RFID Is the First Step Toward Digital Transformation

By Mark Roberti

Companies that want to be truly digital—and truly efficient and effective, and take advantage of advances in artificial intelligence—need to deploy radio frequency identification technologies. Here's why.

In my column last week, I described what I believe the term "digital transformation" means, and why it is not simply applying technology to various aspects of a business. Digital transformation means breaking down the barrier between the real and digital worlds, so that computer applications and artificial intelligence (AI) can be used to create new and unprecedented efficiencies, as well as a competitive advantage. Radio frequency identification (RFID) technology is the foundation on which most successful digital transformations will be built.

Why? Because RFID enables companies to collect vast amounts of information in digital form regarding what is happening in the real world. It's not the only way to collect information without human involvement and at a low cost—video, robots, wired sensors and other systems will clearly play a role—but low-cost RFID tags can be placed on the vast majority of things companies own that have no power source and move around. That allows businesses to vastly improve the way in which they do business.

Let's take Delta Air Lines as an example. Delta has installed more than 240,000 RFID tags on oxygen generators, life vests and cabin emergency equipment on all of its more than 800 aircraft (see RFID Reduces Oxygen-Generator Waste for Delta Air Lines). The Result: the airline can now check the expiration dates on oxygen generators aboard a 757 in fewer than two minutes, whereas it used to take approximately eight man-hours. This marks a step toward digital transformation.

Eventually, Delta will be able to install RFID readers on aircraft (after receiving approval from the U.S. Federal Aviation Administration, of course) and know, in real time, when oxygen generators will expire and need to be replaced. The company can already better plan for replacing those generators, ordering them well in advance and having them at airports where planes with expiring generators will soon land.

That information can easily be shared—since it's digital—with the suppliers of oxygen generators, so that those firms can order materials well in advance to meet Delta's needs. Delta will eventually be able to use artificial intelligence to order oxygen generators and have them delivered and installed in the most efficient way possible, based on where planes with expiring generators are flying.

Macy's has also used RFID to break down the wall between the physical and digital worlds. The retailer is utilizing the technology on many of the items in its stores, so it has a high degree of confidence in its inventory data. Most other retailers do not. Whereas most retailers will not show inventory in nearby stores to customers shopping online unless they have sufficient safety stocks, Macy's is willing to expose all of its inventory because it knows that if its systems say there is one item left, then there really is (see Macy's to RFID-Tag 100 Percent of Items).

Breaking down the wall between the real and digital worlds means Macy's can easily carry out "buy online, pick up in store" (BOPIS) or ship from store. It's one of the first true omnichannel retailers. But with the data it collects, it can also use information related to the number of times a given item was tried on in a fitting room versus how many were sold, and thus make better merchandising decisions. Eventually, it might be able to utilize AI to more effectively adjust store merchandising strategies based on local demographics or weather patterns, or some other sources of data.

Video could help Macy's to understand what customers are doing at physical stores, the way clicks do online. By combining these technologies, and perhaps others, retailers will be able to obtain the kind of data at physical stores that they collect online, and they will then be able to optimize their stores in a way that was never before possible.

In most cases, low-cost RFID will be the tool that will allows companies to collect data cheaply and in near-real time about everything happening in the real world. That, in turn, will enable them to apply digital technologies and AI to those operations and achieve big benefits. In next week's column, I will examine how various technologies, including Internet of Things (IoT) technologies, video and AI, will come together to enable true digital transformation.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog or the Editor's Note archive.