Radio frequency identification (RFID) has actually been around for quite a while now. David Gustin gives a brief history lesson on it at Spend Matters, and then he explains how it all pertains to modern-day supply chain finance.
Yesterday and Today
It was really in June 2003, when Walmart announced a planned supplier EPC tagging program, that RFID finally caught the spotlight in a big way. But tags were expensive and difficult to implement back then, and it was a challenge to get suppliers to agree to go with it. Once it was realized how dramatically that RFID could improve store-SKU inventory accuracy, its adoption became wider spread, but RFID is still used more in stores than in the supply chain.
Gustin learns through talking to Chainlink Research’s Bill McBeath that there are places in supply chain finance where RFID can help. Here is the breakdown:
- Pre-export: supplier receives financing based on firm order, before it has actually shipped the goods
- Post-export: supplier receives financing after it has shipped the goods, but before the invoice is approved
- Receivables financing: financing based on selling receivables
This would be different from the way we see RFID used currently, where it is mostly used by the military or for monitoring temperature in food and pharmaceuticals. To learn precisely where the differences lie, you can read the full article here: http://spendmatters.com/tfmatters/the-strange-tale-of-rfid-technology-and-supply-chain-finance/