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CostEffective IT: Wireless Inventory
Cost-Effective
IT: Wireless Inventory,
by
Richard Sonnier
Houston
Business Show "Advisor" Richard Sonnier, of the Information
Technology Services firm Nimble Services, Inc., provides weekly
information on our show about business technology issues. He can be
reached at 281-445-4800 x250 or rsonnier@nimbleservices.com.
This week I will discuss automating inventory management with the RFID
wireless technology.
What is RFID?
 Radio Frequency Identification
(RFID) is a technology that enables the automation of inventory
tracking. The RFID tag is a very small silicon chip. In the picture,
the RFID chip is the tiny black dot on the finger. The chips are also
very cheap. Many RFID chips cost less than 25 cents, and the latest
generation is being priced at between 5 and 10 cents in quantities of 1
billion or more. The RFID tag includes a very small antenna designed to
receive radio waves. In the simplest application, RFID devices are
Electronic Product Codes (EPCs). Here the RFID chip provides
information similar to the UPC barcode. The advantage of RFID
technology over barcodes in that RFID can be read at a distance of
between 10 to 100 feet. Reading the RFID tag is fast between 30 and 100
milliseconds, and the RFID reader can read a whole pallet full of RFID
tagged items at once. It is like a Toll Road EZ TAG for inventory
items.
RFID Vision
Wal-Mart and Gillette are two companies deploying RFID technology
buying billions of the devices. Even at 10 cents apiece, these
companies are spending a lot of money on the technology. These
companies expect to save money with RFID by better control of inventory
and the supply chain. The vision is:
- RFID tags containing manufacturer ID, model number, and item
serial number are included on every product package at the factory.
- The item is tracked automatically from the moment it leaves the
factory until the consumer leaves the retail store.
- Thus, the entire inventory in the supply chain is known and
optimized.
In theory, you could achieve this result with barcodes today except how
can you read the barcode on each item pack on a pallet in a warehouse.
With RFID tags you simply install RFID readers in the doors of the
warehouse and every item that enters or leaves the warehouse can be
reported to the inventory control system automatically. This is
something you just cannot do with barcodes.
RFID Reality
It will take years for the technology to roll out completely. In 2005,
Wal-Mart is planning to use RFID tags on pallets and cases from its top
100 suppliers. Wal-Mart will use RFID on the pallets and cases to track
the inventory:
- As it enters the stockroom
- When it leaves the stockroom and goes to the retail floor
- When the empty cases go to the trash compactor
Wal-Mart expects to integrate this inventory tracking data into its
business systems to automate operations like ordering replacement
stock. While not the complete item level tracking of the RFID vision,
it looks like a significant commitment by Wal-Mart and everyone will be
watching to see how the technology performs.
Next week, I will discuss saving money through IT automation.
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