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RFID reshapes the global supply chain.

Article Excerpt
EXECUTIVE SUMMARY

An efficiently managed supply chain provides a competitive business advantage, but it requires a robust information technology infrastructure, Perhaps the most influential technology on the forefront of supply chain improvement is radio-frequency identification, which promises to give organizations the need for lower inventory levels and a host of additional benefits.

The need to compete effectively and even emerge with a distinct competitive advantage has forced companies to look continuously for ways of improving their efficiency. One major issue in this regard is supply chain management. A closer study of most successful businesses reveals that effective management of the supply chain is often cited as the most important reason for success. Indeed, efficient supply chain management not only offers sourcing, warehousing, and distributing products to cope with uncertain demand, but it also dramatically improves quality customer responsiveness, operational efficiency, and the bottom line.

An inefficiently managed supply chain often results in a substantial increase in operating costs. According to a study conducted by A.T. Kearney Consulting, inefficiencies in supply chains can waste up to 25 percent of a company's major operational costs. The study also found out that even in companies with profit margins of 3 percent to 4 percent, a 5 percent improvement in supply chain efficiencies focusing just on material flow can double profit margins.

To be successful, companies will not seek to achieve cost reductions or profit improvement at the expense of their supply chain partners, but rather, they will attempt to make the supply chain as a whole more competitive and efficient. Successful implementation of supply chain management has been credited with significantly lowering costs and risks and increasing technological innovation, profitability, productivity, and organizational competitiveness.

Implementing effective supply chain management requires a robust information technology infrastructure. IT helps companies coordinate inter-organizational activities, which is the central aspect of supply chain management. Many companies have integrated IT into their supply chain system in strategic supply chain collaboration. This process is known as collaborative planning, forecasting, and replenishment and is being used by companies such as Best Buy, Hewlett-Packard, and Anheuser-Busch.

Many businesses, especially leading retailers, have already begun preparations to implement a radio-frequency identification technology to their supply chains. Using radio-frequency signals, RFID provides the ability to identify and locate electronic data-carrying devices attached to items--from pallets to individual consumer items. This technology will be a major advance in the entire supply chain management process as it is applied from the simple task of moving goods from loading docks to complex tasks such as managing terabytes of data as information...

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