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Radio frequency identification (RFID) tags are microchips that replace traditional barcode labels on devices as they are being shipped, moved, or used throughout organizations. Once embedded in a device, piece of equipment, or shipping label, an item can be tracked, potentially, from a point-of-origin through an end-users’ distribution (cradle to grave per se). Some of the tags being used presently are not only passive latent devices, but can be used to store and be programmed to transmit data throughout movement from one location to another. In many cases, managers believe RFID tags to be merely a static device used for in-transit visibility (ITV) during transnational or transoceanic shipment of goods. This, however, does not capture the full range of capabilities for which RFID tags can and should be used. If the information available through RFID technology is used appropriately and is managed effectively and efficiently, it could result in greater benefits to multiple supply chain partners resulting in enhanced efficiency, increased speed to shelf of products, significant cost savings opportunities, and enhanced customer satisfaction.¹

RFID technology can be beneficial in a number of ways. The device, once embedded into a process can assist materiel managers in the tracking of shipments and the movement of goods in storage. The information associated with the RFID tag attached to a device creates an overlay of databases that are shared among multiple users and organizations. This overlap of information opens operational information to multiple partners and can be viewed by many interested stakeholders. In this sense, many opponents to RFID implementation see this as a limiting factor of RFID technology while advocates see it as an enhancement to ongoing practices and processes.²

The implementation of RFID technology increases visibility of assets across a broad spectrum of supply chain operations and can be used to assist in the development of more accurate re-order objectives, re-order points, and PAR (periodic automatic replenishment) levels. Additionally, RFID technology can aid in identifying lost goods due to inefficient property management accounting processes. In this respect, RFID technology reduces overall lost revenue resultant of mismanaged supply chain practices.⁶

No matter how integrated information management systems become there will be unexpected applications or systems that need to share information or problematic messaging or file types.¹⁰ This must be worked around, but the return on investment far outweighs the cost of doing business in this regard. Usability, as defined by Ng, Sim, Tan, and Wong¹¹, involves "devices that do not affect the appearance and function of the user" (p. 134). RFID permits this and permits cost savings potential for healthcare organizations regardless of size and function.

In a futuristic context, integrating wireless technology solutions into healthcare supply chain management may become a requirement, not just a differentiator, for efficient healthcare delivery.¹¹ Healthcare supply chain expenditures account for approximately 40% of a hospital organization’s costs.³ Typical shortfalls in a healthcare organization’s processes is a lack of standardization, delays in implementing automation technology, and a lack of high quality data on which to base strategic decisions.

Data synchronization provides organizations with the opportunity to save both time and money. Reports indicate, according to Garvin⁹, that through data synchronization organizations can see increased sales, product availability, enhanced velocity management, productivity and maintenance, and reduced ancillary costs associated with the management of a supply chain. Tools that enhance synchronicity and the contiguous flow of goods and services provide consistency in information and bring the information, often, right to the user’s desktop.

Synchronizing data is a two-step process that can result in tremendous value to a healthcare organization and RFID technology provides a large portion of the data associated with the visibility required for asset management. Step 1 involves acquiring a system for "in-house ordering".⁹ The reason for this process is the insurance that information in the organization’s internal supply pipeline, ordering processes, and billing procedures is consistent throughout the organization. Step 2 involves a data repository development wherein all information is centrally stored, synchronized, audited, verified, and distributed to stakeholders throughout an organization’s supply chain.⁹

Best practices align with internal and external stakeholders to improve product flow, services, information, and monies across a wide spectrum of multi-directional supply lines. RFID technology represents a strategic solution to an ongoing problem. The employment of strategic supply chain management requires a paradigm shift in philosophy and organizational attitude. The shift needs to be away from an isolated departmental perspective that orients the focus toward suppliers in one respect and revenue in another. Supply chain managers and professionals must assist organizational leaders in developing more service-line perspectives that focus on the lines of communication and supply chain as a critical component of cost, revenue, and profit margin centers.³

