The Best Uses of RFID in Supply Chain Management and Logistics

What is supply chain management?

Supply chain management refers to the coordination of all processes involved in the production and distribution of goods, from raw material acquisition to final delivery to the customer. It optimizes the flow of goods, information, and finances across the supply chain to improve efficiency and reduce costs. RFID technology provides real-time asset tracking and monitoring, enabling better inventory management and enhancing supply chain transparency and safety.

How does RFID work in supply chain management?

RFID technology is used in supply chain management to improve inventory accuracy and streamline processes. RFID tags have an antenna and chip that stores information about the item. They attach to products or packaging. When an RFID reader comes within range, it transmits an activating signal to the tag. The tag then transmits its stored data to the RFID scanner.

The data from RFID integration can track inventory location and monitor the condition of goods in transit. It can streamline various areas of the supply chain through automation. The generated information allows for quicker, more informed decision-making that can boost supply chain management efforts.

Rfid In Supply Chain Management

What are the benefits of using RFID in supply chain management?

1. Improved Inventory Accuracy and Visibility

RFID technology significantly improves inventory accuracy and visibility in supply chain management. Each unique RFID tag makes inventory trackable in real-time, reducing the risk of duplication or missing items. RFID-enabled supply chain visibility improves shipping and inventory accuracy. It performs more reliable inventory counts, counts on an item level rather than an SKU level, and identifies and fixes mistakes.

2. Improved Product Traceability and Security

RFID technology enhances product traceability and security in the supply chain. Stakeholders and customers can use smartphones to authenticate products, check their origin, and maintain brand reputation. RFID tracking devices provide faster inventory data access and location. It enables supply chain managers to keep items stored, distributed, replenished, or completed (deliveries).

3. Ability to Track Assets in Real Time

RFID tags enable real-time tracking of assets in supply chain management and are accessible from anywhere in the facility. They resolve concerns caused by misplaced materials, poor organization, or oversights during manual processes.

RFID asset tracking provides quick and easy access to inventory information and location. Supply chain facilities can see when items are stored, distributed, or replenished and confirm deliveries no matter where they are in the supply chain.

4. Reduced Theft and Lost Goods

In the supply chain, theft and lost goods can result in legal issues, fines, and glitches in customer service. RFID technology reduces these risks by increasing visibility and providing updates on the location and amount of each item. Since RFID tags are readable from anywhere in the facility, employees can immediately locate misplaced or stolen items. Additionally, companies can keep track of any moving products that are not authorized to do so.

Increased visibility and control alleviate theft and loss, save money, and protect brand reputation. Examples of successful RFID implementation in reducing theft (or loss) include high-value products like computers, televisions, and automobiles.

5. Reduced Costs Associated with Inventory Counting

RFID technology reduces costs with inventory counting in supply chain management, provides real-time tracking, and includes accurate inventory counts. This visibility allows companies to see the number of available products and find the optimal inventory level to avoid excess products sitting on shelves and wasting money on storage.

With RFID, companies can adjust inventory levels and save around 20-30 percent on warehousing and storage costs. RFID improves shipping and inventory accuracy, identifies and fixes mistakes, and increases inventory count rates from 200 to over 12,000 items per hour.

6. Improved Collaboration and Communication between Stakeholders

RFID technology significantly improves collaboration and communication between stakeholders in supply chain management. Here are some benefits for each group:

Benefits for Suppliers:

  • RFID tags provide real-time visibility into inventory levels. It allows suppliers to manage their production schedules and avoid stockouts.
  • Suppliers can provide accurate and timely delivery estimates by sharing RFID data with their customers. RFID lowers the risk of missed deadlines and associated penalties.

