What is radio frequency identification (RFID) technology? RFID is a wireless communication technology that provides the user to identify a tagged object or person. RFID is also a cost-effective and widely used technology. This is because of the efforts of Wal-Mart and the Department of Defense (DoD) to embed RFID technology into the supply chain. In 2003, the Giant began enabling pallet-level tracking on their inventory, Wal-Mart established rules for an RFID mandate that required their top suppliers to start marking pallets and boxes, with Electronic Product Code (EPC) labels. Also, at the same time DoD quickly followed suit and issued the same expectations to its top 100 suppliers. The push to incorporate RFID technology into their supply chain is motivated by the improvements in freight forwarding, good receiving and storage efficiencies, as well as the reduced storage, labor, and product loss costs that pallet-level inventory visibility can offer.
Wal-Mart as well as DoD mentioned here are actually the world’s giant retailers and the world’s giant supply chain operators. Due to the size of their operations, RFID regulations are spurring growth in the RFID industry and bringing this new and evolving technology to market. Obviously, the cost of using RFID has also fallen as a result of the mandate, as economies of scale are realized. Lastly, the standard appears to have unified the industry behind a single technology standard (Electronic Product Code standard). The lack of understanding and industry consensus on the issue of standards has hampered the growth of the industry prior to the issuance of the mandate. DoD and Wal-Mart alone cannot account for all of the current interest in RFID technology. However. Given the expected rapid growth of the industry, it became clear that RFID has begun to attract the attention of various industries as well as government agencies.