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Monday, November 29, 2004Express Computers publishes an article by Dr.Sanjay Sarma CTO of OATsystems. Dr Sarma writes, what would have been the stuff of science fiction, RFID or radio frequency identification technology is swiftly turning this vision into reality. Excerpts:
Imagine if your microwave oven could read the instructions on a packet of frozen food and cook it accordingly. Imagine sitting in your office and being able to track who is buying your product from the store, and even gauging the rate at which your product is selling. Once this would have been the stuff of science fiction, but RFID or radio frequency identification technology is swiftly turning this vision into reality. Although RFID technology has been around for at least three decades, it has come of age only in the last few years. New applications developed in American tech research labs, and supported by industry, have given RFID a new lease of life, spearheading a technology revolution that is changing the way global businesses monitor their supply chains and operations.
RFID technology is used to track everything from pets to airline baggage. It is also used to prevent store theft and counterfeiting. Some of the world's largest businesses and multinational corporations, including Wal-Mart, Gillette, Coca-Cola and Procter & Gamble, are developing plans to deploy solutions based on RFID to monitor their global supply chains. In fact Wal-Mart joined the Auto-ID Centre in 2001 in order to put industry's weight behind research. And last year the corporation mandated that its 100 top suppliers would have to send all products for RFID-tagging from 2005.As supply chains become global in nature'with materials being sourced in one country, manufactured in a second and sold in a third'time lags and distances often compound these inefficiencies. For instance, retail giants such as Wal-mart and Metro often have global supply chains, with the starting point in resource-rich developing countries like India. However, studies of the global retail industry have shown that up to 65 percent of inventory records in retail environments are wrong. In addition, products are out-of-stock approximately 10 percent of the time, resulting in 4-5 percent lost sales that's worth about $100 billion annually. On the other hand, too much inventory can result in billions of dollars of locked-up capital, high transportation costs, and other problems.
RFID-EPC technology can dramatically improve supply chain management efficiencies by providing real-time visibility into what's on the store shelves. Because RFID tags are unique, a product can be individually tracked as it moves from location to location. The vision of the EPC movement is to create near-perfect supply chain visibility, where businesses have the ability to track every item anywhere in the world securely and in real time. Using RFID-EPC, one will be able to count how much inventory there is on the store shelf, and other information unique to each product, such as its expiration date. RFID can therefore be utilised to build faster supply chains and improve the planning and execution process, all of which provide financial pay-offs.
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