How has radio frequency identification (RFID) technology affected the supply chain?

RFID (radio frequency identification) tags are essentially barcodes on steroids. Whereas barcodes only identify the product, RFID tags can tell what the product is, where it has been, when it expires—essentially whatever information a company wishes to program. RFID technology generates mountains of new data about the location of pallets, cases, cartons, totes and individual products in the supply chain. It produces oceans of information about when and where merchandise is manufactured, picked, packed and shipped. It creates rivers of numbers telling retailers about the expiration dates of their perishable items—numbers that will have to be stored, transmitted in real-time and shared with warehouse management, inventory management, financial and other enterprise systems. In other words, as RFID technologies in the supply chain spread into the operations of more manufacturers, parts suppliers and retailers, they will transform the supply chain as we know it today.

Another benefit of RFIDs is that, unlike barcodes, RFID tags can be read automatically by electronic readers. Imagine a truck carrying a container full of widgets entering a shipping terminal in China. If the container is equipped with an RFID tag, and the terminal has an RFID sensor network, that container's whereabouts can be automatically sent to Widget Co. without the truck ever slowing down. It has the potential to add a substantial amount of visibility into the extended supply chain.

Right now, the two biggest hurdles to widespread RFID adoption are the high cost of building the infrastructure to manage RFID data and a lack of return on investment (ROI) for many midsize and small manufacturers working in today's supply chains.

What is the impact of responsible sourcing, environmental sustainability and the "green" movement on the supply chain?

If the technological side of supply chain management wasn't hard enough, the new "corporate social responsibility" (CSR) movement inside 21st century organizations and IT departments adds another layer of complexity. Broadly defined, CSR initiatives for companies include such strategies as being able to show environmental sustainability (i.e. reducing the carbon footprint), responsible sourcing from a wide range of global suppliers, and how "green" an organization is.

So how does that affect supply chain management? Visibility. In order to prove that a company has lowed its carbon emissions, isn't dumping hazardous materials into rivers and doesn't buy its materials from suppliers that employ underage workers, company leaders need to be able to gain insight into and track the actions of their suppliers, and their suppliers and their suppliers—all the way down the chain into some good and not-so-good parts of the global economy. This ability also becomes critical when tainted goods need to be identified and found quickly in a supply chain, before the goods spread throughout a country's population.

Wal-Mart announced in fall 2008 that all of its suppliers—including the thousand located in China—would have to be in compliance with laws and regulations relating to rigorous social, environmental and energy efficiency mandates. Wal-Mart's suppliers would even have to attest that their suppliers received high ratings on environmental and social practices.

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