Is the hype real with RFID?

Will radio frequency identification technology revolutionize the supply chain in the future? While RFID has hit the channel’s radar this year, it is too early to tell how it will do.

But Scott Lundstrom, senior vice-president and CTO of AMR Research says it will play a substantial role

in the next generation of supply chain execution.

Lundstrom believes RFID, which is an acronym for various pieces of technology that use radio waves to identify specially tagged objects, will be a core technology deployed across the supply chain in most industries.

RFID’s advantages are that it will improve information availability and save money, he says.

That’s why it’s a hot technology at the U.S. Department of Defence and Wal-Mart.

The jury is still out on which organization is more demanding on technology providers. My bet is on Wal-Mart: It has to turn a profit, while the DoD just has to protect the public against the likes of Osama bin Laden.

But I digress. Wal-Mart, for example, is leading the charge for wireless identification tags on outbound shipments. The tags must have information such as product, place, time and transaction data, which in turn helps the receiving company route, track and distribute items better.

Companies such as PeopleSoft have started to tailor solutions with RFID. Its application, for example, can provide the status and location of products and materials across the supply chain. PeopleSoft will incorporate RFID in both its enterprise and mid-market products. This gives the channel an opportunity to get in on the ground floor of a technology movement that can be very lucrative.

There are challenges ahead, such as which worldwide standard radio frequency will be used. It is one thing to better track shipments in North America, but imagine tracking something in Azerbaijan?

Security will be an issue with RFID as it is with everything else in computing. It is very simple: data cannot get into the wrong hands.

The other danger is that RFID may be over-hyped. Proceed with caution because the market for this stuff is in its infancy.

Dedicating a lot of money, time and resources in RFID today may not deliver the kind of return on investment a reseller might want than, let’s say, waiting 18 months might.

However, can you imagine the margins that could be made for RFID-savvy solution providers who understand this hot technology and can develop a practice around it?

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