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Benefits of implementing RFID in Supply Chain Management

Supply chain management is generally seen as complex and knowledge intensive process. In this article Roksana Parvin, a supply chain management professional, elaborates on the benefits of implementing RFID in supply chain management.

Benefits of implementing RFID in Supply Chain Management

The term Supply chain covers all possible processes involved in the flow of goods from manufacturing to customer; including manufacturing, distribution and transportation. Thus, supply chain management covers all these steps in combination with marketing decisions, customer demand, in alignment with general corporate strategy and goals. Usually considered as a complex and knowledge intensive process, management of supply chain can benefit significantly from the implementation of RFID technology.

RFID technology has risen to become a revolutionary element in supply chain management. It is not just a replacement for barcodes. RFID ensures that the right goods are available in the right place with no discrepancies and zero errors. It makes the supply chain considerably more precise and improves the efficiency and reliability of the entire chain. As real-time information is made available also administration and planning processes can be significantly improved.

This article aims to give insights into the benefits of RFID usage in supply chain management processes. For simplification, the processes are described in the order they take place. We chose to describe the processes of the FMCG (fast moving consumer goods) industry in this article. However, the benefits of RFID in supply chain management can be reaped also in other industries.

 

Supply -chain -benefits -article -Roksana

Benefits of RFID in manufacturing processes

The market of FMCG's, fast moving consumer goods, is one of the fastest moving markets in the world. In the FMCG industry, products have to be counted several times already in the manufacturing process: during the stages of production, washing, and packing.  Traditionally, these operations are performed manually. But by utilizing RFID tags and readers, products can be counted in seconds. This is due to the fact that RFID tags can be automatically scanned without being in the line-of-sight of an RFID scanner and multiple tags can be scanned simultaneously. For manufacturers this translates directly into cost reductions as labor intensive tasks can be carried out faster and more accurately.

In addition to faster authentication of produced goods, manufacturers can also benefit from increased information gathered with the help of RFID technology. RFID tags can store far more information than conventional barcode labels. This information can be used to optimize production processes. Accurate knowledge of the real-time movements of raw materials and the time needed for specific production steps can be integrated into efficient production planning.

With the help of RFID, manufacturers can also benefit from increased information in regards to repair and maintenance of their machines and equipment. This allows manufacturers to have visibility into valuable data such as: which machine has been repaired or undergone maintenance and when has this been done? This information helps to plan maintenance schedules. Hence, maintenance can become part of production planning and help to prevent costly production breaks.

RFID in manufacturing processes means:

  • less manual work
  • less costs
  • improved visibility
  • improved planning

RFID benefits in Warehouse Management

Once production has been completed, FMCG producers pack the products into cartons, and deliver the cartons to the warehouse of the freight forwarder or the buying company. After the cargo reaches its destination, it is not uncommon that it ends up in a warehouse first.

Keeping track of the large number of cartons is a very complex as well as time and labor consuming process. However, RFID can be implemented to ease the situation as it can improve information management concerning cargo flow. Usually, read-write equipment is installed at the entry to a warehouse. Every cargo unit is equipped with RFID tags and all the information relating to the tags is stored in the central computer of the warehouse. When the cargo is moved in or out of the warehouse, the read-write equipment registers it and forwards the data to the backend system. This allows the management center to manage the vast amounts of products going into and leaving the storage, recognize cargo and help with placement of the cargo in the warehouse.

In cases where read-write equipment is placed within the warehouse, all in-house movements are additionally registered in the system. This allows for strategic planning of product locations within the warehouse.

The information that is gathered with RFID can lead to significant improvements as the tracking and handling of the products can be done in real-time and with great accuracy. In the warehouse, products are easily located as all product movements are tracked and this information is automatically registered in the system. Whilst stock is accurately tracked valuable information concerning losses is also recorded.

