Small Business Technology

RFID Technology

Written by Richard San Juan for Gaebler Ventures

This article mostly talks about radio frequency identification (RFID) technology. Recently, stores have begun to adopt such technology, because of all the benefits it provides. Wal-Mart is one of the main stores that have adopted this technology. Startups and small businesses who are in the retail sector or other sectors which might benefit from this new valuable tool, should consider implementing RFID technology.

In recent years, advances in information technology have made substantial improvements in many aspects of the retail sector business, such as logistics, warehousing, and inventory.

By examining highly successful businesses and exploring how they have improved their business by utilizing technology, it is possible to identify the impact of information technology on the retail sector overall.

One such business is Wal-Mart, whose state-of-the-art technology and business innovations have set the trend for others to follow. Radio frequency identification (RFID) technology is an important technical strategy that Wal-Mart has decided to implement as part of its business plan to improve its efficiency and profitability.

Retail stores such as Wal-Mart utilize this technology by requiring all merchandise to have its own RFID tag. When scanned and detected, immediate access is provided to a database where there is a variety of content for every garment, shoe, and bag.

There is also real-time information on every item, such as what sizes or colors are currently available. This enables the sales associate to spend more time attending personally to a customer, and less time in the stock room to check for the availability of items.

Once the RFID technology has been perfected, it will allow Wal-Mart to not only eliminate lost sales but also lower the inventory turnover. By increasing inventory turnover, it will lessen the finances needed to maintain such a large inventory. Another benefit of RFID technology is that customer preferences are able to be stored on a database. This information is used to customize the sales experience and further enhance the service provided to the customer.

Once Wal-Mart rolls out the necessary RFID gear to achieve its financial objective, the success from this IT initiative will definitely cause a trickle-down effect. This implementation will have strategic implications not just for Wal-Mart's direct suppliers, but for the suppliers' own operations and vendors as well.

If Wal-Mart is successful in its use of RFID technology, companies that were unsure on RFID technology will probably adopt this business strategy. Moreover, this ripple affect will lower RFID costs in general, thereby opening the door for RFID technology to be introduced to smaller companies and industries.

Furthermore, it will foster the development of new applications such as RFID-enabled security and personal safety. Applications such as these, combined with GPS technologies, would benefit the future user by enabling comprehensive monitoring whether on the road or in a particular location.

Though the potential advantages of RFID benefits are obvious, one of the few concerns with regards to implanting this technology is the possible infringement of privacy. For example, in the warehouse, stores would have the ability to track their employees movements via tags embedded in their badges and uniforms.

Also, retailers will be able to follow consumers' movements and determine what types of products they purchase. This would pave the way for potential abuse with e-mail spamming of sales and coupons in the future. Though there is the potential for abuse, as with past technologies, the benefits of RFID technology are too great to prevent its progress in Wal-Mart and other businesses. Once the privacy concerns are mitigated, the outlook of RFID technology use in retail business is excellent.

Richard San Juan is currently pursuing an MBA degree with an emphasis in Finance from DePaul University in Chicago. He is particularly interested in writing about business news and strategies.

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