Radio Frequency Identification (RFID)

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RFID technology is implemented through tags placed on product cases and pallets, which contain an RFID chip with a small antenna that emits a unique product identifier code when passed near an RFID reader. That information is then transmitted to an inventory control system.

There has been a push for product suppliers and retailers to adopt RFID technologies recently, under the premise that companies will be able to improve the efficiency and transparency of their supply chains.

Retail heavyweight Wal-Mart Stores Inc. put a wave of RFID adoption in motion by issuing a mandate last year that its top 100 suppliers begin using electronic product codes by January 2005.

Wal-Mart has already began trials of the technologies in a regional distribution center and several stores in Texas. As a member of EPCglobal, Wal-Mart has implemented the new protocols in its trial, Grasso said.

Though RFID has been lauded as the future of supply chain management, a few factors have impeded wide adoption: the nascency of the technology, the expense of buying and testing RFID systems, and the lack of global RFID standards.

The Radio frequency identification (RFID) standards group EPCglobal Inc. said that it has finalized its first global standards, promising to help speed companies' adoption of RFID technologies to improve supply chain operations.EPCglobal has begun creating standards for the next generation of tag specifications called UHF (ultra high frequency) Gen 2. 

The electronic product code (EPC) technologies standards define the types of tags to be used and the frequencies the tags work at, as well as the tag read rates.

EPCglobal, based in Lawrenceville, New Jersey, said that it will soon provide its subscribers with access to equipment interoperability tests and offer other compliance services later this year.

The not-for-profit group is a joint venture between EAN International and Uniform Code Council and counts as members other major retailers such as Gillette Co. and Procter & Gamble Co.

Companies that want to implement the standards must become EPCglobal subscribers, and the price of becoming a subscriber depends on a company's revenue and number of EPC codes it plans to use Grasso. The group currently has over 200 subscribers, the majority of which are large corporations.

A survey released by Deloitte Touche Tohmatsu, ePC Group Ltd. and Retail Systems Alert Group Inc. earlier this year indicated that 70 percent of large companies with at least $5 billion in annual sales will begin RFID timelines and initiatives within the next 18 months, and 25 percent of those will spend between $500,000 and $10 million on RFID adoption in 2004.

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