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Put RFID in Your Product, Not on It

Embedding a transponder in products—particularly consumer electronics—delivers more value with no business process change, and the incremental cost is almost insignificant.
By Mark Roberti
Nov 16, 2009Many companies still see radio frequency identification as something that's applied to a finished product to improve supply chain tracking. To these firms, the technology is usually an added cost that they fear they won't recoup by improving processes and better managing inventory. But some businesses are realizing RFID is not just a radio bar code—it's something that can be embedded into a product at little extra cost, so that product can be tracked throughout its lifecycle.

A number of electronics firms have been working with RFID technology providers to develop RFID chips that can be placed on or embedded in printed circuit boards (PCBs). There are a number of benefits to this approach, over sticking a label with an embedded transponder on a box containing a cell phone, DVD player or Internet router.

First, tagging a box means you can only track the product from the moment it's boxed up until the point of sale. If the transponder is in the PCB, however, you can track the product from the time the manufacturing process begins until the item is recycled. There might not be huge benefits to tracking work-in-process, because many electronics facilities are highly automated, with robots picking components and adding them to the PCB. But a manufacturer would be able to track finished products as they are moved into inventory, monitor how long they remain in inventory and ensure the proper items are picked and shipped to the correct customers.

A manufacturer could send an advance shipping notice (ASN) to its retail partner, letting it know what items are coming, and with what serial numbers. The retail partner could then receive the items into inventory, check the serial numbers against the ASN automatically and identify which items, if any, went missing during the trip (theft is a huge problem in the electronics supply chain). Telstra, an Australian telecommunications firm, recently ran an RFID trial that, if rolled out across its 130 retail outlets, would save the company up to $3.2 million in annual labor costs and product shrinkage.

There might be some benefits to consumers as well. For instance, a phone manufacturer could create a database of owners, so that when a phone is lost, someone need only read its tag ID to look up the owner's address. Or the manufacturer could offer an additional service, by which a phone could be turned in to the manufacturer, which would then ship it back to the owner at no additional charge.

When it's time for the phone to be discarded, the tag in the phone's PCB might be useful for recycling. In countries in which manufacturers are responsible for recycling electronics, an RFID tag could identify the manufacturer. But it could also be used to enable a waste-management firm to quickly retrieve information regarding which parts can be recycled, as well as any hazardous materials the phone might contain.

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