Benefits for Retailers:

  • RFID tags help retailers track inventory levels more accurately, reducing the risk of overstocking or stockouts.
  • RFID data optimizes retail store layouts and product placement, improving the customer experience and boosting sales.
  • RFID technology helps retailers quickly and accurately identify and recall defective or unsafe products. It reduces the risk of harm to customers and associated legal liabilities.
7. Enhanced Planning and Execution of Production Lines

By assigning a unique number to each physical object, including raw materials, parts, products, equipment, shipments, and personnel, RFID technology integrates these objects with the Enterprise Resource Planning (ERP) system. This integration enables accurate and timely information about production status, including work-in-process and inventory status, to share across the supply chain.

8. Increased Productivity in Warehouses

RFID technology increases productivity and efficiency in warehouse management. With RFID, tasks are automatable, reducing human errors and increasing accuracy.

RFID provides real-time information about warehouse activities. It improves inventory accuracy from an average of 65 percent to over 95 percent. It can also lower shipping and packing errors, saving companies money. RFID provides greater control over warehouse items, ensures instant product identification, and reduces currency costs.

9. Improved Responsiveness to Shipment Changes

RFID technology improves the responsiveness of supply chain management to shipment changes. By automating the tracking of items at each link in the supply chain, businesses can receive real-time information about warehouse activities and the movement of goods, enabling them to be proactive about finding solutions to any potential issues.

How does RFID work in supply chain management?

RFID technology is used in supply chain management to improve inventory accuracy and streamline processes. RFID tags have an antenna and chip that stores information about the item. They attach to products or packaging. When an RFID reader comes within range, it transmits an activating signal to the tag. The tag then transmits its stored data to the RFID scanner.

The data from RFID integration can track inventory location and monitor the condition of goods in transit. It can streamline various areas of the supply chain through automation. The generated information allows for quicker, more informed decision-making that can boost supply chain management efforts.

RFID applications and uses in the supply chain

RFID technology has become widely used in the supply chain industry to improve efficiency, visibility, and overall performance. It assists in inventory management, asset tracking, and warehouse management. RFID allows companies to track their supply chain workflow, providing usable data with manufacturing equipment, inventory, and asset management.

This technology streamlines supply chain tasks, reducing the time taken to complete processes and removing the element of human error. RFID systems in warehouses and distribution centers improve inventory visibility and availability, increasing accuracy and efficiency. RFID is also used for inbound and outbound shipments, logging the contents of each order and identifying shipping mistakes before they happen.

Here’s a list of 20 application ideas we came up with:

  1. Inventory Management: Real-Time Tracking
  2. Asset Tracking: Fixed Asset Management
  3. Warehouse Management: Pallet and Container Tracking
  4. Shipping and Receiving: Automated Check-In/Out
  5. Order Fulfillment: Pick-and-Pack Verification
  6. Supply Chain Visibility: Track and Trace
  7. Cold Chain Monitoring: Temperature Control
  8. Returnable Transport Items (RTI): Tracking Reusable Assets
  9. Security and Anti-Theft: Loss Prevention
  10. Compliance and Regulation: Product Authenticity
  11. Quality Control: Quality Monitoring
  12. Supplier Management: Vendor Performance
  13. Customer Experience: Order Tracking
  14. Recall Management: Quick Recall
  15. Cross-Docking: Efficient Transfer
  16. Customs and Border Control: Automated Clearance
  17. Yard Management: Yard Control
  18. Sustainability and Environmental Impact: Waste Reduction
  19. Demand Forecasting: Data Analytics
  20. Vendor-Managed Inventory (VMI): Automated Replenishment


