US DoD Beginning to See RFID Payback

RFID Journal reports that RFID implementation in the US military is starting to show quantifiable and anecdotal benefits, as the Pentagon rolls this technology through its massive $120 billion per year logistics chain. The US expects to spend a total of $500 million to implement RFID over a six-year period, with a payback analysis ranging between a net savings of $70 million to $1.7 billion over seven years.

Alan Estevez, the DoD’s assistant deputy undersecretary of supply chain integration, notes that implementing RFID in the US Marines’ supply chain has cut inventory value in the chain (and hence also the burden on that supply chain) from $127 million to $70 million, largely by reducing unnecessary reordering whenever supplies are delayed or uncertain. Average delivery times have also dropped from 28 days to 16 days, while the supply backlog of 92,000 shipments has fallen to 11,000. The more profound change, however, is in the dynamic on the front lines. As RFID Journal notes:

“Marines can see where critical items are, and that changes the dynamic,” Estevez said. “The dialog [between forward operating bases and the logistic hub] has changed from ‘Where’s my stuff?’ to ‘Why isn’t my stuff moving?’ to ‘I want you to put my stuff on the next truck because I can see it’s there.”