Advantages of RFID in Logistics

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Asset management

RFID tags can be permanently attached to capital equipment and fixed assets – everything from pallets to tools, vehicles, trailers and equipment. Fixed-position readers placed at strategic points within a facility can automatically track the movement and location of tagged assets with incredibly high percentages of accuracy. This information can be used to quickly locate expensive tools or equipment when workers need them, eliminating labor-wasting manual searches. Readers can be set to alert supervisors or sound alarms if there is an attempt to remove tagged items from an authorized area.

By tracking pallets, totes and other containers with RFID and by building a record of what is stored in the container as items are loaded, users can have full visibility into inventory levels and locations. Manufacturers, for example, can easily locate items necessary to fill orders and fulfill rush orders without incurring undue managerial or labor time.

RFID tags or labels on pallets, cylinders, RPCs (reusable plastic containers) and other shipping containers can be automatically read at the dock door as they leave with an outgoing shipment. By matching the reading with specific shipment information in a database, manufacturers can automatically build a record of what specific shipping containers were sent to each customer, information that then can be used to document cycle times, improve returns and recoveries and aid in disputes with customers about lost or damaged assets.

Production Tracking

Studies found that manufacturers can reduce working capital requirements by 2 percent to 8 because of the greater visibility RFID provides into work-in-process tracking and materials inventory. By applying RFID tags to subassemblies in a production process rather than to finished goods, manufacturers can gain accurate, real-time visibility into work-in-process in environments where bar codes are unusable.

Inventory Control

Improved inventory tracking remains RFID’s primary benefit, especially when the technology’s capabilities are used to collect information and provide visibility in environments in which tracking was not done before. Because RFID tags can be read through packaging without direct line of sight between object and reader, and because they can withstand exposure to dirt, heat, moisture and contaminants that make bar codes unusable, RFID can remove blind spots from inventory and supply chain operations.

By using the highly accurate, real-time and unattended monitoring capability of RFID to track raw materials, work-in-process and finished goods inventory, companies can improve overall inventory levels and reduce labor costs and safety stocks. Readers covering warehouse racks, shelves and other storage locations can automatically record the removal of items and update inventory records. If an item is misplaced or needed urgently to complete an order, fixed-position readers or a worker with a mobile computer and RFID reader can automatically search for the item by reading for its specific ID number.

Process Control

Besides protecting inventory from theft and diversion, readers can be set to sound alarms or send notification if items are placed in unauthorized areas of the facility or removed from storage without prior approval. Industry studies found consumer goods manufacturers would reduce shrink (inventory loss) by an estimated 10 percent by implementing secure storage areas.

Similarly, direct store delivery and other remote sales and service personnel can take advantage of RFID readers integrated with mobile computers to quickly and accurately count inventory held in stores or in a vehicle. The automated counting saves significant time in the field, allowing representatives to visit more customers in a day. For field service applications, permanent asset tags applied to equipment store its ID, configuration and service history information to ensure accurate and appropriate service is performed in the field, where access to a central records database may be unavailable.

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Business optimization 

Many highly effective applications can take advantage of existing data collection systems and processes and enhance them with RFID for operations where more functionality is required. This approach fully leverages existing technology and successful systems, which makes the return on investment for RFID easier to measure and faster to attain. For unit-level identification, bar code systems may provide excellent performance and will continue to be the most cost-effective option. RFID then can complement and expand that system at the carton, case and pallet processing level.

The same benefits retailers and distributors are attaining are available to others that implement RFID-tagged shipments into their own business processes. Manufacturers benefit by applying RFID tags to cases and shipping containers, especially reusable assets like pallets, reusable plastic containers, kegs, totes and gas cylinders. The types of RFID tags that are placed on these items may be reused hundreds of times, which leverages the initial tag cost to provide a very attractive total cost of ownership. Tagging at this level also sets the foundation for numerous highly accurate labor-saving automated routing, receiving, shipping and inventory control applications. These benefits allow manufacturers to reduce fixed assets 1 percent to 5 percent and to cut working capital 2 percent to 8 percent because of better asset utilization,

One thought on “Advantages of RFID in Logistics

  1. Pingback: Major step forward in RFID for retailers and logistics companies | Silverstar Analytics

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