considerable upfront planning and testing to successfully implement and integrate the technology.

Although radio-frequency identification technology can be used in a broad range of applications, ITs focus right now should be on the supply chain. RFID will have a significant impact on every facet of supply chain management—from the mundane, such as moving goods through loading docks, to the complex, such as managing terabytes of data as information about goods on hand is collected in real time.

RFID will initially be used to manage the identification of large lots of goods—for example, at the pallet and carton levels. RFID tags, therefore, must have unique serial identifier information that associates each lot with a corresponding bill of lading sent from the originator. Because RFID readers can scan tags many times during a 1-second period, the serial identifier will prevent the application making the data request from getting multiple counts of the same items.

Wal-Mart has told its 100 top suppliers that they must use RFID tags on their pallets and cases by January of 2005. Click here to learn how one company plans to meet the mandate.

RFID tags are classified as passive or active. Passive tags work by taking the energy received from the reader through a tags antenna and using that energy to transmit stored data back to the reader. Passive tags will likely be more widely used, at least at first, because of their low cost.

Active tags include their own power supply, usually a battery, to transmit information directly to a reader. The battery can also be used to help power or interact with other devices. For example, a company shipping perishable goods may want to use active tags that integrate with thermometers to ensure the goods are kept at an acceptable temperature.

RFID tags also have the potential, at the individual-item level, to store information that can be relevant to broader applications. For example, individual items with embedded RFID tags could contain information about warrantee and prior service to make it easier for companies to service those items.

Standard Issue

The development of standards for encoding information on RFID tags will be critical to making the technology as important to the supply chain as bar codes currently are.

EPCglobal Inc., the standards body that manages UPC (universal product code) information in bar codes, sets the standards for how basic product information is encoded in the RFID chips. (RFID chips are designed to augment bar codes.)

EPCglobal will establish the standards on how information is passed from RFID readers to various applications, as well as from application to application, in the supply chain.

When one company ships goods to another company, these standards will help simplify the electronic transactions that occur between the organizations ERP (enterprise resource planning) systems. The standards will determine how middleware handles data scanned by an RFID reader as goods enter a warehouse and will pass the data to an enterprise application.

The current version of the EPC (electronic product code) Tag Data Standard specifies the data format for encoding and reading data from 64- and 96-bit RFID tags. The data stored in these tags dictates information about a product in UPC terms, including company and product identifiers.

Savant is EPCglobals proposed standard for defining how middleware will structure data gathered by an RFID reader. Savant middleware will perform preprocess routing and storing of data, which includes eliminating duplicate reads. Savant middleware will then pass only requested information to the enterprise application. Savant also provides a framework for creating queries against readers on the network.

EPCglobal standards address some of the privacy concerns regarding RFID by dictating the means by which RFID data stored in a tag can be erased. The larger concern, however, is that retailers will not erase tag data on individual items after purchase.

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