The Supply and Demand for RFID

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Industrial Engineer – Volume 43 Number 12

Today’s Supply Chain must deliver higher level on performance to satisfy consumer demands, and RFID can revolutionize the way they do it. Still RFID technology faces challenges that include high capital costs, a lack of technological maturity, minimal global standardization and substandard government regulation.

A set of open, global standards would help integrate RFID into supply chain. And information technology must figure out how to integrate RFID existing supply chain management (SCM), customer relation management (CRM), and enterprise resource planning (ERP) application. An RFID system helps with streaming lining or better managing business process, making for higher technology ROI, better process data management, higher product quality and reliability because of traceability.

RFID technology can be extremely powerful when used as an infrastructure for many applications. There a few companies, including Airbus, have succeeded with this infrastructure approach.

In 2006, the company decided to implement RFID technology in three phases. In the first phase, Airbus decided to streamline its supply chain tracking capabilities, warehouse logistics and distribution process. The second phase was designed to improve the process in manufacturing, assembly and global transport. In the third phase, Airbus is looking at in-services processes and support operations that RFID could enable.

Moreover, Wal-mart’s initiative to use RFID technology was heralded as the most important technology development for retailer since the patterned bars, spaces and numerals started getting slapped on products. The tags help with reordering, stocking and keeping track of purchase, and because of RFID, Wal-mart can save $6.7 billion in labor costs alone from RFID implementation.

Pharmaceutical companies have taken the lead in the healthcare field’s adoption of RFID. The technology helps the drug industry self-police in the fight against thieves and counterfeiters. RFID helps to track painkiller named OxyContin to identify if drug stolen or not. In other healthcare aspects, RFID tags are used on employee identification cards, patient identification cards, ankle and wrist identification bracelets and implantable RFID chips.

In tomorrow’s supply chain, the emphasis will shift from manufacturers and retailers pushing products into value chain to consumers pulling new or customized items into the supply chain. RFID can offer direct insights into customer’s buying habit, resulting in higher levels of performance in satisfying consumer demands.


Smart companies are striving to reduce cost, improve service, and increase return on investment throughout the supply chain. Automation-based solutions can play a crucial role in meeting those goals, and many organization consider radio-frequency identification (RFID) technology a major force in transforming global supply chain automation and visibility. RFID increases efficiency by optimizing business processes and automating asset and inventory management.

Over the last few years, more and more companies are integrating RFID technology into their strategic planning, since it provides significant advantages to supply chain performance. There are far more benefits gained by RFID implementation into supply chain and logistics operations than just improving identification of products, shipments, and assets. Nevertheless already the most common benefits prove that RFID is worth the investment.