The impact of radio frequency identification on supply chain facilities

Abstract

Radio frequency identification or RFID has received much press of late, mainly due to the recent compliance mandates by many of the world’s largest retailers (Wal‐Mart, Tesco, Marks and Spencer, Target, etc.) and Gillette’s reported purchase of 500 million units last year. The technology has been proclaimed to ‘lead to an entirely new relationship between people and things’ (J. D. Markman, ‘Invest in the Greatest Thing since the Bar Code’, MSN Money ‐ SuperModels, 25th June, 2003; http:// moneycentral.msn.com/content/P50823.asp). Others have said ‘we think it will be bigger than the Internet. All the Web did was connect computers to computers. That’s not as big as connecting things to computers’ (M. Roberti, publisher of RFID Journal, in interview with Markman, above). Promoters describe a supply chain where all assets are in perfect visibility through production, distribution, retail and consumption. According to one analyst, the world will need about half the warehouse space it needs today (P. Jilek, ‘Corporate Sector Focus, A Killer App?’ CSFB Investment Strategy, 17th June, 2003). This paper introduces RFID technology and its potential implications. Although the technology is compelling, there are serious nearterm challenges. Finally, the paper looks at the impact RFID could have on supply chain facilities and the future demand for industrial real estate.