Pros of RFID for Supply Chain Management

Cons of RFID for Supply Chain Management

1. Enhanced Visibility: Real-time tracking of products and assets, leading to improved supply chain visibility.
1. Implementation Costs: Initial setup costs for RFID systems can be high, including tags, readers, and infrastructure.
2. Inventory Accuracy: Improved accuracy in inventory management, reducing stockouts and overstock situations.
2. Compatibility Issues: RFID systems may face compatibility challenges with existing technologies and standards.
3. Reduced Manual Labor: Automation of data capture and tracking, reducing the need for manual data entry and physical counts.
3. Data Privacy Concerns: RFID technology can raise privacy issues when applied to products and assets.
4. Faster Check-In/Out: Faster processing of goods at distribution centers and retail outlets, leading to reduced wait times.
4. Interference Problems: RFID signals can be affected by environmental factors, causing data reading issues.
5. Theft Prevention: Improved security with anti-theft features, making it harder for unauthorized access or theft.
5. Tag Costs: RFID tags can add to the cost of individual products, affecting profitability.
6. Supply Chain Optimization: Data-driven insights enable better decision-making and optimization of logistics and distribution.
6. Labor Training: Staff requires training to effectively use RFID technology, adding to operational costs.
7. Product Authenticity: Helps in verifying product authenticity, reducing the risk of counterfeit goods entering the supply chain.
7. Environmental Impact: RFID tags and readers can have environmental impacts, leading to waste disposal challenges.
8. Regulatory Compliance: Facilitates compliance with traceability and safety regulations, reducing legal and compliance risks.
8. Limited Range: RFID technology has limitations in terms of reading range, which can impact tracking capabilities.

What are the steps on how to implement RFID in supply chain management?

Step 1: Understand the purpose of RFID

RFID technology allows businesses to record accurate, real-time information about products across multiple points in the supply chain. RFID improves inventory management by tracking individual assets throughout the facility, allowing for better measurement of key performance indicators.

It also provides greater visibility in the supply chain, enabling data collection and analysis at a level unreachable with manual entry methods. This data can help identify bottlenecks and excess assets and enable better management of equipment life cycles. RFID technology can potentially help warehouse managers take steps to prevent issues from recurring and make it easier to trace an individual product’s movement.

Step 2: Select RFID technology suitable for your application

When selecting the most suitable RFID technology for your supply chain management application, you must consider frequency, range, tag type, read/write capabilities, and cost. RFID technology frequency determines the range and reading speed of the system. Low-frequency RFID is ideal for short-range applications, and high-frequency RFID is suitable for longer-range applications. The range finds the distance between the reader and the tag.

The selected tag should be compatible with the environment and materials in use. You should evaluate the read/write capabilities of the RFID technology to ensure it meets the application’s requirements. Finally, consider the cost of the RFID technology, including the cost of tags, readers, and other associated hardware and software. Carefully researching these factors will help you select the most suitable RFID technology for your supply chain management application.

Step 3: Choose the frequency of the RFID operating range

When implementing RFID in supply chain management, consider the appropriate frequency range. The available frequency ranges include low frequency (LF) 125–134 kHz, high frequency (HF) 13.56 MHz, and ultra-high frequency (UHF) 868–928 MHz. LF is suitable for short-range applications, while HF is useful for mid-range applications. UHF is ideal for long-range applications and can read multiple tags simultaneously.

It is important to note that different countries have different regulations regarding RFID frequency allocation. When choosing a frequency range, consider the range required, the number of tags, and the environment where the tags will be. UHF is the most commonly used frequency range in supply chain management due to its long-range capabilities and ability to read several tags at once.

Step 4: Choose the storage system for RFID data

Step 4 in implementing RFID in supply chain management involves managing the collected data. RFID technology generates significant amounts of data, so it must be effectively stored and managed. On-premise and cloud-based storage are two potential options. On-premise storage allows companies to have complete control over their data, but it can be expensive to set up and maintain. On the other hand, cloud-based storage is more cost-effective and scalable, but companies must rely on third-party providers to manage their data.

For example, a company that values data security and has the resources to set up and maintain an on-premise storage system may choose this option. In contrast, a small company with a limited budget may opt for cloud-based storage.

Step 5: Set up an RFID system

For supply chain management, you must have RFID tags, readers, and a computer or enterprise system. The RFID tags include a microchip and an antenna and can be attached or embedded into objects. They store data such as unique identification numbers, product information, and inventory levels. The readers read the data on the tags and install them in doorways or other strategic locations throughout the supply chain.

