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Is RFID Right for Your Supply Chain?

Radio frequency identification (RFID) uses electronic tags to store data that can be transmitted to a scanner/reader. This provides identification and tracking benefits similar to those from barcoding, but with the ability to store more information and to read tags without a line of sight. Also, multiple (in some cases, hundreds) of tags can be read at once, making the technology more efficient.

RFID has been deployed for supply chain management by many companies, but is RFID right for your specific supply chain? Here are seven questions to ask as you evaluate whether this technology is right for your business.

1. Are you looking for increased efficiency and accuracy?RFID can improve equipment, inventory, and business process visibility in ways that other technologies simply can’t. Moreover, it can do so with a much higher degree of automation than other identification technologies (like barcodes). RFID tags can be read on an ongoing basis using readers installed at dock doors, at partner facilities, and even inside trucks or shipping containers. This allows you to collect granular inventory data that is more accurate and timely.

2. Are you in a hurry?If you have to quickly deploy a system to address an inventory issue in your supply chain, then RFID may not be the answer at least in the short term. An RFID deployment requires more planning and development than a barcode system because of the intricacies of RF technology and the infrastructure requirements.

3. Do your supply chain partners use RFID?In a closed-loop system where you are shipping goods from your own warehouse to a retail location or customer site, radio frequency identification can be more beneficial because you can ensure that there will be RFID readers at each node. If you heavily use third-party logistics providers and other leased infrastructure, there may still be gaps. Quite a few 3PL specialists, however, offer RFID tracking capabilities that could be integrated with your own initiative.

4. Are you in an environment with a lot of metal or water?RF signals can be degraded or blocked by large amounts of metal or liquids. While there are RFID tags designed specifically to work reliably under these conditions, they are more complex to deploy and often more expensive. That will add cost and time to the deployment, and potentially limit your choice of technologies/providers.

5. What level of visibility do you need?There’s not necessarily a business case for item-level tracking in every category. Very cheap goods won’t benefit from RFID because the cost of the tags relative to the cost of the goods is too high.
That doesn’t mean there isn’t value in case- or pallet-level tagging. You can still have faster and more accurate inventory location data under that model, and generate a measurable ROI.

6. Is your environment challenging for barcode labels?RFID can be used in applications where traditional labels aren’t practical. If you can’t get line of sight on a label, then RFID may be a better option. The technology can also be used in harsh or dangerous conditions — tags can be read at very high or low temperatures, in the presence of dangerous fumes/chemicals, and in storage locations where label scanning might be a challenge. Durable RFID tags can also withstand conditions (like harsh cleaning or trips through an autoclave) that would be impractical for paper barcode labels.

7. Do you need more than just location data?RFID combined with low-cost sensors that measure temperature, vibration, and pressure can do more than just tell where your goods/assets are. They can provide real-time updates on conditions that affect the quality of the freight in question. For example, for cold chain applications (such as frozen food, pharmaceuticals, or fresh produce) RFID and sensors can produce an auditable record of the temperature of the inventory in order to ensure quality and safety.
Is radio frequency identification a good fit for your supply chain? In most cases, the answer is yes — provided you build the right business case prior to deployment. RFID can provide supply chain benefits beyond location tracking, making it possible to optimize operations in ways not previously possible.