You might call them "extreme" bar codes. They are RFIDs – radio frequency identification tags – and they may well spark the next revolution in intelligent supply chain management.

"RFID technology is finally coming into its own, as engineers work out the bugs and vendors learn to make them more cheaply," says Noel Greis, director of the Kenan Institute’s Center for Logistics and Digital Strategy. "Meanwhile, the private sector is driving RFID usage through their supply chain initiatives.

"Our goal is to help companies learn not only how to respond to these challenges and opportunities, but also to use new technologies to launch entirely new lines of businesses that create value from their supply chains," Greis says.

Exploiting intelligent tools

RFID and intelligent software are natural partners for building smart supply chains. Greis and her global partners from academia and industry have recently launched an initiative that brings together airlines and aerospace manufacturers to better manage aircraft maintenance and spare parts logistics. The new PILOT, or Prognostics-Integrated Logistics, project is helping companies exploit an array of intelligent tools to help them become more competitive, more effective and more profitable.

Aerospace companies, for instance, competing in a stagnant market post-9/11, SARS and the Iraq War, have the opportunity to develop new profit centers by offering customers cradle-to-grave maintenance and supply services. The Boeing Co.’s recent purchase of 50 Boeing 737’s by Air Tran included a "Total Care" package, in which Boeing will provide a range of services to Air Tran related to the maintenance of the 737s.

"Companies like Boeing are differentiating their products by wrapping them with premium-gaining, value-added services and functionalities," says Greis. "Boeing no longer sells just airframes, but rather offers in-flight reliability guarantees that have a direct impact on its customers’ bottom lines."

Managing client demands

Meanwhile, many suppliers are under pressure from their customers to integrate RFID technology into their operations. Wal-Mart has asked its top 100 suppliers to put RFID tags with product codes on the cases and pallets they ship to distribution centers and stores beginning January 2005. The U.S. Department of Defense asked its top 100 suppliers to put RFID tags on pallets, cases and big-ticket items by 2006.

"There are tremendous challenges," says Greis, "but also tremendous opportunities. Our job is to help companies figure out what these new technologies mean for the companies’ bottom line, what those benefits are and how they can reengineer their business processes to take maximum advantage."

The Kenan Institute and Boeing are lead sponsors for the PILOT Project. Industry partners are General Electric Co., Delta Airlines, Aero Mexico and KLM. University partners, also members of the Center’s Global Logistics Research Initiative (GLORI), include Monterrey Tech, University of Warwick, Delft University of Science and Technology and the University of Applied Sciences in Cologne.

For more information on the Center’s projects and capabilities, contact Greis at 919.962.2133 or noel_greis@unc.edu