By Nerida Kelton
The next generation of inventory management technology and supply chain efficiency is said to hinge on broader adoption of RFID technology for tracking at the pallet and case level initially and ultimately down to the individual item as well.
According to Scott Austin, MD of Sunshine Technologies , RFID has the potential to materially change how inventory is managed, “be it in the supply chain, in warehouses, in transit, in distribution centres, on store shelves, or by improving visibility of that inventory in near real-time, and all at an economically feasible cost”.
Whilst RFID is not necessarily new within supply chain and logistics, the market however is now on the verge of accelerating its adoption of the technology on a broader scale for supply chain applications.
A report from Bear Stearns & Co Inc. Equity Research, Supply Chain Technology, identified several reasons for this:
• Vendors of RFID technology are embracing the economics of lower-cost production in higher-volume scenarios that could bring individual tag costs below 10 US cents.
• Large global retailers have been heavily involved in RFID projects.
• Consumer product goods (CPG) firms such as Procter & Gamble and Gillette have been at the forefront of initiatives to use RFID to reduce shrinkage in the supply chain for high-value goods such as razor blades and batteries and both appear eager to realise the benefits of day-to-day use of the technology.
• Specifically, Gillette’s order of 500 million RFID tags underscores the importance of RFID in its strategy going forward.
A fundamental issue with RFID technology is that the read range and high-frequency 13.56Mhz applications were hindered by the limited maximum read distance, at best a couple of feet, which is not conducive to use throughout the supply chain.
However, ultra-high-frequency (UHF) RFID applications have read ranges of up to 3 to 4m, and results from the latest field trials and pilots with UHF are demonstrating performance that is well-suited to application in the supply chain.
“With UHF, readers can be installed at dock doors. When trucks are unloaded and loaded at the manufacturer, the DC, and the back of the store, the goods can be pushed right through the dock doors, with RFID readers able to scan tagged pallets and cases as they pass,” Austin said.
“Also, the newest RFID technology being tested right now has accuracy rates that approach 99%+, making it applicable for tracking valuable inventory that must be accounted for as it moves through each stage of the supply chain,” he said.
According to the report lower-frequency applications with shorter read ranges were not suited to tracking applications in DCs and warehouses.
Results from the latest series of field trials and implementations suggest that the performance in terms of read range and accuracy is well-suited to applications in the supply chain space.
So would RFID supplant barcodes for logistics, supply chain and retail applications?
“No….not in the near future and probably not ever for low-cost goods at the item level,” Austin said.
“During this transition period RFID and barcodes can co-exist, but over time RFID will become the primary means for tracking and efficiently managing inventory in the supply chain,” he said.
The key benefit of RFID tracking over barcodes is that the physical line of sight needed for barcode scans is not required in the case of RFID making it generally more efficient than traditional barcoding.
This permits the near simultaneous ‘scanning’ of many pallets and cases fitted with transponders that are, for example, passing through a dock door equipped with an RFID reader system.
Barcodes would require each item to be scanned individually, which takes more time and requires specific positioning of labels. There is many more touch points along the supply chain where inventory equipped with RFID transponders could be tracked, and there are numerous ways this improved visibility could be put to good use.
Increased Visibility to Supply Chain - RFID technology has the ability to track items in real-time as they move through the supply chain with more touch points that would be possible using a conventional barcode scanning solution.
By tracking items in the near real-time, users of RFID technology have greater visibility to their supply chain, providing opportunities to lower inventory carrying costs, as well as reducing the need for storage warehouses, thereby improving cash flow, boosting productivity and reducing overheads.
Reduced Shrinkage - With the availability to monitor the movement of goods throughout the supply chain more closely with RFID tracking, CPG firms and retailers are looking to RFID as a way to reduce shrinkage ( stock levels), including theft. Shrinkage has long been a supply chain problem, particularly for high-volume goods; RFID technology is expected to help pinpoint the specific spot where the problem is occurring and ultimately help prevent the problem.
Tags can withstand harsh conditions - In order to function properly barcode readers must have clean and clear optics, and the label it is reading must be clean and free of abrasion as well. RFID on the other hand, enables tag reading from greater distances – up to 100ft for active tags – even in the most challenging environments.
The RFID revolution will be widely evident over the next few years and many private and publicly listed companies will benefit from this development.
There are enormous opportunities for transportation and logistics providers to utilise RFID to become more productive and to make their customers more productive.