benefits of implementing rfid in supply chain management - rfid arena

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Benefits of implementing RFID in Supply ChainManagement

14 November 2013

RFID Arena Guest Blogger

Supply chain management is generallyseen as complex and knowledgeintensive process. In this article Roksana

Parvin, a supply chain management professional, elaborates on the benefitsof im plementing RFID in supply chainmanagement.

BENEFITS OFIMPLEMENTING RFID INSUPPLY CHAIN

MANAGEMENT

The term Supply chain covers all possible processes involved in the flow of goodsfrom manufacturing to customer; including manufacturing, distribution and

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transportation. Thus, supply chain management covers all these steps in combinationwith marketing decisions, customer demand, in alignment with general corporatestrategy 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 chainmanagement. 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 makesthe supply chain considerably more precise and improves the efficiency and reliabilityof 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 chainmanagement processes. For simplification, the processes are described in the order they take place. We chose to describe the processes of the FMCG (fast movingconsumer goods) industry in this article. However, the benefits of RFID in supplychain management can be reaped also in other industries.

BENEFITS OF RFID INMANUFACTURING PROCESSES

The market of FMCG's, fast movingconsumer goods, is one of the fastest moving markets in the world. In the FMCGindustry, products have to be counted several times already in the manufacturing

process: during the stages of production, washing, and packing. Traditionally, theseoperations are performed manually. But by utilizing RFID tags and readers, productscan be counted in seconds. This is due to the fact that RFID tags can be automaticallyscanned without being in the line-of-sight of an RFID scanner and multiple tags can bescanned simultaneously. For manufacturers this translates directly into cost reductionsas labor intensive tasks can be carried out faster and more accurately.

In addition to faster authentication of produced goods, manufacturers can also benefitfrom increased information gathered with the help of RFID technology. RFID tags canstore far more information than conventional barcode labels. This information can beused to optimize production processes. Accurate knowledge of the real-time

movements of raw materials and the time needed for specific production steps can beintegrated into efficient production planning.

With the help of RFID, manufacturers can also benefit from increased information inregards to repair and maintenance of their machines and equipment. This allowsmanufacturers to have visibility into valuable data such as: which machine has beenrepaired or undergone maintenance and when has this been done? This informationhelps 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


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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 buyingcompany. After the cargo reaches its destination, it is not uncommon that it ends up ina warehouse first.

Keeping track of the large number of cartons is a very complex as well as time andlabor consuming process. However, RFID can be implemented to ease the situation asit can improve information management concerning cargo flow. Usually, read-writeequipment is installed at the entry to a warehouse. Every cargo unit is equipped withRFID 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 themanagement center to manage the vast amounts of products going into and leaving thestorage, 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-housemovements are additionally registered in the system. This allows for strategic planningof product locations within the warehouse.

The information that is gathered with RFID can lead to significant improvements asthe tracking and handling of the products can be done in real-time and with greataccuracy. In the warehouse, products are easily located as all product movements are

tracked and this information is automatically registered in the system. Whilst stock isaccurately 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 SHIPPINGCONTAINERS

Around the world, the most popular way to transport large amounts of cargo is to useshipping containers. Container transports are oftentimes chosen as they ensure safe andsecured 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 totrack containers in real-time in yards and docks. Ultra-high frequency RFIDtechnology has long identification distance and speeds up identification.

RFID in container management and tracking:


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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, improveefficiency, and increase accuracy in selection and distribution processes. It will alsoreduce distribution costs. When products embedded with RFID tags enter adistribution center, the RFID read-write equipment at the entry gate can register theRFID tags, and send the information to the distribution centers' backend system. Thisinformation can be used to put the cartons in proper places, sort them quickly andefficiently, and dispatch the cartons to the retailing centers in less time with improvedaccuracy. Usage of RFID also ensures accurate inventory control.

As the products reach their final destination, aka the store, they are scanned andregistered automatically at the entrance. For more information about in-store benefitsof 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 technologyinto their strategic planning, since it provides significant advantages to supply chain

performance. There are far more benefits gained by RFID implementation into supplychain and logistics operations than just improving identification of products,shipments, and assets. Nevertheless already the most common benefits prove thatRFID is worth the investment.

This entry was written by RFID Arena Guest Blogger, posted on 14 November 2013Bookmark the permalink . You can post a comment.

31 comments on“Benefits of implementing RFID in Supply Chain

Management”

1. Kent S. FiebelkornPosted 03 January 2014 at 20:49:52

Great article , and addressing elementary topics that benefit the keystakeholders... Question I have, looking for suggestions in getting allstakeholders in the ecosystem involved.... have you seen enough benefits up

http://www.rfidarena.com/2013/11/14/benefits-of-implementing-rfid-in-supply-chain-management.aspx


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stream that, mfg and dist's are willingto help the retail investment in thetechnology?

2. Kirsikka Dräger Posted 13 January 2014 at 13:15:13

Hello Kent,

that is a great and equally trickyquestion you are asking. Being ableto involve stakeholders is affected bymany factors. What motivates or raises curiosity in stakeholders maydiffer widely. Also it depends onwhat party in the supply chain yourepresent.

Best regards, Kirsikka

3. Fabian FabitoPosted 27 January 2014 at 19:15:22

describe RFID and it's importance insupply chain management.

