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Cover Story

September 11, 2006
Volume 84, Number 37

Radio-Frequency Identification

Customers push chemical companies to adopt the next-generation tool in supply-chain technology

Rick Mullin

Raadio-frequency identification (RFID) has been on the to-do list at most chemical company information technology (IT) departments for some time now. Lately, though, it is rather high on the list.

INTERMEC

WAVE OF THE FUTURE RFID is widely viewed as a must-have for supply-chain management.

RFID, which uses radio-frequency scanning to read information on tags embedded in products and shipping pallets, has been a standard feature of logistics in the electronics, pharmaceutical, and consumer goods sectors for more than a decade. But even though each of these sectors is an important market for chemical makers, most chemical companies have not felt compelled to invest in the technology.

This attitude is changing now that two big customers, Wal-Mart and the Department of Defense, have given suppliers deadlines for incorporating RFID tagging. Customers shipping to DOD have been required since last year to tag shipments. Wal-Mart???s top 100 suppliers were required to employ RFID tagging earlier this year, the top 300 by next year.

These mandates have added significant incentive to implement the technology in the chemical sector, according to Gene Sumption, manufacturing systems manager at Chemical Industry Data Exchange. CIDX is an industry group that, among other things, represents the chemical industry before standards bodies forging cross-industry protocols for communicating and protecting information via RFID.

But customer coercion may have less to do with the current push into RFID technology than do broader cost containment and growth strategies, according to Dan Mullen, president of AIM Global, an RFID trade association. Replacing bar coding and other logistics-tracking mechanisms, he claims, can positively impact everything from pricing to security.

David E. Kepler, Dow Chemical's chief information officer (CIO), agrees. "People need to look at the strategic value proposition of the technology," he says. In the case of RFID, the value is in supply-chain optimization. Dow is combining RFID with global positioning technology to better track shipments during transportation. "It gives you more visibility of your supply chain and optimizes safety and security."

Chemtura's BioLab pool chemicals division, acquired as part of Chemtura's purchase of Great Lakes Chemical, sells a good deal of its output through Wal-Mart???reason enough, according to CIO Kenneth L. Donohue, to implement RFID. But the company has a much broader implementation program under way. ???We want to get ahead of the game with traditional chemicals," he says. "We want to be an innovator and distinguish ourselves."

Donohue and others note that the chemical industry is typically not a first adopter of new technologies and that the foray into RFID is part of a general broadening of horizons after intense focus on enterprise resource planning systems. Kepler notes, however, that RFID is an improved method of doing something that is already being done, unlike IT revamps that can significantly change work processes.

RFID can also be viewed as a technology that every industry will need to incorporate as requirements for its use branch out from government and big consumer goods customers. CIDX recently published a white paper detailing its work with standards organizations such as Electronic Product Code Global. In it, CIDX Executive Director JoAnne R. Norton dubs RFID "a next-generation tool for sharing information among trading partners."

Chemical & Engineering News
ISSN 0009-2347
Copyright © 2010 American Chemical Society

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