DoD Using RFID to Reduce Costs

The DoD is actively moving toward using RFID technology to reduce inventory and increase efficiency. The DoD has been using RFID tags for many years to track movements of supplies, but this next phase of its RFID deployment program aims to bring greater visibility across their entire supply chain.

The goal is to use RFID data integrated with the DOD’s existing enterprise resource planning (ERP) software to give the DOD  insight into business processes. In this way, the DoD can find areas where improvements can be made and efficiencies gained.

Multiple pilot studies over the past decade have demonstrated the effectiveness of RFID at managing inventory, reducing errors, and increasing productivity. The success of these studies, and other factors, have convinced the DoD that the time is right for extending RFID use.

Because federal budgets are so tight, reducing costs is essential, and RFID is the way to achieve that goal. According to Paul Peters, the DOD’s deputy assistant secretary of defense for supply chain integration, logistics services cost $215 billion in fiscal year 2010, and accounted for 30 percent of the DOD’s total budget. Reducing costs would have a positive impact on spending.

In addition, new advanced in RFID technology have made its use more attractive. Both active and passive tags have become less expensive, and readers can now operate in harsh environments. Also, a movement toward more open standards will facilitate deployments that could reach across a supply chain and operate globally.

Using RFID,  the DoD can share information across the DOD’s internal supply chain, as well as with the companies that provide the agency with supplies. And by integrating that data with its ERP systems, the DoD can realized the cost-savings benefits of RFID .