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.
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.
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.
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
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