RFID: Helping Improve Supply Chain Efficiency

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New Delhi: Radio Frequecy Identification (RFID) is being tagged as the next big thing to bring a revolution in the enterprise software solution market as it promises to help companies to get rid of problems related to inventory management, material tracking and supply chain processes.

RFID will help enterprises to share the data extracted from enterprise resource planning (ERP) with suppliers and partners, keeping a precise tab on the movements across the supply chain.

In line with these international reports, Wal-Mart has decided to adopt RFID and has asked its suppliers to attach RFID tags to their merchandise. The company is looking at all its suppliers (around 25,000) adopting RFID by the end of the year 2006. Besides Wal-Mart, the US Department of Defense has also issued a mandate to its top suppliers to incorporate RFID tags in all shipments by 2005. These industry initiatives are expected to help grow the global RFID market to $3 billion by 2007, according to the Wireless Data Research Group. The software product vendors have also sensed the latent opportunities. The next version of Oracle Warehouse Management software, according to a latest company announcement, will include new RFID and Electronic Product Code (EPC) capabilities.

The RFID capabilities will help suppliers comply with recent mandates from Wal-Mart and the Department of Defense, and enable companies to reduce warehouse and distribution costs through improved inventory control and extended supply chain visibility.

The customer companies are also increasingly evaluating RFID technology for its potential to dramatically change the economics of shipping, receiving and inventory management, according to Gartner. Enterprises that can leverage RFID to create RFID-centric processes in order fulfillment, manufacturing and warehousing would achieve strategic differentiation from their competitors.

Orcale claimed that 7-Eleven Inc, an Oracle e-business suite customer, has been evaluating RFID technology extensively over the past year. The potential for improved process efficiency, inventory control and, ultimately, cost savings are substantial. 7-Eleven plans to use RFID tracking for its inventory item-by-item, store by store.

Oracle’s competitor in enterprise software market, SAP of Germany, is also betting big bucks on building RFID capabilities in its solutions. SAP claims that it is investing heavily in RFID and see it as a key emerging technology and a potential area of competitive advantage.