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Benefits of implementing RFID in Supply Chain Management

2017-05-26

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.

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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.

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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.