RFID in warehouse processes offers:

  • visibility of accurate real-time information
  • fast locating of products
  • possibility to record losses
  • ability to plan product locations strategically

RFID benefits in tracking and managing of shipping containers

Around the world, the most popular way to transport large amounts of cargo is to use shipping containers. Container transports are oftentimes chosen as they ensure safe and secured transportation, low costs, standard packaging and high transport density. Companies that use RFID in tracking and managing of shipping containers are able to track containers in each link of the supply chain. Active RFID Tags can be used to track containers in real-time in yards and docks. Ultra-high frequency RFID technology has long identification distance and speeds up identification.

RFID in container management and tracking:

  • offers visibility of real-time cargo movement
  • improves efficiency
  • increase accuracy

Benefits in Distribution Processes

Implementation of RFID technology can also add advantages to distribution processes. Usage of RFID will greatly accelerate the speed of delivery management, improve efficiency, and increase accuracy in selection and distribution processes. It will also reduce distribution costs. When products embedded with RFID tags enter a distribution center, the RFID read-write equipment at the entry gate can register the RFID tags, and send the information to the distribution centers' backend system. This information can be used to put the cartons in proper places, sort them quickly and efficiently, and dispatch the cartons to the retailing centers in less time with improved accuracy. Usage of RFID also ensures accurate inventory control.

As the products reach their final destination, aka the store, they are scanned and registered automatically at the entrance. For more information about in-store benefits of RFID, check out the links in the end of this article.

RFID in distribution processes:

  • accelerates the speed of delivery
  • improves efficiency
  • increases accuracy
  • reduces distribution costs

Retail benefits from implementing RFID in supply chain

Over the last few years, more and more companies are integrating RFID technology into their strategic planning, since it provides significant advantages to supply chain performance. There are far more benefits gained by RFID implementation into supply chain and logistics operations than just improving identification of products, shipments, and assets. Nevertheless already the most common benefits prove that RFID is worth the investment.

38 comments on “Benefits of implementing RFID in Supply Chain Management”

  1. Gravatar of Kent S. FiebelkornKent S. Fiebelkorn
    Posted 03 January 2014 at 20:49:52

    Great article , and addressing elementary topics that benefit the key stakeholders... Question I have, looking for suggestions in getting all stakeholders in the ecosystem involved.... have you seen enough benefits up stream that, mfg and dist's are willing to help the retail investment in the technology?

  2. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 13 January 2014 at 13:15:13

    Hello Kent,

    that is a great and equally tricky question you are asking. Being able to involve stakeholders is affected by many factors. What motivates or raises curiosity in stakeholders may differ widely. Also it depends on what party in the supply chain you represent.

    Best regards, Kirsikka

  3. Gravatar of Fabian FabitoFabian Fabito
    Posted 27 January 2014 at 19:15:22

    describe RFID and it's importance in supply chain management.

  4. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 28 January 2014 at 09:21:14

    Hello Fabian,

    hopefully the article contained what you are looking for. If you would like to read more I recommend you check this article:
    http://www.rfidarena.com/2013/4/23/rfid-in-international-supply-chain-management.aspx

    Other supply chain articles can be checked here:
    http://www.rfidarena.com/rfid-now.aspx?groupby=Supply%20Chain

    BR, Kirsikka

  5. Gravatar of Brandon H.Brandon H.
    Posted 04 March 2014 at 04:31:23

    I was just wondering and looking around for the advantages and disadvantages as compared to simply barcoding. Hopefully you can shed some light in terms of pricing, selling, and various areas you've pointed out in the above article.

    Thanks,
    Brandon

  6. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 04 March 2014 at 08:54:29

    Hello Brandon,

    we have an article written by Jessica Säilä on the topic of Barcode vs RFID. You can check it here: http://www.rfidarena.com/2013/12/2/6-most-common-faqs-of-barcode-vs-rfid.aspx

    I hope this helps.

    Best regards,
    Kirsikka

  7. Gravatar of awol awol
    Posted 11 April 2014 at 10:47:20

    Iwant to brief explain about the roles of Logistics and Supply chain management?

