Radio-frequency identification (RFID)

Definition

Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. These tags contain electronically stored information that can be read from a distance using RFID readers.

5 Must Know Facts For Your Next Test

1. RFID technology enhances inventory management by providing real-time tracking of goods and materials.
2. The use of RFID can reduce labor costs and human errors associated with manual inventory counting.
3. RFID data can be integrated into accounting systems for more accurate financial reporting and asset management.
4. Implementing RFID can improve supply chain efficiency by reducing stockouts and overstock situations.
5. RFID technology supports better decision-making by providing detailed, accurate data on inventory levels and movement.

Review Questions

• How does RFID improve the accuracy of inventory management?
• What are the cost benefits associated with implementing RFID in a business?
• In what ways can RFID technology impact financial reporting?

Related terms

Supply Chain Management:

The oversight and management of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer.

Inventory Turnover Ratio: A measure of how many times a company's inventory is sold and replaced over a period; calculated as cost of goods sold divided by average inventory.

Enterprise Resource Planning (ERP): Integrated management software used to collect, store, manage, and interpret data from various business activities including product planning, manufacturing, marketing, and sales.