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Fulfillment and Distributions Favorite Four Letters: RFID

Reality and science fiction novels, it seems, are becoming more similar with each passing year. In the case of radio frequency identification (RFID) technology, this increasing resemblance makes good business sense.

Fulfillment centers are using RFID technology to track shipments with pinpoint accuracy, offering incredible levels of transparency to the fulfillment center client. Furthermore, this technology is in the beginning stages of mainstream adoption.

RFID Technology Basics, and Why Fulfillment Experts Are Heavy Users

Radio frequency identification technology can be great for knowing where things are, and where theyre going next. By using radio waves to communicate data to and from transponders or "tags," as theyre called, tiny RFID tags provide a wealth of location-specific data.

The transportation industry has been using RFID for years now. Major mass transit systems from Washington D.C. to Moscow, Russia employ RFID so passengers can check in and out of turnstiles with minimal friction and maximum tracking.

Commercial fulfillment companies are also heavy users of RFID, which can help track shipments, reduce inventory confusion, and keep labor costs low. Once that "tag" is placed on a product, it can be "seen" wherever it goes, with notable accuracy and without a lot of expense.

As usual, Wamart has been at the forefront of this technology. According to one academic study, Walmart used RFID to reduce out-of-stock product problems by more than 30 percent. When product supply gets low, the tags tell the monitoring system that its time to restock.

Fulfillment Use of RFID Not Just For Big Corporations

With respect to fulfillment houses, the main advantage of RFID has been this ability track products accurately and cheaply. Boeing, for instance, uses RFID to cut down on labor costs related to accepting shipments of airplane parts. The data entry work is now done by the tags.

As the efficiencies of RFID technology have become well-documented, smaller fulfillment houses have followed the lead of major corporations. Trucks and trains have been equipped with RFID transponders, offering a new level of transparency to the entire process of fulfillment and distribution.

The end result is that the average fulfillment truck driver carries more, and more valuable, data than the average corporate data center of 30 years ago. Because all that stuff in the back is tagged and talking to home base, its instantly known where things are, and where things are going.

The average truck driver, today, is carrying not only a load of physical product, but a load of information.

Price Decreases, Miniaturization Bound to Increase Fulfillment Use of RFID

Prices are going down, and the tags are getting smaller. Thats a recipe for increased use of RFID. Its becoming worth it to "tag" smaller and cheaper products.

Of course, there can be too much of a good thing. Fulfillment centers too caught up on the bells-and-whistles aspect of RFID, rather than the concrete benefits aspect, should be made to prove the validity of their RFID system as to how it benefits the client, not just how cool this stuff is.

Adding unnecessary cost to obtain imaginary benefits is never a good business decision.


Business Week

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