Posted on 10/15/2003 8:25:30 AM PDT by NotQuiteCricket
Though it may be years before businesses regularly track all supplies moving through their supply chains with radio-frequency identification, the technology has gotten a big boost from the federal government that could speed its adoption.
The Department of Defense issued a mandate early this month requiring all of its suppliers to use passive RFID tags on the cases and pallets they deliver to its various branches by January 2005. The Defense Department isn't the first to require that suppliers support RFID--Wal-Mart Stores Inc. has told its top 100 suppliers to use RFID tags on cases and pallets by the same date and will require all its suppliers to use the technology in 2006.
RFID is expected to improve inventory management with less manpower. Today, Defense agencies check inventory manually with bar-code scanners, says Alan Estevez, assistant deputy undersecretary of defense for supply-chain integration. "Anytime you have intervention, there's some margin of error. With passive RFID, you now have the ability to in-check without manual intervention."
The Defense Department's directive could have huge ramifications for the technology, which until recently has been too costly to use on a wide scale. The initiative will affect tens of thousands of suppliers, more than Wal-Mart's initiative, which ultimately will involve more than 10,000 suppliers. The Defense Logistics Agency, the department's largest agency, has nearly 24,000 providers.
"This is as good or better than the Wal-Mart mandate in terms of driving adoption of RFID," says Noha Tohamy, a Forrester Research senior analyst. The Defense Department "is a global enterprise," she adds. "They stay away from proprietary deployments."
The department's mandate calls for support of the Electronic Product Code, standards developed by the Auto-ID Center, a partnership of business and universities. Late this month, that work will become the domain of Auto-ID Inc., a newly formed nonprofit organization.
The Defense Department began experimenting with RFID technology, which uses low-powered radio transmitters to read information stored in tags embedded with tiny chips and antennas, in the early 1990s. It uses RFID technology from several suppliers. Last February, Savi Technology Inc. received a $90 million Defense contract for RFID hardware, software, and related equipment, its third such contract since 1994. Under previous contracts, Savi placed RFID equipment at more than 400 locations globally to track military cargo.
The Defense Department's RFID projects to date have used active RFID. The directive calls for passive RFID, and that will require a new infrastructure. Passive tags have no battery, draw power from the reader, and are less expensive than active ones. The department doesn't expect to have the entire infrastructure in place by the deadline but will have it ready at key sites, Estevez says.
It will be a colossal--maybe impossible--challenge to get every Defense supplier on board in a little more than a year. "It depends on the data-exchange mechanisms," Tohamy says. "If suppliers already have communication links with the department such as EDI, than that will be a lot more doable than having to implement a brand-new infrastructure to communicate the RFID information."
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