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Plan for big changes in inventory tracking

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in Leaders & Managers,Management Training

What is RFID? If you don't know, you'd better learn. It may not be long before a large business customer asks you to start implementing it into your inventory for easier logistics management.

RFID is short for radio frequency identification and, essentially, it's a super high-tech bar-code technology.

How it works: Products and/or their packages carry RFID tags, which are tiny microchips that store serial numbers and other information that's unavailable on bar codes. The tags transmit data to an electronic reader that translates it for use in a computer.

RFID readers can collect data from tags within a 10- to 300-foot range, compared to the necessary point-blank range of
bar-code readers. That allows real-time inventory tracking, reducing labor costs and theft. Industries hot on RFID technology include retail, transportation, security and health care.

Led by large businesses, RFID use is growing 45 percent a year, according to research firm Venture Development Corp.

The technology has been around since the 1940s, but it's only now becoming affordable. Readers cost at least $1,000 each. Most tags sell for 30 to 50 cents apiece. RFID costs continue to drop.

Key point: Large businesses are starting to require their suppliers to place RFID tags on their products. Example: Wal-Mart and the Department of Defense are requiring a total of 53,000 suppliers to use RFID tags on cases and pallets of products by January 2005. Those suppliers will eventually pass along the mandate to their smaller manufacturers and distributors.

Technology companies are pushing to develop RFID-based supply-management software for small and midsize businesses. Microsoft plans to release a RFID-based warehouse management system for small and midsize companies in 2005 and a version for retailers in 2006. Oracle and IBM are pursuing similar strategies.

Online resources:

RFID technology

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