RFID’s Efficiency and Applicability to Supply Chain Management
From time to time, certain technologies have been developed and introduced into the market. These technologies aid people to do functions more effectively. Especially in the area of managing goods and information, certain technologies must be implemented to further facilitate the processes needed to better provide people with the services and goods. In the area of supply chain management, RFID is applicable and very efficient.
Radio Frequency Identification (RFID)
Radio Frequency Identification (RFID) technology is all around us. It can be in the ID tag chipped in your dog, or in the EZPass you use through a toll booth. Recently, RFID technology has also been used for security purposes along with biometric technologies. The good thing about this technology is that there is no need for contact or line of sight for communication. Furthermore, the technology can read data even through the human body and non-metallic materials such as clothing (AIM Global, n.d.).
The RFID tags are considered as the “next generation of barcodes.” They are enabling technology included in the Electronic Product Code (EPC) network. These tags are especially manufactured to virtually identify any object, without human intervention. If used fully, data from RFID tags can be beneficial for functions such as monitoring location. Moreover, the use of RFID technology can bring gains to the company such as gains in operational efficiencies and lowering costs (Sun Microsystems, Inc., 2004).
A survey by Frost & Sullivan shows that government mandates such as Food and Drug Administration (FDA) and U.S Department of Defense (DOD) influenced the decisions of the respondents in implementing or considering the adoption of RFID technology. The respondents gave the highest rate of 3.8, with 5 being the highest and 1 being the lowest, for improved process efficiency. Frost & Sullivan also planned to study and analyze North American RFID market and its growth potential. The research firm also planned to evaluate if there will be a need for training regarding the RFID technology (O’Connor, 2005).
Advantages of RFID
This technology offers a wide range of advantages that would make things easier. The main advantage of this technology is its non-contact and non-line-of-sight nature. RFID tags are readily functional even through fog, ice, snow and grime, unlike with barcodes and other optically read technologies. Furthermore, the speed of reading tags, which is in less than 100 milliseconds, is impressive. The RFID’s capabilities of being read and written are also proven useful especially in the areas of maintenance tracking or work-in-process. It became an essential tool in automated data collection and identification applications. In addition, using RFID would be time-saving, and the company could be saved from problems with regards to inventory counts and the elimination of the root causes of inventory variances.
Manufacturers of RFID have improved the production, resulting to faster processing, larger memory capacities and wider reading ranges. Despite the fact that it is more costly than barcodes, RFID is expected to further improve in areas where barcode and other optically read technologies are ineffective (AIM Global, n.d.).
RFID’s Use in the Supply Chain Management
Not to be left behind, the supply chain management has also implemented RFID technology, as mandates from the U.S. DOD and Wal-Mart (Sun Microsystems, Inc., 2004). The supply chain management is about managing the flow of goods through suppliers, carriers, service providers, co-packers and freight forwarders (RedPrairie, 2009). The RFID technology proved to be helpful in the supply chain as it prevented problems, such as losing track of goods on its journey towards the store shelf, from happening. Another concern which prompted the use of RFID is the improvement in securing the source of goods and productivity of transporting goods. As Wal-Mart and DOD believed and proven that RFID is a cost reduction technology, many other companies have started using RFID so that they can better keep track of product flow. Additionally, RFID is effective for identifying inbound and outbound product. The warehouse management in supply chains would do well with RFID in locating products. Manufacturing and processing industries can also use RFID for fundamental purposes such as tracking and locating ‘Work in Progress’ (WIP) goods. Transportation management will also benefit with RFID because it can be used in monitoring and tracking products that are being transported. In addition, RFID is an efficient tool for making sure that store shelves have enough supply of goods (GAO RFID Inc., 2008).
Sun Microsystems, a pioneer in the production of RFID, conducted a successful pilot implementation of RFID in one of its manufacturing facilities. Its primary goal was to find out if RFID can be used on the factory floor. This goal was brought about by certain issues which could affect the effectiveness of RFID technology. Some of these issues are: 1) metal used in products could block RFID signals; 2) radio sources could interfere with the RFID signals; 3) RFID tags could be read inaccurately (Sun Microsystems, Inc., 2004).
After six weeks, Sun was able to get positive results. They recorded 99.5 per cent accuracy in reading the tags with only one tag that was misread, which meant that the Sun’s goal was met. The company also recorded no unintentional reads of tags and no unintentional transactions. Sun indicated that this was a promising result because there was a high degree of metal in the products. The pilot result also indicated that there was no radio interference.
RFID signals the beginning of more efficient functioning of the different transactions of companies. It is efficient to use in the field of supply chain management because of its advantages. As tracking of goods and locating them are critical in supply chain, active RFID, along with other systems, can improve functions. Again, RFID can read tags at a faster speed, even from 250 feet or so away. Many companies have used RFID to enable them to track and locate their trucks or trailers on their way to stores.
AIM Global. (n.d.). What is RFID? Retrieved January 15, 2009, from http://www.aimglobal.org/technologies/rfid/what_is_rfid.asp
GAO RFID Inc. (2008). RFID solutions for supply chain management. Retrieved January 15, 2009, from http://supplychain.gaorfid.com/
O’Connor, M.C. (2005). Efficiencies drive RFID adoption. RFID Journal. Retrieved January 15, 2009, from http://www.rfidjournal.com/article/articleview/1833/1/1/
RedPrairie. (2009). Supply chain management. RedPrairie Corporation. Retrieved January 15, 2009, from http://www.redprairie.com/supplychain.aspx?lid=1
Sun Microsystems, Inc. (2004). Improving manufacturing operations efficiency using RFID. Retrieved January 15, 2009, from https://www.sun.com/aboutsun/media/presskits/networkcomputing04q2/rfid_casestudy.pdf