Radio-frequency identification (RFID) is a supply chain management tool that has been increasing the efficiency of inventory tracking for a number of years. It is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders.
RFID Tags
The tag can be applied to, or incorporated into a product, animal, or person for the purpose of identification using radio waves. Some tags can be read from several yards away and beyond the line of sight of the reader. For our purposes we will talk about RFID in SCM and inventory tracking.
Most RFID tags contain at least two parts. One is for storing and processing information, modulating and demodulating a radio frequency, RF, signal. The second is an antenna for receiving and transmitting the signal. A technology called chipless RFID allows for discrete identification of tags without an integrated circuit, thereby allowing tags to be printed directly onto assets at a lower cost than traditional tags. In many businesses this has replaced bar-coding as the inventory tracking method of choice.
RFID Improves Efficiency
Today, RFID use is increasing in supply chain management, improving the efficiency of inventory tracking and management. In some cases it can lower a business’s warehousing tracking costs up to 75%. The decrease in hours and manpower to track inventory is a major cost savings to the business owner and pays for the technology.
Many companies are also linking their RFID with GPS tracking and cellular systems to track assets once they leave the warehouse allowing asset tracking to the overall end-to-end supply chain visibility. Much like the tracking numbers given to us when we ship a package, a package sent from a company’s warehouse can be tracked to its destination via computer. This not only tells the business owner that the part has arrived, it also allows them to tell the customer exactly where a part is and when it should arrive.
Use any Internet search engine and enter “RFID” into the search block and you will find literally thousands of sites that mention RFID, its use, software cost, and how to apply it to a business.
Advantages of Using RFID
The first advantage is warehousing and inventory management. The second great advantage is when numerous items are shipped in a single container, a scanner can tell a user exactly what is in the container, the numbers of each and even where the contents should be sent.
In the past a container arrived at a company’s shipping dock. A receiving clerk would pull out the bill of lading, open the box and do a physical inventory of the contents. The clerk would then have to do a physical data entry to load the receipt of the equipment into the company’s database. Each item calling for a person to physically open the boxes, conduct an inventory, and then load the receipt into a data base. All time consuming acts that can be virtually eliminated with the use of RFID technology. Thus reducing cost for the receiving company and reducing overall cost of their SCM.
RFID Readers
A RFID reader can “scan” the container and load the received inventory directly into the company database. The company database can further break down where each item is to be delivered inside the plant or warehouse also greatly reducing time and cost to stock or deliver the assets internally.
RFID use as well as bar coding and a newer technology on the block, Unique Identification (UID), that replaces bar codes and allows for the user to add vastly more item data than could be obtained via bar coding.
RFID technology can save a company a great deal of money by reducing manpower and warehousing space. It can be a good return on capital investment. Companies should do a cost benefit analysis to see if it is a good option for cost reductions.
Jake George - JAKE GEORGE is the Director of Acquisitions for Virtual Tales. Mr. George is responsible for qualifying new manuscripts, assigning them to ...
Join the Conversation