Supply chain management in other industries, like grocers and other types of retailers, is more successful than healthcare organizations in managing asset visibility.⁵ Retailers know exactly what products they have, how many units of each product they have used and how many items have been processed, sold, and are in the supply lines or need to be re-ordered. Much of this is due to the implementation of RFID technology. "A traditional material management team using a task-driven, transaction processing, stock and inventory management system cannot effectively stem the cash leakage" resulting from inefficient supply chain management practices.³ Healthcare leaders may need to refocus perspective on touch points between the patient, caregiver, and supply line with an understood goal of data synchronization, consolidation, or elimination of superfluous data as needed up- and downstream. Automating this process through the implementation of RFID technology will generate definite gains in productivity and workflow.⁴ Most of the economic threat to healthcare organizations, according to Hermann⁸, stems from automation asymmetry – one party knowing more information than another does.

Wireless and mobile device technologies may continue to revolutionize healthcare over the next few decades. Successful merchandizing and retailing of goods and services requires accurate, complete, and consistent information related to products. The use of RFID technology permits organizations better opportunities to monitor the disposition of products including in- and out-flow from storage facilities as well as tracking and monitoring devices used for specific needs.⁶ This total asset visibility capability is developed through passive identification systems attached to products, goods, and device service tags and may be invisible to an uninformed eye. RFID readers, called interrogators, collect data from those devices on a continual basis and captures information beginning at a point-of-origin to the end user of an item providing near real-time information to whomever is recording the data.

The implementation of technology should support an overall business plan to include financial, clinical, and administrative initiatives.¹⁰ Planning strategically is an important aspect of new technology implementation and must be tied to an organization’s strategic vision. "Organizations must consider incremental progress toward realizing their vision and introducing technology that allows them to take meaningful steps toward goals while accounting for cost restrictions, resource knowledge, and legacy capabilities".¹⁰

A perceived disadvantage to the implementation of RFID technology is a further fragmentation of healthcare sectors.1 In June 2006, the FDA stated "that it considered RFID to be the most promising technology for electronically tracking and documenting the chain of custody" of goods and services.⁷ With the right strategies and technology solutions in place, hospitals and other types of healthcare organizations could greatly reduce incidence of medical errors and improve overall patient safety and supply chain efficiency. If none of those organizations understands, communicates, or maximizes these successes, however, the lessons learned become mere lessons observed and the associated data goes toward no further development of a common good. For example, according to Hartman⁷, the cost savings per provider could be significant with the implementation of RFID technology. With each elimination of a medication error, an organization could realize $2,000 in cost avoidance. Additionally, a 25% increase in the reduction of errors at bedside point-of-care related to improved data synchronization.⁷ This, however, highlights one of many misunderstandings related to RFID implementation in that the healthcare industry associates internal automation advancements only with the enhancement of patient care. "Software solutions for the healthcare industry frequently focuses on enhancing the quality of patient care" but fails to realize opportunities for boosting the organization’s revenue cycle.¹⁰

Far too many senior healthcare leaders do not place enough emphasis on savings associated with effective supply chain management when it is one of the largest expenditures in a healthcare organization.³ Pertinent data should be made available to multiple consumers via low-cost technology platforms such as RFID tags. Interrogators can be placed, easily, in door frames, ceilings, and nursing stations to automatically and directly read RFID information to eliminate much of the manual entry errors associated with supply chain practices. This relates directly to the technology enhancements of ongoing practices by (1) not requiring direct contact or line-of-sight scanning, (2) improving/enhancing stored data, and (3) enhancing asset visibility resulting in lower lost goods reporting when equipment or supplies cannot be found. In this respect, RFID technology is commonly seen as an alternative or complement to traditional bar coding – a common practice in many organizations.¹⁰

As organizations progress into the future, supply chain IT may focus on ease-of-use, flexibility, and portability rather than on high-tech devices and gadgetry.4 As these strategies are developed organizations will need to re-look some of the strategic implications associated with implementation and inculcation. "Research directed toward the development of technical solutions to fulfill these requirements will underpin the practicable, versatile, universal, and unfettered use of telemedicine" tools and devices.¹¹