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RFID Will Change Retailer-Supplier Relationship

RFID implementations are generally far from meeting the "act-on-fact" test in which they successfully enable the execution of an order at the precise moment of the order's receipt.
Nov 25, 2004This article was originally published by RFID Update.

November 25, 2004—Brian Zrimsek, research vice president of ERP and supply chain for Stamford, Connecticut-based research firm Gartner, made some interesting comments at the Symposium 2004 held last week in Sydney, Australia. He noted that RFID implementations are generally far from meeting the "act-on-fact" test in which they successfully enable the execution of an order at the precise moment of the order's receipt. (The alternative of the act-on-fact system is of course what we have today, in which inventory management is more art than science; items are often over- or under-stocked and rarely well-correlated to actual realtime demand.) According to Zrimsek, 2010 is the soonest we can expect act-on-fact. Currently, RFID is little more than a super-up bar code. This probably won't surprise many in the RFID industry, as they have always expect that the RFID revolution will some years to fully form. It naturally will start with RFID streamlining the tracking process and opening a window onto the supply chain. Only gradually will the business process reengineering take place.

Zrimsek also made a great point about Wal-Mart's ultimate goal with its RFID initiative: the retailer wants to realize an act-on-fact supply chain so that it can offload inventory onto its suppliers (a la Dell), thereby freeing up $20 billion annually. While it would indeed be revolutionary for the world's largest retailer to stop having to carry inventory, it would pose serious questions for the suppliers then burdened with carrying that inventory.

Read the article at ComputerWeekly.com
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