Validating the existence and status of goods doesn’t necessarily have to be just down to human intervention. Increasingly technology is being used to help with that process and provide real time tracking information about the location of the goods.

One such technology is known as Radio Frequency Identifier (RFID) tags, which are heavily associated with inventory control and management. These are small electronic devices or tags, which can be attached to a container or even incorporated into a product.

Some of the more sophisticated RFID tags contain silicon chips and antennas and generally work off their own power source. By using GPS technology they can even report on the exact location of a container or cargo.

According to Chris Vukas, senior vice-president, finance and accounting, at UPS Capital, the group is already deploying RFID tags on certain routes for some of its clients.

They are commonly used in road transport for tracking in real time the progress of a truck as it moves goods from supplier to buyer.
According to Sitpro, a UK organisation committed to simplifying international trade, RFID tags could play a major role in speeding up border crossings.

For instance, a sealed cargo could be accompanied by an RFID tag with embedded security features such as biometric authentication. Customs officers could gather much of the information they need by scanning the tag, thereby speeding up border crossings. In the current political environment such a technology would prove very useful to help keep the supply chain moving. More accurate information on the exact location of a cargo can help various parties in the trading community to plan their production processes better. That along with faster border crossings reduces the length of financing needed.

EPCglobal, a not-for-profit standards organisation, which is seeking to drive the global adoption of RFID technologies, recently had its latest radio frequency identification protocol endorsed by the International Standards Organisation. This is likely to be an important development for the technology.

It is a unified data system enabling information about product specifications, transport requirements and volumes to be instantly transmitted along the supply chain. For example it will provide crucial information to a shipper about the contents of the cargo and if it has any special shipping requirements.

That information would most likely be gathered by a reading device. The data can then be transferred to a computer. Once secured with encryption technology it can be made available via the Internet to the relevant parties to the transaction.

The new standard is likely to provide an ideal platform for a whole range of vendors to create innovative products and solutions for supply chain managers.

The tags and their associated systems are relatively expensive, which has slowed their adoption. Nonetheless, investment is gradually bringing down their cost and increasing their sophistication. This in turn speeds up the return on investment and makes them more attractive.

Most analysts expect them to eventually become widely used. Indeed, a whole raft of large multinationals have signed up to adopt the system including Nestle, Coca-Cola, PepsiCo, Hormel Foods, Kraft and Unilever.

Their motive is to speed up the supply chain and improve visibility. No doubt they”re also hoping it will play a role in reducing their trade finance costs and in improving the efficiency of their treasury operations.