Why RFID in Supply Chain Management?

By : Priyanka | November 7, 2019

Supply chain is network of entities, directly or indirectly linked to serve the consumers. A supply chain enables a company to better manage demand and supply of products. It is responsible for the right amount of inventory, keep the cost minimum and meet customer demand effectively. A supply chain starts from the vendors for raw material to the ultimate users; it includes the producer who converts raw material into final product, ware house where products are stored and the retailers who sell the product to end user. But this flow of products from supplier to manufacturer to end-user requires appropriate strategies and systems to manage this complex process.

SCM focuses on planning and forecasting, purchasing, product assembly, moving, storage, distribution, sales and customer service. Technology plays a crucial role in today’s complex supply chain. Radio frequency identification technology works on electromagnetic waves! All one requires is tag the products in the supply chain. RFID tags can enhance the understanding for businesses in terms of the manufacturing and what happens to incoming and outgoing materials in the supply chain.

Supply chain is responsible for managing the flow of goods from supplier to the end users, for keeping a track of this flow creating visibility becomes important! RFID technology creates visibility in supply chain work process, it can change the way they do business. RFID technology in supply chain can contribute to the improvement of services, better serve customers, improve product quality, reduce time, cost distribution and materials handling.

There are many applications and possibilities for RFID/EPC as these objects in motion are traced throughout the supply chain. The complete visibility of accurate inventory data throughout the supply chain from manufacturer’s shop floor to warehouses to retail stores brings opportunities for improvement and transformation in various processes of the supply chain. RFID technology can help a wide range of organizations and individuals such as hospitals and patients, retailers and customers, and manufacturers and distributors throughout the supply chain to realize significant productivity gains and efficiencies.

Benefits of RFID in Supply Chain Management

Adds Intelligence in the process

Supply chain is complex process; it involves various levels to manage the flow to material from the supplier to the end user. The purpose of Supply Chain Management (SCM) is to keep chaos at bay – synchronizing the activities of the network. Radio frequency technology adds intelligence to this process by capturing and transferring the data to and from RFID tag via radio waves. It enables real time tracking of inventory in the warehouse, in-transit and in-stores. It also helps to keep an accurate track of inventory of products and material. RFID technology in supply chain enables a company to automatically record the movement of material. It creates visibility throughout the vertical, thus increasing competitiveness by faster response to customer demands and production problems, reduction of delivery issues, reduction of uncertainty on factors causing fluctuations, improvement of the readability of the quantity and quality of items produced.

Reduce errors in delivery of customer orders

Customer is the key figure in a supply chain; the ultimate user of a product. Nowadays the customers have become very demanding, they expect a lot from the product and service they pay for. So, an effective and efficient flow of material is required from the manufacturer to the customer to meet the customer demand on time. RFID technology equips a supply chain with proper flow of information at each level, and thus helps in maintaining adequate inventory level. RFID is used to automate the procurement of the material and products of the distribution centers and stores and thus helps in reducing time, money and complexity. By putting an RFID tag on a product, the users can track the product’s movement from the manufacturer to the customers. Using RFID in the supply chain reduces the checking time, manual counting and logging products at all level of supply chain, leading to reduced errors in delivery of products.

Product’s travel time in the supply chain is spent waiting for identification or some manual process- counting of stock, documentation, etc. Thus, the flow of objects/items starts taking more time due to such stoppings. RFID enables automatic identification of tagged items via radio waves; it can potentially improve the speed of supply chain process by enabling the objects to move faster and at less cost.

Real time tracking of people and object

Supply chain requires an accurate data of movement of material; it helps to solve any inefficiency in the process. Absence of real-time data can slow down the decision making process in the supply chain. With RFID in process, the manufacturers and retailers can improve the efficiency of process. RFID removes the transparency problem from the process which was a challenge for supply chain in past. RFID addressed this challenge by creating real-time supply chain data, by connecting the movement of the last mile between the physical object and the computer, thus enabling automatic identification of data and populating of the database.

With RFID asset tracking, supply chain facilities can gain quick and easy access to inventory information and location to keep track of when items are stored, distributed or replenished and confirm deliveries – no matter where they are in the supply chain.

Increases Security in the flow of material

RFID tags in supply chain make it easier to guarantee authenticity of a product. RFID tags are virtually impossible to copy, making them suitable to any security applications. RFID protects material in supply chain by removing the propensity for counterfeiting through embedding tags that automatically reads as material passes through the supply chain. Each tag consists of unique code which distinguishes the product as genuine. This unique number cannot be easily copied or altered, improving the security. Combined, the attributes of being both automated and highly secure give an electronic security.

Less manpower required

Using RFID technology in supply chain automates the process of recording and item tracking with less manpower. RFID does not require human to be within the direct line of sight when reading RFID tag. Tagged objects can be traced irrespective of item orientation, unlike barcode. This technological characteristic is advantageous at numerous stages in a supply. They no longer have to waste time on labor-intensive processes like scanning individual barcodes, searching for misplaced tools or equipment or counting inventory amounts. This allows them to increase task speed and project turnover to reduce labor and carrying costs, as well as improve the facility’s overall productivity. RFID eliminates the chances of human error and oversight things that take significant time to be fixed.

Inventory control

Manufacturers persistently struggle to get the right products to the right retailers at the right time. RFID can help solve this problem while reducing inventory levels and lowering distribution and handling costs by providing accurate and real-time information on inventory quantities and movement. RFID technology brings transparency in inventory and supply chain operations. Automatic recording of the inputs and outputs of materials brings more accuracy in process; manufacturer know what they have and where will reduce safety stock, enable better timing of replenishment and give better data on where to forecast future demand.

Exact knowledge of the amount of inventory at each location in the supply chain in real-time enable supply chain decision makers to run a much more efficient supply chain. Knowing what is in the replenishment, and when it is expected to arrive, potentially allows safety stocks to be reduced, while maintaining or increasing customer service levels. In addition, new and more flexible inventory control policies can be devised that make use of the added visibility.

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