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David Hannon, News and Transportation Editor -- Purchasing, 3/18/2004 2:00:00 AM
Radio frequency identification (RFID) not only makes importing shipments more secure, but more cost effective. These were the findings from a cost-benefit study conducted by consulting firm BearingPoint on behalf of the U.S. Trade and Development Agency, which funded the project. As part of the study, RFID-ready containers were shipped from a port in Thailand to Seattle in the fall of 2003. It was found that RFID effectively:
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Improved visibility, resulting in better predictability and timeliness of cargo shipments;
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Reduced costs related to emerging U.S. Customs trade security measures;
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Reduced safety stock and inventory carrying costs from improvements in trade compliance and in-transit visibility;
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Improved customer service to sales channels and resellers;
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Increased profits from improved in-stock product rates; and
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Reduced incidences and direct costs of theft and pilferage.
The study also found that financial benefits from the added security were dependent on value of goods being shipped. Adjusted conservatively for uncertainty and risk, there is an 80% probability that the benefits cited above will exceed $220 per container, according to the report. The report also predicted that benefits would increase dramatically as system utilization grows and additional trade routes are added.
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