Latest in Supply Chain Management

This is important if you are trying to understand what lies ahead in supply chain management.

ProLogis, a leading global provider of distribution facilities and services, recently released the latest edition of the ProLogis Supply Chain Review entitled, “RFID - Lessons Learned.” It is based on interviews conducted with 31 supply chain leaders and describes their companies’ preparations or strategies for dealing with radio frequency identification (RFID) technology as well as the lessons that they have learned.

Leonard Sahling, head of the ProLogis Research Group, noted, “To date, the high cost of RFID tags and readers has generally outweighed the potential benefits. But technological breakthroughs announced during the past few months have reduced these costs by about a third. Within the next year or so, we expect to see a sharp acceleration in the number of companies that have purchased state-of-the-art RFID systems and incorporated them into their supply chain operations.”

Key findings of the Supply Chain Review include the following:

• RFID technology is designed to provide users with enhanced visibility across their supply chains—i.e., accurate information about the quantity, location and status of all products, at all points within their supply chain.

• Enhanced visibility will facilitate greater efficiencies across the supply chain, resulting in higher inventory turns, major cost savings, faster deliveries, and extensive cooperation and collaboration among supply chain partners.

• Although it may appear at this stage that the benefits from RFID accrue mostly to retailers whereas the costs are borne by suppliers, recent interviews with supply chain leaders revealed several instances where suppliers have realized major improvements in the efficiency of their supply chain operations after adopting RFID technology.

• How soon RFID technology succeeds in revolutionizing supply chain operations remains to be seen. This technology is still being developed and refined, and the overall costs of RFID tags and readers currently outweigh the benefits. Tag costs are falling, however.

• In deciding whether to implement RFID, companies must decide whether the incremental benefits, above those derived from barcode scanning, are great enough to make the return on investment (ROI) worthwhile.

• To date, companies have mostly limited themselves to conducting initial research or building business cases for RFID applications. In effect, they are dipping their toes into the water, rather than taking the plunge.

Read more here. And read my earlier article on supply chain management