Leading the Revolution in Supply Chain Management for Asian Manufacturers

“If you are in the manufacturing business and you service big US retail chains like Macy, JC Penny and Wal-Mart, it is no longer a matter of choice but necessity to adopt RFID on your products,” commented Prof. Cheung Waiman, Director of Asian Institute of Supply Chain & Logistics (the “Institute”). “Starting from 2010, we have observed a rapid adoption of RFID technologies with Macy’s Inc requiring to have all its garments tagged buy RFID within 2012. Sam’s Club of Wal Mart followed suit by imposing a service charge to suppliers for products without an RFID chip. This is regardless of the profit margin of the item to be supplied.”

RFID, the holy grail in every big retailer’s boardroom

RFID, Radio Frequency Identification, is not a new technology. The excitement revolves around its application in minimizing inventory and retail chain management. The whole system consists of a chip which will store all the “desired” data a user wants for an item while the sensor can readily read them for further management use.

RFID is an invaluable tool to enhance margin performance and maximize shareholders value. Recent success stories have repeatedly demonstrated that a great technology by itself often does not succeed by itself, it is how the technology is used and managed that greatly impacts changes in social behaviour. One of the motivating factors for the big retailers to adopt RFID is aimed at satisfying the insatiable information need of today’s consumers. The Institute focuses on moving this objective forward to revolutionize how retail business is done in future and hence another success story in redefining consumer behaviour.

Does every manufacturer need to jump aboard the RFID bandwagon?

Manufacturers of products which consist of many different procedures and parts, for example, a mobile phone, would probably find better use of RFID than, say, a furniture manufacturer. However, in the long run, if a manufacturer wishes to stay competitive, “do nothing” is not an option because her very survival depends on meeting clients’ just-in-time inventory policy.

Manufacturers can approach the local branch of GS1 (www.gs1hk.org), a not-for- profit industry led supply chain standards organization where various information and training on supply chain management can be found. Still there are tons of questions to be answered. This is where the Institute can offer assistance. It has launched a pioneering research project to study application of RFID in the garment industry in the first instance. The choice was made as it is an important industry in Hong Kong. Professor Cheung’s team is the first team to offer such service to the garment industry. The team aims to expand their study to cover other industries in the near future.

In addition to coordinating and conducting academic and applied research on supply chain management, the Institute develops training courses to spearhead the transfer of much needed know-how to equip manufacturers to cost effectively adopt the RFID technology to help reposition the global competitiveness of Asian manufacturers. The scope of the courses covers the development of infrastructure to manpower training to the capture and analysis of data to enable management to keep abreast of the RFID technology.