DOD learned its supply chain lesson from the first Gulf War. Prior to the start of the war thousands of tons of supplies, from bullets to bandages were shipped to Kuwait. However the military frequently could not readily identify everything on a pallet or in a container, nor where it was when needed. Those "lessons learned" resulted in use of RFID tags for equipment and supplies shipped during the recent War with Iraq. The military now had readily available "visibility" of supplies in the pipeline-real time what, where and how much.
Wal-Mart became the world's largest retailer in part by having better capability to manage its supply chain and product inventories than anyone else. RFID tags are the latest step in continuing to push that competitive edge. Wal-Mart's operating philosophy is built on having the right product (on the store shelf) in the right quantity, when the customer wants it, at the cheapest possible cost.
As was the case with the emergence of UPC codes, some in the dairy and ice cream industry will take the lead in adapting RFID tags advantageously into their supply chain management and operations. Others will ultimately be dragged kicking and screaming by their largest customers. Some will recognize the opportunity presented by RFID tags to reduce inventory in the supply chain, improve inventory accuracy, and increase sales by reducing customer stock outs and to help further reduce product handling costs. Those early adopters will use those capabilities to achieve strategic and tactical advantage over their competitors.
RFID tags may be either passive (read only) or powered broadcast tags. In the product supply chain we are talking generally about passive one-time-only tags. However, given the dairy and ice cream industry's use of returnable dairy cases, carts and sleeves there is also a critical need for passive read/write tags which can be repeatedly reloaded with new product data. The industry requires multiple use tags which can be reprogrammed at each case filling or cart loading with that inventory cycle's currently-in- the- case product type, size, quantity, mfg. date and cost.
At present, the critical questions include tag cost per unit, compatibility of vendor systems, and the ability of readers, transmitters, tags and tag printers to communicate with each other. Another is the tag users' ability to readily integrate data from tags into his own system. In addition, tag application cost and the ability to apply tags while maintaining current filler line speeds are major considerations for many. It is also imperative that manufactures of RFID tags, tag printers and tag readers agree on industry standard communication protocols.
Tag quantities generated by Wal-Mart and DOD will help drive down cost per tag, but not enough to an affordable per-carton level for dairy and ice cream industry use. Acceptable RFID tag cost, at the product carton level, will only be achieved through a combination of tag volumes and continuing rapid evolution of the technology. Those two factors combined will ultimately reduce tag manufacture and direct carton printing costs to a level at which they can be beneficially employed in dairy.
What must not be lost in the industry's evaluation of RFID is that tag cost on a per-unit purchase price is not the correct evaluation. For any dairy or ice cream company the decision to incorporate RFID tags must include a comprehensive identification and evaluation of the values of benefits to be gained from real time product visibility and status through out the supply chain-from the filler to the point of purchase.