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

Hello Fabian, hopefully the article contained whatyou are looking for. If you would liketo 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. Brandon H.


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Posted 04 March 2014 at 04:31:23

I was just wondering and lookingaround for the advantages anddisadvantages as compared to simply

barcoding. Hopefully you can shedsome light in terms of pricing,selling, and various areas you've

pointed out in the above article.

Thanks,Brandon

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

Hello Brandon,

we have an article written by JessicaSäilä on the topic of Barcode vsRFID. 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


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7. awolPosted 11 April 2014 at 10:47:20

Iwant to brief explain about the rolesof Logistics and Supply chainmanagement?

8. Kirsikka Dräger

Posted 15 April 2014 at 09:20:08

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

9. John WilliamsPosted 17 June 2014 at 20:01:01

Do have any articles releated toRFID tracking of multi tasked

production orders in manufacturing?

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

Hello John,

We do not have such an articleavailable on the RFID Arena. Maybeyou could further specify what aspectyou are most interested in readingabout? BR, Kirsikka

11. Warehouse for LeasePosted 13 August 2014 at 10:52:40

RFID? How about in warehousing

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

RFID in warehousing is a veryinteresting 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. Erkan. PehlivanPosted 30 August 2014 at 15:14:36

http://safehouse.com.ph/


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What about cost of implementationof RFID in supply chain? Is unit

price of one RFID tag stillexpensive? Or what is average pricefor one RFID tag? Are allinternational retailers using it? Whatis the market situation for RFIDimplementation?

Thanks

14. Kirsikka Dräger Posted 04 September 2014 at12:35:02

Hello Erkan, we have articlesavailable discussing RFID in thesupply 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 haschanged: 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 RFIDtags, please contact a tag supplier. With all the choice available in the marketthey will be able to answer your questions best.

15. Syeda Shahana YesminPosted 17 September 2014 at 14:05:34


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hello

16. Ziad barghouthiPosted 18 September 2014 at11:56:20

My question is about the container tracking. When a container leaves a

distribution center and goes into aforeign port, how is the interfacedone between this foreign port (for instance in Saudi Arabia) and theexporting port like for instance inEngland? Does this require thedestination port to be connected tothe same backend server in Englandto be able to track that container location in the container yard in SA?

Thanks.

17. Hajar Posted 19 October 2014 at 18:01:57

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

18. Suvi DalénPosted 22 October 2014 at 08:41:27

Hello Hajar, thank you for your nicefeedback! We are not able to providea PDF file. We recommend you touse your own programs in order to

print the article as a PDF. If you findthe topic interesting, please alsocheck this article:

http://www.rfidarena.com/2013/4/23/rfid-in-international-supply-chain-management.aspx

19. Harmen

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??

http://www.gcesoft.com.jo/


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http://www.rfidarena.com/2013/11/14/benefits-of-implementing-rfid-in-supply-chain-management.aspx 10/16

Grt

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

we are students of SUPPLY CHAINMANAGEMENT this article is very

helpful for us kindly briefly explainthese terminologies in simple wordthat a student can easily pick allcontent of specific field

21. Suvi DalénPosted 27 October 2014 at 08:40:58

Hello Harmen, thank you for your comments! Unfortunately we do nothave any articles about port authority

processes. The best way to find oneis perhaps to google. If you find one,

please let us know too!

22. Ashok MauryaPosted 17 December 2014 at08:01:30

Very informative blog. I would bemore interested to know if there are

RFID tags available in the marketwhich can work in 95% humidityacross fresh supply chain

23. GiulianoPosted 12 January 2015 at 01:56:51

I'm searching something about thetopic Reid technology in supplychain but I didn't find nothing. Thedifferent websites connect it withRfid technology in supply chain. Is itthe same topic?

24. Suvi DalénPosted 12 January 2015 at 09:47:03

Hi Giuliano,

RFID comes from words Radio Frequency Identification. What does REIDmean - 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 lookingfor!

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

http://www.thefas-solutions.com/http://digicloud.co.in/


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very well explained but i have onequestion that would this technologyalso be effective for small businessesas well in terms of revenuegeneration?

26. Dan johnsonPosted 10 April 2015 at 10:59:28

Great article! One issue that we haverun into with active RFID tags whenused on containers that are shippedvia surface is battery life. The activetag will send out a "Ping" once everyhour, or however programmed, andsometimes the battery will die whilein transit and you will only be able toidentify it's last know location.

U.S. Air Force Logistics Officer

27. AhmedPosted 07 May 2015 at 13:51:04

RFID is a great technology that work on efficiency/improvement of theSupply chain processes however theonly barrier implementing suchtechnology is the running cost of the

RFID tags .As a mobile phone distributor when istudied such technologyimplementation I discovered thateach phone will cost around 15 centwhich is a considerable cost in suchindustry.

28. Noor Posted 14 May 2015 at 17:51:38

Can RFID control the inventoryreconciliation process in asupermarket? And How?

29. PRAHLAD PATELPosted 19 August 2015 at 17:49:16

what is rfid

30. Suvi Dalén

Posted 20 August 2015 at 08:42:21

Hi,

RFID comes from the words Radio Frequency Identification. For your


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information, we are soon about to publish an article explaining the basics of RFID.

br,Suvi

31. ken

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 inmy email.

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