RFID battling cost-benefit issue for logistics

RFID battling cost-benefit issue for logistics

LONG BEACH, Calif. -- Radio frequency identification devices are all the rage today in supply chain logistics, but except for isolated developments in the retail and transportation sectors, RFID technology has generated more talk than action.

While RFID can give visibility to merchandise down to the item level, logistics professionals are still attempting to balance how much data they need on a shipment with the price they are willing to pay for the information.

The uncertainty that surrounds RFID technology involves a lack of standards and the cost of the tags in comparison to the tried and proven technology of bar codes. Keith Dierkx, senior vice president and chief information officer at MTC Holdings, said that if a company is truly interested in using RFID, the lack of standards should not be an impediment.

"Remember, it took 20 years to create bar code standards," Dierkx told the Eye for Transport forum Thursday in Long Beach. In fact, "first movers," such as the West Coast terminal operators, may become the de facto standard setters in their industries.

Terminal operators on the West Coast are finalizing plans to require that every truck that calls regularly at ports from Seattle to San Diego be equipped with an RFID tag. Information on the trucking company, the truck and the driver will be transmitted electronically to the terminals.

By linking RFID with other processes such as appointment systems and the use of optical character readers at the gates, terminal operators intend to streamline the processing of trucks into and through their facilities.

While users of RFID technology normally seek real-time visibility of their shipments, they do not benefit when too much detail is provided and the cost is greater than the value of the information provided.

Similarly, logistics professionals who believe RFID is needed for their operation must look beyond the cost of the tags and consider the total costs involved in the hardware, software and process changes that go along with RFID technology.

As competition among manufacturers drives down the cost to a few cents per tag, a wholesale shift to RFID may still be a bad move if the company must spend millions of dollars to change its logistics processes to incorporate RFID technology, Dierkx said.