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RFID and The Internet of Things

RFID

 tags are a relatively recent innovation in e‑SCM that are already widely used for logistics 

purposes. They can be attached to individual product items in a warehouse or in a retail loca‑

tion. With appropriate RFID reader technology they can then be used to assess stock levels. 

With the possibility of the RFID reader being connected to a system to upload item location 

and status to the Internet, this approach is referred to as 

The Internet of Things

, although 

the term was proposed in 1999 originally. Innovation is still continuing, with software com‑

panies such as Thingworx.com and wireless hardware services such as KORE collaborating 

to develop what are known as 

Machine-to-Machine (M2M) applications

. According to 

ThingWorx (2013), in the mobile phone sector a solution will enable companies to order 

and manage SIM inventory more readily and access data about device location and last data 

session. For customers, they will be able to create custom bills and use more  location‑  based 

services.

The approach is already used in simple systems like vending machines where data is 

exchanged with readers on stock availability. In the house of the future, appliances and 

devices will be located and activated using similar approaches.

RFID is still in a relatively early phase of its adoption, with PMP (2008) reporting that only 

3% of UK companies are using RFID extensively while 19% are deploying it in some areas. A 

further 3% only use it if mandated by their customers, while 16% are planning to use it in a 

few areas. The main disadvantage of RFID technology is still seen as its cost, cited by 42% of 

respondents to PMP (2008), while a lack of technology standards is mentioned by 32% and a 

lack of consumer understanding or distrust by 23%.

Fisher (1997) makes the distinction between two strategies that manufacturers can fol‑

low according to the type of product and the nature of its demand. For functional products, 

particularly those with easily predictable demand, the product does not need to be modified 

frequently in response to consumer demand. Here the implication is that the supply chain