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RFID: Getting From Mandates to a Wireless Internet of Artifacts

By Rajit Gadh
October 4, 2004 12:00 PM ET

Computerworld - Radio frequency identification research at UCLA suggests that in response to supplier mandates from Wal-Mart Stores Inc., the Department of Defense and others, the "slap-and-ship" model probably won't work when scaled up.

But for now, just slapping RFID tags on pallets and cases and shipping them seems to be the de facto option that most companies are pursuing because the deadlines for these mandates are rapidly approaching.

These mandates are forcing product suppliers into accepting solutions from their technology providers that may not be ready for scalable deployment. Technology providers, in the meantime, have been scrambling to provide solutions and integrate RFID capability into their products.

While there is much hype surrounding the mandates, product suppliers need to ask whether they can obtain benefits beyond the mandates. Today, product suppliers are not benefiting internally by their RFID deployments. Yet the mandates are forcing them to get their feet wet, and once they do, they may be willing to experiment beyond the mandates to see if additional benefits can be gained to provide a justifiable return on investment.

Technologically, as is now widely regarded, the excitement of RFID is due to its contactless communication, low cost of tags, batteryless operation and long life. On the business side, the excitement of RFID is due to its ability to keep track of any product from cradle to grave as it moves through the various stages of its supply chain.

For the product supplier, RFID can track in-manufacturing inventory, when and which products leave the factory floor, when products reached their customers and so on. Retailers such as Wal-Mart, Target and Tessco can, on the other hand, keep a very tight supply chain, holding inventories to a minimum by strict control on the flow of goods.

The incorporation of RFID into supply chains is going to result in major business process changes, especially for product suppliers. When an incrementally new technology becomes available, tweaking of business processes is often sufficient to accomplish the desired incremental benefit. However, when trying to inject a radically new technology such as RFID to an existing business process, generally neither the costs nor the benefits are incremental.

For the product suppliers, the incremental benefits of RFID would need to be attained subsequent to the first round of investment, or else the follow-on round of investment may become difficult to justify. Realizing a return on the first round of investment is going to be challenging because the current slap-and-ship model isn't of much benefit to the product supplier -- it addresses only the needs of the retailers'

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