Radio Frequency Identification (RFID) in general, refers to the practice of identification that merges the use of radio and microchip up-to-the-minute technological advancements to distinctively find the location of particular objects (Convery, 2004). It is a process wherein radio waves are utilized in order to recognize certain objects. Furthermore, it is a subset of a larger category of modern advancement otherwise known as the "automatic identification ("Auto-id" ) systems, a system used for tracking and compiling data about people, goods, etc. an example of which is the scanning of Universal Product Code (UPC) oftentimes referred to as barcode. A UPC has the identification of the product being monitored and its marketable price (Hartman, 2005). Principle as such applies likewise the same to Radio Frequency Identification (RFID) technology.
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Essentially speaking, the RFID can be considerably reflected as a modernized and advanced barcode, with an extensive capability of transfiguring an Auto- id into a more up-to-date innovation (Hartman, 2005). The use of this RFID technology, according to Byrnes (2004), can optimize inventory running given that it also further advocates the aims of the supply chain. An illustration of what a supply chain is is simplified in Figure 1.
Figure 1. The Supply Chain; a network of organizations for production and consumption. Existence of supply chains surmises that businesses rely on the dealings and involvement of other likewise businesses in the continuous process advocating their production activities ( Convery, 2004).
In addition, Byrnes (2004) agreed that companies make use of the Radio Frequency Technology to first, maximize the productions of supply chain activities and second, to foster the development of any analytical or certain business-oriented applications that tend to have an impact on the broad-spectrum supply chain structure. He further proposed that optimization labors generally concentrated on the activities of production flow, such as the reduction of labor in shipping and delivering operations, has the slightest effect between the two methodologies.
For Byrnes, therefore, the fundamental basis for a successful RFID is the direct focus on analytical schemas. Applications such as those would carefully steer certain areas for the prompt development and improvement on the supply chain coordination. Contrary with a production-oriented methodology that strives to make the prevailing supply chain structure more competent and efficient, the analytical approach on the other hand specifically aims to unearth the potential and beneficial ways by which the use of RFID as a technological tool can generate a more effectual and operative supply chain process (Byrnes, 2004).
Granted such specifications pointed by Byrnes, RFID indeed impresses a great deal of impact in managing production and inventory. In addition, revolutionizing current methods or stratagems for tracking merchandise sin a supply chain are potentially promising via RFID (Hartman, 2005). Hartman (2005), agreed also that the commercial use of the RFID technology has visibly posed a lucid advantage in its short tag price cost. It moreover does not require any battery. Fundamental among the applications of RFID is an Electronic Product Code (EPC), which functions much like its antecedent, the barcode and
simply possesses the necessary information and details regarding a specific product. To note, however, EPCs are better exploited than barcodes since it can easily differentiate or distinguish one box having the same product content from the other ( Higham, 2004). This considerable facility to differentiate is immensely of help in the interaction of goods in the supply chain. An instance of this is the possible distinction between two boxes from different origins having similar contents of apples, one however contains contaminated goods. Via the use of an RFID-readable tag, a grocer could therefore point which box has contaminated ones, just by going through the RFID tag and determining from what place has the contamination started off. Into the bargain also, the RFID technology is tough to counterfeit, rewritable, cannot be smeared on and is permissibly viable to be exclusively programmed using corresponding serial numbers ( Hostetter, 2005).
Nothing like a barcode, which entails the passing on in front of a scanner to be read, an RFID-readable tag can be distantly read simply just by being within the surrounding area of the scanner, therefore saving time and labor ( Hartman, 2005). To cut it short, a grocer may then be able to scan every single item in a heave same as the total time necessitated upon scanning everything through the option of barcoding, without of course not having to touch anything ( Hostetter, 2005). To further elaborate on the discussion about RFID's distribution in managing production and inventory, a retail distribution supply chain is illustrated on Figure 2. When there is an excess in demand that cannot be sufficed by an inventory, stock-out condition surfaces. The optimization of retail distribution could greatly reduce stock-outs. Notwithstanding the significant outlay in technology and production improvements, stock-out conditions variably continue to expend retailer profits ( Convery,2004).
Figure 2. Retail Distribution Supply Chain (Convery, 2004)
Distribution maximization often relies on progressing forecasting; forecasting which is better perfected by means of better visibility, and the role of RFID as a technological suit is ideal for the distribution of chain visibility. As for the general impact imprinted by this technology over the industries, and on the individual companies within those industries, Wal-Mart in 2004, promulgated its intention to compel its top one hundred suppliers to take on board and implement the use of Radio Frequency Identification by the year 2005. Surprisingly, many other suppliers followed Wal-Mart's scheme on using RFID.
Furthermore, supply chain RFID management approaches have been calculated to extend over a billion dollar by the coming of the year 2007. Eventually, granted the present rapid changes in the logistics environment, I personally think that a company, when making choices about managing its inventory and production, can afford to "go it alone" only when the time that a monopolistic production has come to pass in every area, since by then, the complexity of production and inventories would be diminished due to a cut down on the proportion of competence among other companies. Furthermore, reliance on technological advancements would be a cut below as the present's need for such because things related to production would not be subjected to too much complications and complexities.
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