RFID: Just The Facts
“The Bottom Line: RFID will have a dramatic impact on the operation of
global supply chains over the next 10 years.”
Scott Lundstrom, Chief Technology Officer, AMR Research1
Radio Frequency Identification (RFID) is a hot topic today due to the announcement made in June by
Wal-Mart that they would require their top 100 suppliers to provide RFID tags on pallets and cases by
January 1, 2005, and extend this requirement to all suppliers by 2006. That has sent many CPG
executives scurrying for information on what RFID is all about and what it might mean for their
organizations. Beyond Wal-Mart, many firms are investigating RFID as a high ROI alternative to other
automated identification and data collection (AIDC) technologies such as barcodes.
Unfortunately, today’s market hype masks the fact that RFID technology has been in commercial use
for over twenty years with a consistent track record of success. We utilize RFID at the gas pump, in
our toll way systems and for numerous other applications without recognizing RFID is the technology
powering these products and services. However, the widespread adoption of RFID for retail and
supplier product identification is just beginning.
There is little doubt that RFID will have a major impact on supply chain operations over the next few
years. Research firm Gartner, Inc. states: “The use of RFID to capitalize on data flow in global supply
chains could be one of the most-significant developments since enterprises first explicitly recognized
the importance of information flow in the supply chain.”2 Likewise, AMR Research predicts that RFID
will be a $20 billion market by 2013.3
So how should companies reconcile Wal-Mart’s demands and the long-term benefits of RFID with the
current risks and limitations of the technology? This paper will address these issues and provide a
phased implementation roadmap that is consistent with current requirements and technology. It will
examine briefly the history of RFID technology, review the various types of tag and reader
technologies and their uses, discuss the potential benefits as well as the challenges for its adoption,
and then provide recommendations on implementation strategies that make sense today.
While there is no question that RFID will transform supply chain management over the next ten years,
the impact, costs and results will vary considerably between industries and companies. Despite the
current hype and retail pressures, RedPrairie believes that RFID should be viewed as a long term
investment that must be closely examined to determine the appropriate technology, processes, and
timelines best suited for each company based on their expected requirements, benefits and ROI.
However, it is also clear that companies must start investing today if they are to remain competitive as
the supply chain industry transforms.