Issue #16 | February 17, 2005

It's easy to forget how RFID technology can affect people, not just bottom lines, supply chains and distribution centers. I, along with a crowd of 800-plus delegates, was reminded of the power of this technology to improve lives at last week's Department of Defense RFID Summit in Washington , DC . "The primary goal for RFID," said Alan Estevez, assistant deputy under secretary of defense, in his conference address, "is to help the 'War Fighter.'" (For civilian readers, the 'War Fighter' refers to the men and women serving in the armed forces, not to an aircraft.)And building the War Fighter's confidence in the DoD supply chain is a top objective in order to improve how quickly critical supplies are received by military personnel. By using RFID technology, with other Defense Logistics Agency (DLA) systems, battalion commanders can see exactly where a requisition is and the anticipated date of delivery. Without this visibility, it is common practice to place multiple requisitions for the same goods because there is little confidence the previous order will be delivered. (One speaker cited a case in which the same requisition was made twelve times.)

Cost considerations are part of this investment: no one wants to pay for inventory multiple times. But the military is actually more concerned about the demand placed on critical, limited ?airlift? space. Depending on what is requisitioned, a duplicate order may have a higher priority over another non-duplicate order. Since there are limited resources available to transport equipment to the field, duplicate orders slow the entire supply chain. Reducing duplicate orders reduces the overall volume of inventory and the cycle times to process the inventory. This means getting the right material, to the right people at the right time.

Winter of discontent for suppliers
Despite the operational improvements to be reaped from the DoD's wide-reaching RFID infrastructure, there were some rumblings of discontent among suppliers at last week's show.

Like the major retailers, the DoD's passive deployment uses EPCglobal Class 0,1, and will eventually use UHF Generation 2 equipment. The DoD is committed to accepting Class 0 and 1 tags for a minimum of two years while the market readies for Gen 2 products, and has promised to announce a sunset date with plenty of time for suppliers to make a transition. This is extremely important due to some companies taking the position that they don't want to install RFID equipment that will be obsolete.

Some suppliers said that without an amendment to the Defense Federal Acquisition Regulations (DFARs) to include a RFID tagging requirement, they don't plan to do anything. One executive remarked that his company has simply forwarded the DoD's documentation and expects their third party logistics contractors to "take care of it" when it's finally required.

I fear that this attitude is going to come back to haunt companies later. Even if a company is not a direct supplier to the DoD, there's no place to hide. For example, larger suppliers to DoD are now stating they intend to push the mandate on to their suppliers and distributors. I predict that this will cause a ripple effect in the global supply chain unanticipated by many companies. Boeing has already mandated that one of its suppliers of circuit cards must implement RFID tags on cases and pallets. In turn, that supplier has expressed plans to require the same of their component suppliers. That supplier will then mandate RFID on its supplier, thus creating a domino effect.

As such, the war fighter will march on and the suppliers will fall in line.

Written by Louis Sirico
Copyright ? 2005 Louis Sirico