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RFID technology is changing the way companies manage the goods they produce and sell. Employing RFID has significant benefits throughout the supply chain, from product acquisition through final delivery to customers. 

Quick Takeaways

  • RFID technology is transforming all aspects of supply chain management, from demand planning and inventory management to asset management and shipping and receiving.
  • Applying RFID tags to all products, components, and containers enables companies to track every single item throughout the supply chain process.
  • With RFID technology, companies can improve inventory accuracy, improve order accuracy, better meet demand, and reduce costs.

Using RFID in the Supply Chain

The supply chain is the flow of materials and services from suppliers to manufacturers to warehouses to end customers. Every company has its own unique supply chain, and they are constantly working to improve its efficiency and accuracy. 

Fast and accurate data is essential to an effective supply chain. To better manage its inventory, a business needs to track its goods at all stages of the supply chain process, which can be done by using RFID technology. RFID tags can be used on component parts, completed products, packaging, boxes, pallets, and shipping containers to provide tracking and other important data. By providing detailed real-time data about the flow of goods through the entire supply chain, RFID promises to transform supply chain management. 

The use of RFID technology in this fashion is part and parcel of the Internet of Things (IoT), in that it enables every single product or component part to become a “smart” device. RFID offers operational efficiencies in asset tracking, vendor relations, forecasting and inventory, and more. 

Demand Planning

Whatever your business, it’s essential to be able to forecast demand for what you sell. Without an accurate forecast, you won’t know how much product to stock or how many employees to schedule. 

To create a reliable forecast, you need a combination of historical current data. RFID can provide detailed real-time data regarding current sales, as well as inventory levels, in-transit product, and work in process. You use this data to forecast demand for the next day, week, month, or year. Your forecasts are more accurate because you don’t have to guess about current inventory levels or where products are in the supply chain.

Inventory Management

The more complex your business, the more challenging it is to get a good handle on your inventory. It doesn’t matter whether you’re manufacturing completed products from raw materials or selling completed products to retail customers, you need to know what’s available, what’s been sold, and what’s on order.

Using RFID in supply chain logistics is essential, and there are many ways companies use RFID to track products in their warehouses. Companies use RFID to enhance product tracking, improve traffic flow, and track perishable inventory, as well as provide more data to help them better manage their operations. The result is a smart factory that runs more efficiently and better meets the needs of internal and external customers.

It’s easy to apply RFID tags to individual products and component parts. If you’re a manufacturer, you can track every nut and bolt that goes into the finished product. If you’re a wholesaler or retailer, you can track each unit of every single SKU, no matter how small or seemingly inconsequential. 

All of this tracking is done in real time, so you don’t have to rely on manual inventory counts from weeks ago or best guesses made in the interim. RFID technology enables you to know where every single component, product, or package is at any given moment, as well as what is due to arrive. The detailed tracking enabled by RFID should help you improve inventory accuracy, reduce excess inventory, and improve inventory turns. 

Asset Management

RFID doesn’t just track product inventory. It can also be used to track other assets, such as pallets, containers, and even equipment. Applying RFID tags to all reusable assets lets you trace their location and movement, so you know where it is and how it’s been used. 

Using RFID for asset management also improves security. By tracking the movement of your assets, you’ll know when they’re removed from authorized areas. This will help you reduce theft and unauthorized use.

Shipping and Receiving

RFID is also essential in shipping and receiving operations. RFID tags are read when inventory is received and each item is automatically entered into inventory. On the other end of the process, RFID readers are used to record every single product or pallet that is ready to ship. This verifies that the right items are in the right containers and that inventory is appropriately adjusted. 

This reduces the time spent receiving and shipping products and provides more accurate inventory, shipping, and invoicing. According to a study by Auburn University’s RFID Lab, retailers who use RFID technology were able to achieve 99.9 percent order accuracy. This compares to retailers who hadn’t implemented RFID, who only achieved 69 percent accuracy. 

Integrating RFID with Blockchain Technology

RFID technology is capable of integrating with blockchain technology to provide even more supply chain benefits. Blockchain technology can create an unalterable ledger of transactions throughout the supply chain. By combining blockchain with the data tracked and collected by RFID devices, companies can more quickly identify and respond to supply chain issues. It will be like supercharging the benefits currently supplied by RFID technology.

Create a More Efficient and Manageable Supply Chain with RFID

Companies across all industries and sectors use RFID to better track their goods and assets and provide more accurate and actionable data to improve their business practices.

The primary benefits of RFID technology for the supply chain include:

  • Improved inventory accuracy
  • Improved accuracy of orders shipped
  • Better tracking of reusable assets
  • More and more accurate data gathering and analysis
  • Reduced number of errors 
  • Reduced operating costs

RFID-enhanced supply chain management gives companies a competitive advantage over firms that don’t use RFID technology. If your company hasn’t yet evaluated the use of RFID, you need to – or you could be left behind.

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