The Characteristics and Development of RFID - Radio frequency identification Essay Example for Free

The Characteristics and Development of RFID Radio frequency identification Essay Wal-Mart, the world leading retailer, announced it will expand its rollout of radio frequency identification (RFID) to a total of 300 suppliers by 2006, following meeting with its top vendors. The retailers top 100 suppliers have already agreed to implement RFID by January 2005. Wal-Mart plans to have the inventory tracking system, which uses radio frequency technology, in six distribution centers and 250 Wal-Mart stores and Sams Club stores by next June. By October of next year, the program will include up to 13 distribution centers and up to 600 Wal-Mart and Sams Club stores. By the start of 2006, Wal-Marts next top 200 suppliers will begin tagging cased and pallets, bringing the total to 300 vendors. Radio Frequency Identification (RFID) technology has been in commercial use since the early 1980s. It has been employed, for instance, on highway and bridge tolls, in tracking livestock movements, in tracking airfreight and in motorcar manufacturing, but until recently, the technology has been too expensive and too limited for mass commercial applications. However, retailers are now starting to drive the introduction of RFID and it would seem to have the potential to revolutionize efficiency, effectiveness and security throughout supply chain. By definition, RFID is a technology process starts with a tag that is made up of a microchip with an form a magnetic field when they join with the antenna on the RFID tag (FRiDa. com). Its one of the most powerful IT strategic assets in use in retailing industry. According to Michalisim (1997), he pointed out that strategic asset are simultaneously valuable, rare, imperfectly imitable, and nonsubstitutable. RFID technology has been commonly recognized as the key source to enterprise resource management system as well as warehouse management systems and enables retailers to gain competitive edges over rivals. RFID is the generic name for technologies that use radio waves to automatically identify items. There are several methods of identifying items using RFID but most systems consist of a tag, which is made up of a microchip with a coiled antenna, and an interrogator or reader with an antenna. The reader sends out electromagnetic waves that form a magnetic field when they couple with the antenna on the RFID tag. The tag draws power from the magnetic field and uses it to power the microchips circuits. The chip then modulates the waves that the tag sends back to the reader and the reader converts the new waves into digital data. The data transmitted by the tag may provide identification or location details and/or specific information about the product such as price, colour and date of purchase. The tags are very flexible in that microchips measuring less than a third of a millimeter wide can now store a wide range of unique product information, they can be read from a distance and through a variety of obstacles. RFID technology can also allow some, but not all, the data held on a tag to be read and the tags can be updated after the original data has been loaded. The tags also offer security in that they can be made virtually tamper free. The technology has been too expensive and too limited for widespread mass commercial applications, but as the price of tags, tag readers and the associated equipment continues to fall so a growing number of retailers have begun to explore the introduction of RFID and this in turn seems likely to bring the technology into everyday consumer use. Wal-Mart is making this revolutionary technology (i. e. RFID) a reality in distribution centers today. Its expected that Wal-Marts top 100 suppliers must be RFID-ready by January 2005 and the retailer then put its large foot forward in April of this year by launching the first phase of RFID implementation at the case and pallet level in Fort Worth marketplace. Apparently, the retailing industry is slowly moving toward a re-engineered supply chain with enhanced efficiencies. RFID represents the most sweeping supply-chain advancement since June 1974, initiated by Wm. Wrigley Company by adopting the worlds first, official grocery-store barcode on a pack of chewing gum. Since then, it changes to the way the supply chain operation becomes more efficient. It is evident to note that RFID helps manufactories virtually eliminate manual data entry and manual business process transactions in such ways: first and foremost, order fulfillment speed is dramatically increased; second, the order accuracy is improved; third, the on-going operating costs of order fulfillment are reduced; the performance of warehouse management system investment can be enhanced; last but not least, hidden warehouse management costs become visible. Moreover, efficiency gains can be measured in picking and put away errors, acceleration of handling for return and restocking, and elimination of physical counts. In addition, RFID enables manufactories to make the most use of data as it becomes available for real-time demand signals when product moves through the supply chain. Furthermore, RFID contributes to the improvements of data accessibility and quality of which having a positive impact on demand forecast accuracy (Smith Offodile, 2002). Consequently, it helps manufactories to gain real-time visibility into customer purchase decisions throughout the value chain, which prepare firms to react and influence the marketplace. Cited from Rose (1996), An inspection of technological changes in terms of supply chain management over the last 20 years has illustrated that there have been tremendous changes in the area of physical distribution or supply chain management systems through global business. Information technology and RFID have changed payables, receivables, and the asset side of inventory. Typically, RFID use modern wireless technologies to provide manufactories with unique solutions to difficult logistical tracking of inventory. The technology is largely feature in its stability, with open architectures becoming increasingly available.