  8. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 15 April 2014 at 09:20:08

    Awol, could you please specify what information you are looking for? For a variety of logistics/supply chain articles, you could check here: http://rfidarena.com/rfid-now.aspx?groupby=Supply%20Chain

  9. Gravatar of John WilliamsJohn Williams
    Posted 17 June 2014 at 20:01:01

    Do have any articles releated to RFID tracking of multi tasked production orders in manufacturing?

  10. Gravatar of Kirsikka DragerKirsikka Drager
    Posted 18 June 2014 at 09:13:43

    Hello John,

    We do not have such an article available on the RFID Arena. Maybe you could further specify what aspect you are most interested in reading about?

    BR, Kirsikka

  11. Posted 13 August 2014 at 10:52:40

    RFID? How about in warehousing

  12. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 25 August 2014 at 10:13:30

    RFID in warehousing is a very interesting topic, have you read up on the article RFID gates: RFID gates – where are they and why? (http://rfidarena.com/2012/10/23/rfid-gates-%E2%80%93-where-are-they-and-why.aspx). What aspect of the topic RFID in warehousing, would you be most interested in?

  13. Gravatar of Erkan. PehlivanErkan. Pehlivan
    Posted 30 August 2014 at 15:14:36

    What about cost of implementation of RFID in supply chain? Is unit price of one RFID tag still expensive? Or what is average price for one RFID tag? Are all international retailers using it? What is the market situation for RFID implementation?
    Thanks

  14. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 04 September 2014 at 12:35:02

    Hello Erkan, we have articles available discussing RFID in the supply chain http://www.rfidarena.com/2014/1/9/intelligent-logistics-closing-the-loop-on-transferable-assets-in-logistics-with-rfid.aspx as well as how the tag price has changed: http://www.rfidarena.com/2012/4/5/the-magic-5-cents-per-tag.aspx. Nevertheless if you are interested in the specific price classes of different RFID tags, please contact a tag supplier. With all the choice available in the market they will be able to answer your questions best.

  15. Gravatar of Syeda Shahana YesminSyeda Shahana Yesmin
    Posted 17 September 2014 at 14:05:34

    hello

  16. Posted 18 September 2014 at 11:56:20

    My question is about the container tracking. When a container leaves a distribution center and goes into a foreign port, how is the interface done between this foreign port (for instance in Saudi Arabia) and the exporting port like for instance in England? Does this require the destination port to be connected to the same backend server in England to be able to track that container location in the container yard in SA?

    Thanks.

  17. Gravatar of HajarHajar
    Posted 19 October 2014 at 18:01:57

    Great paper. How can'I have this paper in PDF ?

    Thank you

  18. Gravatar of Suvi DalénSuvi Dalén
    Posted 22 October 2014 at 08:41:27

    Hello Hajar, thank you for your nice feedback! We are not able to provide a PDF file. We recommend you to use your own programs in order to print the article as a PDF. If you find the topic interesting, please also check this article: http://www.rfidarena.com/2013/4/23/rfid-in-international-supply-chain-management.aspx

  19. Gravatar of HarmenHarmen
    Posted 24 October 2014 at 11:32:44

    Great paper,
    Lots of benifits are made clear. Are there also benefits for the port authority proces??

    Grt

  20. Gravatar of Adnan umerAdnan umer
    Posted 24 October 2014 at 14:57:58

    we are students of SUPPLY CHAIN MANAGEMENT this article is very helpful for us kindly briefly explain these terminologies in simple word that a student can easily pick all content of specific field

  21. Gravatar of Suvi DalénSuvi Dalén
    Posted 27 October 2014 at 08:40:58

    Hello Harmen, thank you for your comments! Unfortunately we do not have any articles about port authority processes. The best way to find one is perhaps to google. If you find one, please let us know too!

  22. Posted 17 December 2014 at 08:01:30

    Very informative blog. I would be more interested to know if there are RFID tags available in the market which can work in 95% humidity across fresh supply chain

  23. Gravatar of GiulianoGiuliano
    Posted 12 January 2015 at 01:56:51

    I'm searching something about the topic Reid technology in supply chain but I didn't find nothing. The different websites connect it with Rfid technology in supply chain. Is it the same topic?

