RFID: IBM invests millions in supply chain technology
IBM has announced that it is to invest $250m in RFID technology and employ in the region of 1000 staff dedicated to supporting its new products and services in this field. The company becomes one of the latest to focus on the technology as a key strategic area of future growth.
To date advances have been driven mainly in the US by such organizations as Walmart and the US Defense Department. Walmart has gone as far as to set a deadline (the end of the year) by which time its top 100 suppliers must be RFID compliant. European retailers have also been conducting trials, with Tesco one of the most advanced.
RFID, the acronym for Radio Frequency Identification, uses wafer thin chips to store information about the product to which they are attached. ‘Passive’ tags can offer up this information to sensors which interrogate them at various points of the supply chain. As well as being able to store much more information about a product than traditional barcodes, sensors (in theory) do not have to have line of sight with the tags to operate. Information from groups of tags can be read by a sensor simultaneously, in contrast with barcodes.
Although RFID has been around for many years, it has attracted an increasing amount of interest from manufacturers, retailer and logistics companies. The interest is due to the visibility, and hence the cost savings, which are achievable if the technology delivers the benefits that many people hope. In addition to supply chain savings, the tracking which RFID enables can be used to increase security within a store or within a warehouse. Now that developments in manufacturing techniques have driven down the cost of each tag, it is becoming feasible to consider tagging billions of products individually.
The importance which all parties in the supply chain are putting on the technology is also demonstrated by Exel’s recent announcement that it has joined EPCglobal, a collaborative organization that controls, develops and promotes RFID standards. A common global standard will be essential if the tags are to be readable at all stages in multiple supply chains (even outside ‘closed loops’) and across a variety of geographies.
This is not the only challenge. At present there are still problems with ensuring that sensors read the tags accurately in certain environments, such as the warehouse. Wooden pallets apparently can interfere with sensor’s ability to read tags due to the moisture content of wood and metal nails. In addition there are political sensitivities. Civil liberties campaigners are keen that tags must be de-activated once they have left stores, so that tracking is not possible post-sale. However this would prevent tags being used to facilitate the reverse logistics process, one of the areas of greatest potential savings.
