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Walmart's tiny tag revolution is promising a productivity boost

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Sometimes it takes a market bully to push technology and force change that ends up benefiting everyone.
The use of radio-frequency identification, better known as RFID, is sweeping across industries from carmakers to pharmaceutical producers to oil drillers. The tags are cheap — less than 5 cents each — and are small and thin enough to be put on anything. Now, artificial intelligence has arrived to make sense of the mountain of information that’s being collected from these tags, portending a productivity boost that could drive economic growth and wage gains.

Walmart Inc. was the bully that forced its suppliers to tag all items, from clothing to electronics to food. The idea was to improve control over inventory by extending visibility to the product level from the previous case or pallet level. The retailer started with apparel suppliers and then expanded the so-called Walmart RFID mandate to other goods about two years ago.

Suppliers didn’t have a choice if they wanted to continue doing business with the retailer. The request added costs, of course, but they weren’t unreasonable because the technology had become so small — less than half an inch — that it could be embedded in a label, hang tag or even in the seam of a garment. The cost had plummeted to as low as 2 or 3 cents per RFID tag, which consists of a microchip and a tiny antenna that can transmit data up to about 15 feet. Just a decade ago, the tags cost about 50 cents each and were about 2 inches in size.

The technology was even more expense and clunky when it was introduced in the late 1960s and early 1970s, starting with security badges.

Now, people use RFID every day — from office access badges to automated toll tags on their vehicles — often without thinking or knowing about it. These passive tags, which are activated when pinged by a RFID reader, are everywhere — perhaps some are embedded in the clothes people wear and, for sure, their cars likely have dozens attached to a variety of auto parts.The success of Walmart’s RFID strategy caught the attention first of its retail competitors, and the practice soon spread to manufacturing and logistics. The initial benefits of improving control of inventory are well documented, said Senthilkumar CP, director of research and technology at Auburn University’s RFID lab.The technology is now moving into a phase in which AI is playing a central role of turning a flood of information into actionable data, he said. The supply-chain snags and inventory excesses during the pandemic have spurred even more companies across industries to invest in the technology.

“It’s hard to find anyone at this point, especially after Covid, who’s not exploring this technology,” Senthil said. “We are getting data that didn’t exist before, and now we have tools and technology like AI that can leverage the data.”

Most of the automakers, including Mercedes-Benz Group AG and Honda Motor Co. use the technology to make sure they have the right parts on the assembly line to make the different variations of models that are offered to customers. Health-care companies are using it to track inventory and to make sure patients receive the correct doses of medicine. The Defense Department, which needs to track a massive supply chain, and NASA were early adopters of RFID.

United Parcel Service Inc. is putting RFID-embedded labels on all its packages and is outfitting its sorting centers and delivery trucks to read them. The payback has been immediate, with the number of packages loaded on the wrong truck dropping significantly, which reduces the delays and cost of having to return the package to the sorting facility so it can be put on the correct truck the next day. The rollout isn’t simple. The facilities and trucks have to wire up with RIFD readers given the short range of the passive RFID tags. FedEx Corp. also uses the technology to make its network more efficient.

Snap-on Inc. is using the technology in its commercial unit to provide customers with Automated Tool Control. With tags on all tools, the system picks up when workers take equipment in and out of the tool room. Weatherford International Plc uses RFID for oil wells to activate drilling tools that previously required physical interaction by dropping a steel ball into the hole.

The technology has security concerns. Hackers can read the passive sensors but need to be at close range. Logically, the longer the range, the more the vulnerability. The technology depends on the internet, of course, which the service companies must keep available even amid threats from the international hacking gangs that FBI Director Christopher Wray has warned about.

Security will need to be scrutinized as the technology becomes more sophisticated. The price of Bluetooth-based tags is coming down rapidly and is now as low as $10 each. The tags, which are battery-powered and emit a signal, allow for two-way communication and are good for tracking products at a distance. They are being placed on larger items such as a pallet of goods or a finished automobile to track them in transit. A subset of RFID, Near Field Communication, benefits consumers by allowing them to use smartphones to read tags to obtain detailed product information on the spot or pay instantly at a self-serve parking lot.

By streamlining the supply chain and bolstering efficiency in transportation and delivery, the marriage of RFID and AI will become one of those hidden productivity gains that drive economic growth and wage gains. It only took a tad of market bullying to get the ball rolling.

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SROMPL – India’s 1st Import Export Consultanting Company

Welcome to Sromplexport! We’re a company that helps people and businesses import and export products across different countries. Whether you’re looking to source products, manage logistics, or navigate customs regulations, we’ve got you covered. We’re based in Rajkot, Gujarat, India, and we’re committed to providing ethical and transparent service to our clients. We work with industries like textiles, agriculture, and handicrafts, and we’re always happy to build new relationships with people who want to succeed in the import/export world. Thanks for stopping by, and let us know how we can help you!

Sromplexport offers international trade services, including product sourcing, quality control, logistics, and customs clearance. Our ethical and transparent approach simplifies the import/export process for clients in various industries.

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