Radio Frequency Identification (RFID) technology has a great potential of impacting global trade patterns. The RFID technology provides rich and timely information that enables those in business to have a complete control over their chain management due to increased visibility (Hansen, 2008).
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Many companies have been reluctant to adopt this technology because they fear facing difficulties in justifying the Return on investment. RFID has been proven to only offer long-term payback periods that can be used to attain the objectives of the business in terms of Return on Investment.
There have been divergent views on the use of RFID with retailers viewing it as being useful in preventing loss of sales as a result of out-of stocks (Bart neck, 2009). The value Proposition of RFID is depends on the position of the technology within the supply chain. This paper will highlight the potential impact of the RFID technology on global trade patterns.
One of the major aspects of international trade is the management of production relationships over long distances (Jilovec, 2004). Many companies have started to invest heavily in technologies such RFID in order to improve the visibility of global trade (Jilovec, 2004). Companies can actually maximize the impact of the RFID technology by identifying the right performance matrix.
There are certain implementations that are in progress and are expected to bring some benefits to those concerned and in the process affecting the current trade patterns.
The supply chain performance is one of the major operational indicators of a company and with the introduction of the RFID technology, the company is bound to benefit from accurate and timely information from the demand and the supply side across the world (Wolfram, 2008).
Global issues such as export compliance and work-in-process visibility quota management and tax liability can only be addressed through the use of RFID technology. The RFID also plays a vital role in improving the inventory visibility (Banks, 2007).
Suppliers, manufacturers and distributers have been pushed to adopt the use of RFID tagging on pallets and cases as per compliance mandates. The RFID technology has a lot of technological advantages over the use of bar codes. The RFID tags can withstand adverse conditions such extensive abrasion and are readable through paint and dirt.
The RFID technology has made it easy to monitor transit goods and therefore encouraging many people to venture in international trade (Banks, 2007). Although the RFID tags are expensive, their ownership costs are very low because they can be used to perform multiple tasks simultaneously (Wolfram, 2008).
The RFID minimizes unnecessary handling and enables on-demand stock replenishment (Hansen, 2008). The company operational costs can greatly be reduced by avoiding the inaccuracies normally caused by human intervention in data collection.
In conclusion, the use of the RFID has a great potential of influencing trade patterns across the world. This technology is very instrumental in improving the chain supply performance of international companies to greater and more effective levels. The implementation of RFID is normally a long term project that requires strategic alignment of all business strategies (Jilovec, 2004).
After meeting the RFID compliance, a business organization gets a great opportunity to enjoy the benefits RFID that include a reduction in resource utilization, improved services, reduced inventory and reduced cycle times.
Banks, J., 2007. RFID applied. New York, NY: John Wiley and Sons.
Bart neck, N., 2009. Optimizing processes with RFIID and auto ID: Fundamentals, problems and solutions, example applications. New York, NY: Wiley-VCH.
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Hansen, W., 2008. RFID for the optimization of business processes. New York, NY: John Wiley and Sons.
Jilovec, N., 2004. Edi, Uccnet & Rfid: Synchronizing the supply chain. New York, NY: System iNetwork.
Wolfram, G., 2008. The RFID roadmap: The next steps for Europe. New York, NY: Springer.