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The RFID device is a radio frequency transmitter instrument which transmits a self identifying radio signal that tells its receiver details about whatever object the device is tagged to. This device has tremendous application in the supply chain management system, as has been demonstrated by Wal Mart, the retail giant.
Since the 1980s, Wal Mart has insisted that all its major suppliers add RFID tags to their supplied products to Wal Mart. These tags are little microchips planted on individual products or their containers. Wal Mart stores have detecting devices that receive signals from these RFIDs as soon as a product comes into store. This signal then goes to a central supply chain management and inventory control database which stores the information.
The same system is used to track shelf life of products, customer buying habits and a host of other important information that the retail giant then utilizes to understand how its products are being bought in various geographies and at different times of the year. This kind of information is very important for Wal Mart, because this helps it determine what product to send where and at what time. This is an in depth study of market trends and product movement that no other method would have made as thoroughly possible as the RFID.
Concerns have been raised at some sectors about the so called invasion of privacy that the Wal Mart’s RFID supposedly commits. But this sort of criticism can be true of all kinds of market study – for example, Google’s study of visitor patterns and user data which helps businesses profit by understanding customer trends. However, criticism or not, Wal Mart’s methods have been extensively studied and copied by other retailers. For example, London’s Merck and Spencer, the giant retail outlet, has implemented a massive project to implement the RFID technology across all its product range.
It has been estimated that the use of RFID saves Wal Mart over half a billion dollars annually, by letting it transport products at just the right time and to just the right places.