The software components include a real-time supply chain management system and a wireless networking system. The management system provides real-time updates on product location and inventory levels, while the wireless networking system enables communication between the RFID tags, readers, and the computer system.

Step 6: Plan operational procedures for RFID use

RFID operational procedures in supply chain management and logistics are crucial for maximum efficiency and accuracy. First, identify the areas in the supply chain where RFID technology may be necessary to improve operations. Some factors to evaluate are the cost of RFID implementation, the potential benefits, the impact on existing operations, and the compatibility with existing technology.

These steps provide a comprehensive plan for RFID implementation in supply chain management and logistics:

  1. Conduct a feasibility study to determine the potential benefits and costs of implementation.
  2. Identify the areas in the supply chain where RFID technology is necessary.
  3. Develop a plan for RFID integration technology into existing operations, including any necessary modifications to processes and systems.
  4. Determine the RFID hardware and software needed for implementation.
  5. Develop a plan for training employees on the use of RFID technology.
  6. Test the RFID system to ensure it is meeting the desired objectives.
  7. Implement the RFID system and monitor its performance.
  8. Continuously evaluate and improve the RFID system to ensure that it is meeting the needs of the supply chain and logistics operations.
Step 7: Enable communication between separate systems using RFID

Middleware is necessary to enable communication between separate systems using RFID in supply chain management. This system filters and processes the large amount of data captured by RFID and transforms it into meaningful information in enterprise applications such as ERP, WMS, and TMS. Here is a step-by-step guide on how to integrate RFID technology into these systems:

  1. Install RFID scanners and UHF RFID scanning equipment in the warehouse doors to deliver instant updates on products coming in and leaving.
  2. Use compatible readers and tags within the reader’s range to wirelessly communicate and transfer information stored in the memory of tags to a computer or enterprise application.
  3. Implement middleware between readers and applications with two interfaces: the application interface and the reader interface (to communicate with the environment).
  4. Use the generated data to streamline supply chain tasks through automation and remove human error.
  5. Integrate RFID technology into ERP, WMS, and TMS systems to enable updates and improve the efficiency of operations.
  6. With the information generated from RFID integration, make quicker, more informed decisions for boosted supply chain management efforts.
Step 8: Optimize the manufacturing process using SCM solutions using RFID

RFID technology integrates into supply chain management solutions to optimize manufacturing processes and improve efficiency. RFID technology allows businesses to track their supply chain workflow and streamline manufacturing processes by providing real-time visibility over semi-finished and in-stock raw materials. With the information generated from RFID integration, businesses can make quicker and more informed decisions, reducing the time spent at the receiving stage and moving items to the production stage earlier.

Step 9: Improve product availability using SCM solutions using RFID

Companies can improve product availability by incorporating Radio-frequency identification (RFID) technology into their supply chain management (SCM) solutions. RFID technology allows for real-time tracking of products throughout the supply chain, enabling suppliers, manufacturers, and retailers to match the number of products in specific locations with expected sales levels and forecasts. It helps ensure that products are in stock when needed.

Companies must invest in RFID tags, scanners, and software to implement RFID in their SCM systems. RFID tags are attached to products, while scanners read the tags and transmit data to the software. The software then provides visibility into inventory levels and enables companies to manage their inventory more efficiently.

Step 10: Implement a total-in-motion solution with WMS integration

Implementing a total-in-motion solution with WMS integration when incorporating RFID technology in supply chain management improves inventory accuracy and streamlines warehouse operations. A total-in-motion solution uses RFID technology to track goods as they move through the warehouse, allowing for real-time inventory updates and reducing the need for manual tracking.

Ensure your WMS can integrate with RFID technology to implement a total-in-motion solution with WMS (Warehouse Management System) integration. Next, install RFID scanners at points in the warehouse, such as at receiving, storage, and shipping areas. As goods move through the warehouse, the RFID scanners automatically update the WMS with their location and inventory status.

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