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 / Winter 2004 / Issue 37(originally published by Booz & Company)


RFID: Thinking Outside the Closed Loop

Currently, there are many competing standards for RFID hardware, software, and data management. This makes it difficult to set up a network in which the systems of multiple organizations would be compatible. According to our survey, only 8 percent of companies have begun centrally coordinated efforts to embed RFID into overall strategic planning within the firm and with supply chain partners; 48 percent of the companies to which we spoke said they’re still doing individual closed-loop projects. Moreover, because barcoding has helped warehousing and transportation companies continuously improve shipment tracking, 99 percent of shipments are already delivered problem free, limiting RFID’s added value.

Despite the small number of successful RFID applications today, we believe that adoption of the technology will increase dramatically over the next four years. Some companies’ resistance will be weakened as chip prices continue to fall and as standards inevitably take hold.

But there’s also a tactical reason to be optimistic about RFID’s prospects: As companies pursue more sophisticated mass customization, they need to track and analyze supply chain data at an increasingly granular level. To give customers what they want when they want it — customized, quickly, inexpensively, and efficiently — companies must know the status of supplies, inventory, manufacturing, and shipments almost to the moment. RFID could become the spy on the supply chain that every company wishes it had.

Author Profiles:

Stefan Stroh ([email protected]) is a vice president with Booz Allen Hamilton in Frankfurt, Germany, who specializes in technology strategy, restructuring, outsourcing, and large-scale IT transformation programs. He has worked with companies in the automotive, pharmaceutical, telecommunications, and transportation industries.

Jürgen Ringbeck ([email protected]) is a vice president with Booz Allen Hamilton in Düsseldorf, Germany. He focuses on strategy and transformation for companies in global transportation industries, such as airlines, tourism operators, postal and logistics companies, and railways.
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