  24. Gravatar of Suvi DalénSuvi Dalén
    Posted 12 January 2015 at 09:47:03

    Hi Giuliano,

    RFID comes from words Radio Frequency Identification. What does REID mean - maybe you should find more out where you need that one. If you are looking for Radio Frequency Identification, then RFID is what you are looking for!

  25. Posted 10 April 2015 at 07:28:07

    very well explained but i have one question that would this technology also be effective for small businesses as well in terms of revenue generation?

  26. Gravatar of Dan johnsonDan johnson
    Posted 10 April 2015 at 10:59:28

    Great article! One issue that we have run into with active RFID tags when used on containers that are shipped via surface is battery life. The active tag will send out a "Ping" once every hour, or however programmed, and sometimes the battery will die while in transit and you will only be able to identify it's last know location.

    U.S. Air Force Logistics Officer

  27. Gravatar of AhmedAhmed
    Posted 07 May 2015 at 13:51:04

    RFID is a great technology that work on efficiency/improvement of the Supply chain processes however the only barrier implementing such technology is the running cost of the RFID tags .
    As a mobile phone distributor when i studied such technology implementation I discovered that each phone will cost around 15 cent which is a considerable cost in such industry.

  28. Gravatar of NoorNoor
    Posted 14 May 2015 at 17:51:38

    Can RFID control the inventory reconciliation process in a supermarket? And How?

  29. Gravatar of PRAHLAD PATELPRAHLAD PATEL
    Posted 19 August 2015 at 17:49:16

    what is rfid

  30. Gravatar of Suvi DalénSuvi Dalén
    Posted 20 August 2015 at 08:42:21

    Hi,

    RFID comes from the words Radio Frequency Identification. For your information, we are soon about to publish an article explaining the basics of RFID.

    br,
    Suvi

  31. Gravatar of kenken
    Posted 25 February 2016 at 11:19:38

    role of rfid in supply chain performance in distribution firms, case of maersk. can i get a full project on this topic kindly reply in my email.

  32. Gravatar of Lester G. PinedaLester G. Pineda
    Posted 19 July 2016 at 17:26:46

    I am looking for a way to track our shipments even at custoner's end. Can RFID serve the purpose? It os not discreetly mentioned in the article.

  33. Posted 13 October 2016 at 23:05:34

    role of rfid in supply chain performance in distribution firms, case of maersk. can i get a full project on this topic kindly reply in my email.

  34. Gravatar of KirsikkaKirsikka
    Posted 18 October 2016 at 09:51:19

    Hi Ahmed,

    unfortunately we do not have such case study available for you but e.g. RFID Journal features great articles and cases, they might have this topic covered. Hope this helps.

    BR,

    Kirsikka

  35. Posted 27 October 2016 at 09:28:18

    this article is very useful for us to know more about supply chain management.

  36. Gravatar of Harsh GaneriwalaHarsh Ganeriwala
    Posted 01 November 2016 at 23:19:41

    So within a large manufacturing facility producing large metallic parts, is possible to implement an RFID system that tracks movement of various components within the enterprise?

  37. Gravatar of RYAN WEATHERSONRYAN WEATHERSON
    Posted 27 November 2016 at 02:29:20

    Hello,

    I am interested in purchasing some items in your facility but firstly i will like to know if this is possible.

    1: can you SHIP to Cuba ?
    2: Do you accept private pick up ?
    3: Do you have POS machine to charge credit card and accept master and visa credit card payment ?

    Kindly email me if this is possible with out any problem.so i can send you the list of items i want to purchase.

    I will await your reply Asap,

    Best Regard
    Ryan Weatherson
    R.W VENTURES LTD
    ryanweatherson77@gmail.com

  38. Gravatar of KirsikkaKirsikka
    Posted 29 November 2016 at 15:18:45

    Hello Ryan, please contact our info@nordicid.com email address with details so your answers can be directed to the responsible person. Thank you!

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