Move Over RFID: Real ‘Supply Chain Visibility’ is Here

In the annals of predictions that don’t come true, TV meteorologists hold the top spot, followed by political pollsters and the cover of Sports Illustrated. 

Rounding out the top five are the long string of technology pundits who confidently predicted that supply chain RFID tracking would conquer and re-shape the global logistics industry.

Ironically, the supply chain holy grail that RFID was supposed to deliver is now within reach--though RFID isn’t necessarily part of the technology that is making it possible. That holy grail is called “end-to-end visibility.” It means awareness of the location and condition of every product

and component, all the way back to upstream suppliers. New tracking technologies have filled gaps in supply chain visibility. But more importantly, new information technology is capable of analyzing the torrent of data these tracking devices generate. In our new white paper, we explain how the combination of big data processing and better tracking devices can be used not only to monitor supply chain activity, but to identify and eliminate waste, pinpoint delivery times and predict failure points.

Read our white paper, Beyond Visibility: How to Build a Supply Chain That Thinks. 

RFID’s Roots: Russian Spies and Electronic Music

The prehistory of RFID actually goes back to a Russian inventor better known for his contribution to electronic music. In the late 1930s and early 1940s, Léon Theremin was imprisoned in the Soviet Union, where he had returned after achieving fame in the West for inventing one of the first electronic instruments, the theremin. While there, he was forced to work in a state lab, where he invented a passive listening device for the Soviet spy machine. Actuated by a radio signal from afar, Theremin’s bug rested inside the Great Seal in the U.S. embassy in Moscow for seven years, from 1945 to1952, picking up conversations and transmitting them using a technology that prefigured the passive RFID tag. Twenty years later in 1973, the first true RFID was developed as toll equipment for the New York Port Authority. In 1983, the “radio frequency emitting identifier” was patented.

Early RFID Adopters: Wal-Mart and the U.S. Army

Supply-chain hype around RFID emerged in the 1990s with the U.S. Army’s adoption of the RFID-based movement tracking system (MTS) for supplying Army units. The MTS was designed to enable quick re-routing of supplies based on emergent needs and changing conditions in the field. Every company supplying the Army was required to package its goods with RFID tags.

Wal-Mart soon followed suit from the private sector: In 2003, the massive retail chain announced that it would begin requiring its top 100 suppliers to tag pallets and cases of goods with RFID. Within three years, the company said, all its suppliers would have to comply with the program. The goal was “end-to-end visibility,” a massive leap forward in Wal-Mart’s already vaunted logistical prowess. Wal-Mart would be able to track the goods it sold from where they originated with a supplier, all the way through to the point of sale in a store. But it didn’t work out that way: Suppliers balked at the cost of the tags and Wal-Mart itself faced problems: Its IT systems weren’t powerful enough to handle the massive amount of data that the RFID project generated. Wal-Mart abandoned its end-to-end visibility ambitions in 2009, just a couple years after the U.S. Army softened its RFID requirements for vendors.

Move Over, RFID

In the last few years, the cost of RFID has come down, and its uses are more common. But there are also several other tracking technologies filling the gaps in supply chain visibility. According to the EU A.T. Kearney/WHU Logistics Study from 2015, technologies like GPS (U.S.), GLONASS (Russian), Galileo (European), and Cellular (like GSM, WCDMA, LTE, and others) are increasingly a part of the picture. In addition, cellular devices and services are becoming cheaper and less power-hungry. This allows supply chain managers to gain insights into stretches of the supply chain where they did not previously have any visibility, and pull impressive amounts of working capital out of in-transit inventory.

Despite the hype, it turns out that RFID was only the beginning. The promise of end-to-end supply chain visibility that began years ago with RFID is now being realized through new, predictive tools for accessing and using supply chain data, and it’s giving early adopters an edge. The “cognitive supply chain” is 100% digital, turning assets and knowledge into a flow of information that runs from one end to another, and enabling managers to use Six Sigma techniques to predict bottlenecks and failure points before they happen. To learn more, read our white paper, Beyond Visibility: How to Build a Supply Chain That Thinks.