Logistical Challenges of Radio Frequency Identification

The use of Radio Frequency Identification Technology (RFID) in the supply chain might seem long overdue to some people, yet to others, it is a brand-new idea that could work. To others, this is a working system in their businesses. RFID is a system that typically has a tag/label bearing a computer chip, antennae, and a reader. The basic composition looks just like a radio that is on a wireless Local Area Network communicating with the tag. These tags could be either active or take on a passive role. To ensure that there is non-stop tracking, one would require up to millions of antennae and readers that have been placed in a proximity that is very close to each other. This is honestly not justified economically.

Another potential logistical problem is in the implementation of the chip into the products that are currently in existence. Taking a scenario of one of Woolworth’s centers of distribution with more than 100,000 cages and dollies, there seems a potential burden for the database, i.e., there seems to be no clear manner on how these data are going to be handled. The analysis of this collected data will also be quite expensive. Privacy issues also do emerge from the use of this technology. Basically, the use of RFID that is hidden to spy on customers could generate a potentially explosive situation in which bad publicity would be incurred. Since, most likely, at its inception, there would be multiple corporate systems being run, retailers would have to install several systems to run at the same time. As much as the cost of installing one of the systems is low, the installation of several systems would eventually drive up the cost.