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Items of Interest, RFID now!
Beginning in 2004, one of the world’s most formidable retail giants, Wal-Mart began mandating that suppliers comply with RFID tagging. With 3,750 stores, Wal-Mart tends to be the pace-setter for the retail industry. Their large scale implementation of RFID is helping to drive widespread adoption of the technology by other category leaders, including Macy’s, Bloomindales and J.C. Penny. At the same time, the cost of RFID tags continues to drop, coming down to about 15 cents or less per tag, depending on volume. Converging with these factors, on October 1st of this year, the Department of Defense/Defense Logistics Agency (DLA) issued a mandate stating all DLA suppliers must include RFID tags on all items destined for their 25 supply depots, driving demand for RFID across more business verticals.
Is RFID destined to become ubiquitous within the supply chain over the next decade, as analysts and observers predict, and if so, what will/does this mean for EDI professionals?
The first point to understand as to why Radio Frequency Identification (RFID) is experiencing rapid adoption now is that this is not your father’s RFID. This is not case and pallet tracking. This is ITEM level tracking. The benefits of RFID for tracking cases of items all went to the procurer. Be they the military, or a retailer, they wanted to accurately manage data moving into distribution warehouses. Once the shipping units are broken down into items destined for stores, or other end users, the goods had no RFID tags to track them. The accuracy gained by RFID in the warehouse was instantly compromised.
The desire to know with near certainty what is actually at the point of distribution for the end customer has driven the mandates to tag virtually everything. A typical retail store has less than 70% accurate inventory. Item level RFID attains 99.5%! Finally, the customer is now more likely to find what they came into buy.
This means that the 856 Advanced Ship Notice (ASN) must contain the serial number of every RFID tagged item if the supplier tags the goods. This is new data flowing into the EDI flow.
A quick note about RFID and barcodes; RFID is radio, effectively sound, not line of sight as with a laser scanned UCC128 label. When the tag is excited by the RFID antenna, the RFID tag chirps its name, or serial number. It may respond hundreds of times. The RFID software does not count how many chirps it hears, it records the names it hears. This is analogous to counting children by hearing their names in a roll call rather than by counting them coming through a door. Accuracy is 100%. For this to work properly the names have to be known in advance from a published roster. The ASN is the electronic roster.
On the upside, the use of RFID will drive inefficiencies out of the supply chain, and ensure the highest degree of integrity for transactions. The data provided by the RFID tag surpasses any existing methods of information transfer. When compared to barcodes for example, RFID has myriad clear advantages. Unlike barcodes, RFID requires no line-of-sight for reading, and can be read at distances of up to 300 feet versus 15 feet for barcodes. RFID is capable of reading 40 or more tags per second, making the read for RFID tags about 80 times faster than for barcodes. Importantly, RFID tags reads are automatic (thing to thing) with no human action needed, while barcodes require human assists. RFID tags are also more rugged and durable, and more secure, with password protection “kill” factors to permanently remove data. Barcodes, on the other hand, are easy to replicate or counterfeit. RFID tags are much “smarter” than barcodes, bringing us back to the point about inputting information; the RFID tag can carry and transmit tremendous amounts of data, and that requires extra work for all of us. But the results are well worth the effort.
RFID facilitates the gathering and processing of product data at a rate that is unprecedented. When integrated as a component of electronic data interchange (EDI), it can bring profound benefits and competitive advantages. Because it is such a powerful technology, we often hear talk of RFID “replacing” barcodes, or “replacing EDI, however this is inaccurate. Even though it is fast becoming the next big thing for the supply chain industry, it’s a mistake to think of RFID as a replacement technology. It is designed to be an enhancing technology, boosting the performance of EDI and other legacy technologies to their full potential.
Over the past two decades, EDI has become the “gold standard” for business to business transactions. Will that change? Yes. However, not in the ways you might think. Because of the barriers to the integration of item-level RFID technology with EDI, the standards are already set by EDI and will become even more impressive. RFID is going to make it possible for you as an EDI professional to do what you do every day with even greater efficiency and accuracy.
Your role within the business eco-system, revolves around meeting expectations for data integrity as data moves through the pipeline. In managing or transferring data, errors and inaccuracies cost money. For Wal-Mart, the DLA and others, the bottom line depends on how efficiently inventory moves through the system. Looking at some DLA statistics before they implemented RFID tagging, one out of every 20 boxes shipped to Lackland Airforce Base contained the wrong item. Now, the capabilities enabled by RFID have already reduced the inventory error rate from 5 percent to .2 percent…near zero. Any manufacturer with a widely diverse supply chain can easily see the benefits of RFID for managing and reconciling transactions, especially amid the growing complexity of today’s global market place.
Both EDI and RFID are targeted to streamlining critical tasks within the supply channel. Both play a critical role in order management and shipping efficiencies. Both are aimed at streamlining critical channel-oriented tasks and play a role in order management. But because RFID combines near perfect data accuracy and unprecedented visibility into inventory and inventory processes throughout the supply chain, it can build for EDI to advance from great to greater.
For more information contact Zander Livingston at email@example.com.
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