Radio Frequency Identification (RFID) uses radio frequency electromagnetic fields to extract data from an electronic tag, passing it on to RFID readers and using this data for tracking and automatic identification purposes.
In a supply chain management environment, this manifests itself as a system of tiny electronic tags (typically made up of a very small chip plus an antenna) each transmitting data feeds to RFID readers and related hardware and supply chain software infrastructure via radio signal. These transmitters are placed directly onto goods where movement tracking and management adds value to the commercial process.
Depending on the industry, these tracked goods can range from pallets and shipping containers through to unit-level clothing garments and food chain ingredients.
The initial significant wave of interest and investment for RFID in supply chain markets arrived in 2003 when two of the world’s largest private and public supply chains – Walmart and the Department of Defense (DOD) – announced major RFID-enabled supply chain programs for goods tracking throughout the chain. Although the pace of program development was slower than planned and led to widespread disappointment in the technology at the time, RFID as an enabling and disruptive technology is now held in high regard and is seeing widespread adoption and interest as many of the world’s major companies, across a wide range of industries, are jumping on board.
Uses and benefits of RFID in supply chain management
The bottom line of RFID is that it enables complex and large-scale businesses to track and manage physical assets, people, tools, inventories and delivery schedules within a highly efficient and cost-effective operation.
Today, RFID supply chain operations are adopted by many businesses including retailers, logistics service providers, hospitals, manufacturers and food chain suppliers. Put simply; any organisation engaged in the production, movement or sale of physical goods. Since there are now many case studies of success and major cost reduction, integration of an RFID management system is now regarded as a highly attractive investment for many organisations.
Many high-profile organisations such as Walmart, Tesco and Airbus have already adopted RFID supply chain management programs, some enforcing tagging requirements onto suppliers, and have reported cost savings reaching into the hundreds of millions.
A well integrated and executed RFID solution generally demands a bespoke solution which might include cloud-based, scalable supply chain software and warehouse management software programs. As an integrated solution, RFID tagging and tracking offers benefits including:
- the avoidance of stock outs and theft
- RFID asset tracking
- Reduction of error and vendor fraud
- improved transport pallet and case tracking
- inventory management
- stock replenishment
- removal of the need to have physical labour to manually scan barcodes in the supply chain
Beyond product, tool, stock and resource tracking, RFID also gives businesses an insight into the demand and purchasing patterns of its customer base – this particular intelligence benefit brings high value research and customer profiling data to B2C and FMCG industries where automated purchasing and demand data is of critical importance when managing product cycles and marketing programs.
The impact and business value of RFID varies across industry segments and traditional cost-benefit analyses are employed to assess and compare RFID against other identification and tracking technologies. Since the ultimate goal for all supply chain managers is to operate a lean, pro-active and cost-minimised operation, RFID and its digital, automated infrastructure can deliver this with ease. RFID promises to continue revolutionising supply chains across the globe and lead a new age of operational intelligence, efficiency and cost saving.
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