Like others that seemed out of the wireless range at the outset, the radio-frequency identification technology may not just be about supply chains.
Its future efficiency may be derived from using wireless technologies like wireless local area networks and wide area networks. Although the industry is not there yet, the idea is taking root. In January, Philips entered a deal with Visa to pursue what it calls contactless payment, in which retailers can carry out transactions with their mobile devices such as cell phones and personal digital assistants.
Companies like Sony Corp. and NTT DoCoMo Inc. entered similar agreements earlier to usher in this technology.
But it all starts with short-range technology. While the use of cell phones and PDAs will take place in the consumer end of the business chain, the supply chain angle is also shaping up.
In a recent agreement, Philips and IBM Corp. announced they will work together to introduce smart cards that will not only monitor inventory, but also track items from the manufacturer to retail storage to the display shelf and finally to the checkout line, where presumably the buyer will use a contactless payment solution for purchase.
The full end-to-end connection has not happened yet, but that is the plan, said Christophe Duverne, vice president of marketing and sales for Philips Semiconductor.
Big retail companies like Wal-Mart may use short-range protocols like Wi-Fi technology, Duverne said. In the consumer end, bearer technologies like CDMA or GSM, or more advanced ones like EDGE, CDMA2000 1x or wideband CDMA may be used.
This is how it will work: Manufacturer A has 5,000 items in its warehouse to deliver to retail company B. Once the goods leave the premises of company A, the movement is reflected on its records.
When the product arrives at company B’s premises, the mainframe computer notes the arrival after the items have been scanned through RFID technology. Using Wi-Fi technology, workers can communicate to other company officers of the activities with the new consignment, including the quality of the goods, and activities with product off-loading and conveyance.
As the goods move from the delivery truck to company B’s storeroom or warehouse, RFID technology tracks the goods in what is called pallet-level tracking or case-level tracking. This level of tracking already exists. Company B can track the items in boxes from the truck to the storeroom.
What has not been accomplished yet is the intelligent shelf. This refers to the ability to track items once they are displayed on the aisle shelves. The beauty of this level of tracking is that it involves the retail shopper, who will pick up the item of choice. Once this is done, RFID technology will monitor product movement to the checkout line.
The buyer also can pay using a mobile device, which is linked up in the store with wide area networks and Wi-Fi technologies.
Until the retail industry adopts intelligent shelves, RFID will work conservatively without wireless LANs or bearer technologies. In the IBM-Philips deal, IBM will perform integration while Philips will produce the RFID chips.
“As Philips extends it RFID business from early adopters to the mass market, its business is rapidly moving towards large-scale projects that require global reach, an expertise in project management and systems solutions,” said Philips.
