Is RFID Still Useful to the Supply Chain?

As a company expands its operations, its supply chain naturally grows right along with it. The processes become more complex, which in turn stresses the importance of accuracy at each link in the supply chain.

This is where RFID technology comes into play.

The most common RFID application is for tracking and management. This includes inventory management, asset tracking, cargo and supply chain logistics, and vehicle tracking. RFID can also be used in the supply chain for improved visibility and distribution.

Restricted visibility along with inaccuracies can completely halt production and limit a company’s overall efficiency. One solution that gained momentum several years ago is radio frequency identification (RFID). And while some people in 2021 may argue that with the large expansion of IoT integrations, RFID is now outdated or archaic in some way. And while RFID technology has been around since the 1940s, it is anything but useless.

In fact, RFID is still widely implemented and is probably more useful to the supply chain industry than most people may realize...

Comparing RFID vs Barcodes for Tracking Inventory

Two of the leading pieces of equipment that help logistics companies locate and identify products are barcodes and RFID tags. While they both accomplish similar tasks, they are quite different. 

For instance, both are used to track assets and help with inventory management. However, one is mobile, while the other is a stationary scanning system.

The barcode system is used to scan a “UPC” code that helps to identify a product, the location, or a storage commodity being used in the movement. Since this type of platform depends on a stationary system, it is not useful for tracking goods in real-time.

RFID tags, on the other hand, can be traced as they move through the chain and in real-time. 

RFID Improves Visibility

Radio-frequency Identification allows companies to track their supply chain workflow, which will provide more usable data with manufacturing equipment, inventory, asset management, and company processes. 

When used properly, the generated data can help streamline these areas of the supply chain through automation.

This kind of technology can be integrated into various supply chain tasks in order to streamline things just a bit. With RFID tech, processes that normally take two hours to complete may only take a matter of minutes.

Having the information generated from RFID integration at your fingertips allows for quicker, more informed decision-making that can easily boost your supply chain management efforts considerably.

This type of visibility allows processes to be fully automated, which will remove the element of human error. Warehouses and distribution centers that implement RFID systems into their processes take their inventory visibility and availability from 2 percent to 20 percent, according to Cybra.com.

Improves Productivity

The main pain point of using barcodes is that you must see it in order to scan it. This results in a fair amount of wasted time walking to the product, locating the barcode, and scanning with the equipment.

RFID eliminates this by using radio frequencies to help ‘ping’ the location of the product. These tags significantly reduce the time needed to locate, and track products.

Furthermore, the reduction in time spent locating goods helps to reduce costs associated with labor and can improve the overall facility productivity. 

Provides Real-Time Inventory Tracking

One of the greatest benefits of increased visibility is using the data generated with the help of RFID to cut costs.  One example is real-time tracking that shows the most accurate inventory levels. 

With this tech, companies can see exactly how much of their products they have on hand. This type of real-time tracking gives them a better timeline of when to reorder to bolster inventory. 

It also helps them find the optimal inventory level so there is no excess product sitting on the shelves, wasting money for storage. While adjusting inventory levels may not seem like a profit driver, keeping proper inventory levels can help a company save between 20-30 percent on its warehousing and storage costs.

Retailers who have already implemented RFID into their processes are already seeing benefits. They are running into fewer issues of out-of-stock products and increasing the on-shelf availability of their products.  RFID is able to scan each unique SKU number and identify differences in products, such as size, color, and style.

With merchandise tagged with RFID, manufacturers are able to more readily increase inventory count rates from 200 to upwards of 12,000+ items per hour (of course, this is also dependent upon how products are stored and how easy they are to access.

This type of visibility is giving retailers information on what is selling and what is sitting on their shelves. To handle this sort of task, when lots of product units are involved, it would take days or weeks without this visibility technology as opposed to handling it within minutes via RFID.

Higher Accuracy

When RFID is implemented into warehousing and storage systems, it usually results in a major improvement in product picking.

According to Cybra.com, manufacturers and distributors who implemented RFID saw an 80 percent improvement in shipping and picking accuracy.

This type of improvement saves companies a good amount of money as a result of fewer shipping and packing errors.

According to Bill Hardgrave, Dean of Auburn University’s Harbert College of Business and founder of the RFID Lab:

RFID increases inventory accuracy, from an average of 65 percent to more than 95 percent. And high inventory accuracy can lead to increased sales—but only if retailers use the data to improve their operations and processes. This is an important distinction and its key to the success of any RFID deployment.

As supply chains evolve, RFID is continuing to make waves by helping solve some common supply chain issues. Simultaneously, it improves efficiency at the same time.

RFID is improving visibility while generating more useful information, it is providing real-time inventory tracking and is more accurate throughout multiple supply chain processes.

Reduce Loss, Theft, and Shrink

RFID tagging also helps companies with inventory control. They are able to achieve this by keeping track of any moving products that are not authorized to do so.

This is especially important with high-value products like computers, televisions, and automobiles. Sometimes the mere appearance or knowledge that RFID tags are attached can reduce the potential of theft.