RFID Potential in Supply Chain Management
RFID
Systems
Radio Frequency Identification (RFID) is a form of automated identification
(Auto ID). Auto ID is a low cost way to keep track of items as they move through
the supply chain. Imagine a large group of people in a marathon. The runners each
wear a unique ID tag, a number, to identify them from the time they start the
race until they cross the finish line. Using Auto ID technology, companies can
manage their product inventory from point of manufacture to point of sale. Automatic
identification devices-bar codes, satellite-based systems, and RFID tags-are used
to monitor the shipping and receiving of raw material components and finished
goods through the distribution channel.
Bar Code.
The bar code or Universal Product Code (UPC) tag was patented in 1952. Since the
first scan of a bar code in an Ohio supermarket 30 years ago, bar codes have become
ubiquitous on all consumer packaged items.
Satellite-Based. Satellite-based
systems use radio frequency technology to track containers of merchandise on ships,
and trailers of product pulled by trucks. A signal from these battery-powered
transponders is also activated by a transceiver as a container enters a port terminal
or a trailer enters a truck yard. This technology originated during World War
II when the U.S. government used transponders to distinguish friendly from enemy
aircraft.
RFID. Radio frequency identification (RFID) is the
next step in Auto ID development. RFID tags are integrated circuit-based radio
transponders attached to physical goods and/or their cartons and pallets. The
four different kinds of tags used are classified according to their radio-frequency
level (see Figure 1): Low frequency (LF), High frequency (HF), Ultrahigh frequency
(UHF), and Microwave (wave). RFID tags could replace the bar code; because they
locate product in the supply chain and communicate information to the manufacturer,
logistics provider, and retailer.
RFID System Architecture
Unique Identifier. This is part of the Electronic Product Code (ePC),
a uniform numbering scheme that identifies every inventoried item and assigns
an individual ID for any physical object.
Smart Tag. Every tag
attached to an item consists of a silicon chip and an antenna. Known as passive
tags, they are transponders with no power source of their own. Their energy is
received from the incoming radio frequency originating in the transceiver. Smart
tags do not need a large memory (96 bits, or less, of information), nor computing
functionality. The minimum storage requirement of a smart tag would be the unique
identifier but can also include other ePC information.
Tag Reader/Processor.
The reader/transceiver detects tags within its reading range and is the interface
between the tag and the value chain. Data is collected and sent to a data base
storing product information.
Networked Data Base. This stores additional information about the product's genealogy and status.
RFID
System Elements
WORM Tags. "Write once, read many"
times tags are used to hold the information as the item goes through its life
cycle. WORM memories are desirable for low-cost permanent storage.
ePC
Naming Convention. The ePC consists of four fields: Header gives the version
number of the code to distinguish different naming schemes; ePC Manager identifies
the company or organization that wants to number its products; Object Class identifies
the product grouping; and the Serial Number field identifies each product in the
group (see figure 3).
Object Naming Service. The ONS is a reverse
directory that maps the ePC to the location on the Internet where the full product
information is stored.
Physical Markup Language. PML is an XML
based language describing all the information related to a product and its infrastructure
(packaging, pallets, etc.) at a specific Internet site.
RFID
vs. Bar Code
Deliberate vs. Automatic Scan. Whether at a checkout
or in a warehouse, bar codes are read deliberately by a person with a scanner.
An RFID tag automatically announces itself to a nearby reader by means of its
radio signal. The continuous stream of data available with RFID technology will
increase accuracy and reduce the costs of inventory control.
Line
of Sight vs. Random Orientation. A direct line of site is required to read
a bar code. This point and shoot technology is time consuming when compared to
RFID. Since radio frequency identification does not rely on visual alignment to
gather information, product can also be randomly placed on a pallet or in a warehouse.
Unique Item Identifier (figure 3). Bar Codes [North American
Universal Product Code (UPC) and European Article Number (EAN)] and their information
are now subsets of the new Electronic Product Code (ePC). The Electronic Product
Code is the information transmitted by RFID technology.
RFID
Can Improve the Existing Game
Shipping. RFID can facilitate
shipment consolidation by making it easier to know what is on each load ("This
is what I shipped."). Same-order items split between several loads will not
be misplaced or left behind to become shrinkage ( "This is what I meant to
ship."). Loading times will be reduced as readers automatically record what
is loaded and create an Advance Shipping Notice (ASN). The recipient knows exactly
what to expect on arrival.
Transportation. RFID not only makes
it easier to track shipments of standard packaged goods, but it also improves
the efficient handling of reusable (sub-conveyance) packaging, such as beer kegs
and refrigerated food trays and dollies. The use of read/write RFID tags can record
the changing product in reusable food and drink containers. Similarly, the overnight
package business can be streamlined if a courier company can eliminate multiple
line-of-sight scans on 40 to 50 million packages a day.
Receiving.
RFID has the potential to accelerate unloading times, inventory reconciliation,
and proof of delivery verification. This "one touch" receipt of goods
can move product to store shelves quickly and increase customer satisfaction.
Internal Operations.
-Manufacturing plants will be able to use
RFID technology to track product as it moves through the plant, facilitate product
configuration, and improve labor productivity.
-Warehousing operations can
rely on RFID technology to generate immediate, constant, and accurate inventory
counts without the labor hours for line-of-sight bar code scanning. RFID can also
manage the merger of product lines in transit.
-Retail stores will benefit
from RFID's ability to automatically activate inventory replenishment. Better
on-shelf availability can reduce out-of-stock items and lost sales. RFID tags
can deter theft by alerting security if an unpaid item leaves the store. It could
also popularize automatic checkouts by making them fast and easy.
-Cross supply
chain applications of RFID are in the areas of product recall of consumer goods
and fraudulent goods detection. The unique identifier will enable companies to
track food from point of origin to retail outlet and thus aid in product recall
and improved product safety. Standardization of product identification will also
help companies monitor pirated pharmaceuticals and protect consumers from knock-off
brands.
RFID Can Change the Way the Game is Played
When a regular customer calls his local pizza parlor in Boston, they welcome
him by name and ask whether he wants to order the same pizza as last time. The
store recognizes his unique identifier (telephone number) and calls up his purchasing
record on its database. RFID has the potential to revolutionize logistics in the
same way the pizza parlor uses a customer's previous buying habit to anticipate
future wants. The Path of Innovation (figure 4) illustrates how various technological
innovations change the structure of society. Refrigeration changed the economy
of the southern United States. The web continues to change the way we do business
and organize our activities. RFID has that same potential.
Tomorrow's
supply chain will have to deliver higher levels of performance in satisfying consumer
demands. Emphasis will shift from manufacturers and retailers pushing products
into the value chain, to consumers pulling new or customized items into the supply
chain. RFID has the potential to offer direct insight into consumers' buying habits
(remember the pizza parlor), revolutionizing the way the supply chain meets customer
expectations.
RFID will streamline the flow of inventory along the supply chain, leading to new warehouse designs geared to digital sensing. RFID's insight into consumer buying habits could also change the way retailers operate - automatic shelf replenishment, personalized advertisements, smart homes and appliances communicating directly with retailers for continuous inventory counts, and extending the visibility of the supply chain to anticipate end-of-life and recycling potential. The consumer will benefit with better service at a better price.
RFID is on its way to being the next revolution in supply chain technology!
Reprinted with Permission. Courtesy of Pete Rector, Senior VP, Research and Development for Genco.
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