Positive ID

Expect Radio Frequency Identification (RFID) to revolutionize your inventory-management system, says Luke Hughes, director of research for consulting company Accenture.

It works this way: Tiny tags with built-in radio transmitters are put on items you need to keep tabs on. Then, when you want to locate a specific item or take inventory, simply click a button-located on a Palm, a cell phone or another device that's been interfaced with the system-and find out exactly how many items you have and where they're located.

"RFID is a huge advance over bar coding," says Hughes. "Research says that around 7 to 8 percent of inventory is out of stock when customers want to purchase it. RFID cures that-you'll never again be out of stock and not know it."

Not surprisingly, RFID is spreading fast. Big companies already use it, but growing businesses are catching on to RFID's value, too. Says Hughes, "It's such an obvious value proposition for any size business."

Robert McGarvey is the author of How to Dotcom (Entrepreneur Press).

This article was originally published in the December 2001 print edition of Entrepreneur with the headline: Positive ID.