RFID is not a 'silver bullet`

By Warwick Ashford, ITWeb London correspondent

Johannesburg, 23 Jun 2005

Radio frequency identification (RFID) technology is not a 'silver bullet` that will solve every organisation`s tracking and tracing problems, but there are some compelling business benefits that cannot be ignored, says Eon de Koker, CEO of Pretoria-based Techsolutions.

"While RFID is not a magic cure-all, the technology does enable contactless automatic identity systems that have the potential to virtually eliminate global supply chain inefficiencies commonly believed to cost business around $40 billion each year," De Koker told business representatives at an RFID briefing at The Innovation Hub east of Pretoria.

De Koker explained that because RFID enables contactless monitoring, tracking and tracing, through appropriate application of the technology, manufacturers and retailers forming part of typical supply chains have been able to record significant benefits.

"For manufacturers, RFID has been shown to enable up to 50% reduction in lead times and up to 5% increase in sales, whereas retailers can expect up to 8% better on the shelf availability and consequently up to 10% more sales," said De Koker.

Other advantages for both groupings include lower transport and logistics costs as well as lower inventory or stock levels because RFID enables better stock management due to a higher level of supply chain visibility.

De Koker emphasised that while high returns on investment were possible, this was highly dependent on the establishment of a solid business case and a thorough implementation of the solution with due care to the placement of tags and readers as well as the design of backend processes to compensate for challenges to RF-based systems and handle errors.

Although De Koker sees RFID technology as being complementary to bar coding, he says it has several obvious advantages. "RFID tags tend to be more robust and durable than bar codes, can provide accurate location information in real-time, have a higher data storage capacity than bar codes, and are re-usable in some cases."

However, De Koker warned that as RFID pilot implementations gather momentum in SA, the limited local skills pool would come under increasing pressure. He appealed to business to support local RFID technology development companies to ensure that in the next few years these firms would have the necessary resources to meet the growing demand.