RFID might seem like old news, but the technology can still potentially improve companies' supply chain operations today.
RFID continues to experience growth in the marketplace. "By 2025, new generations of RFID and/or electronic tagging will feature as a core component across 20% of technology solutions deployed across supply chain networks," authors Andrew Stevens and Tim Zimmerman wrote for a 2021 Gartner report, "Adopt Next-Gen RFID Tags to Transform Technology Deployments Across the Supply Chain." Meanwhile, the RFID market is set to reach $35.6 billion by 2030, an increase from $14.5 billion for 2022, according to a study by MarketsandMarkets.
Learn about RFID's continued relevance in the supply chain landscape today and how companies are using the technology.
Product tracing and RFID
RFID's potential benefits to the supply chain are likely driving the recent increase in use.
RFID adoption is increasing because the tech can help companies improve their track and trace functions, which are crucial to mastering the contemporary supply chain, said Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management, a not-for-profit education company located in Chicago. If a product has an RFID tag attached, an employee can quickly locate it.
"Not knowing where things are is problematic, especially when lead times have been extending," he said. "Predictability of shipments is at a historic low."
Tech improvements and cost decreases are both likely driving adoption as well.
RFID now uses a range of different frequencies and antenna and transponder technology, so the range that RFID can accommodate has grown, Kent said. Perhaps more significantly, the cost of basic tags has dropped dramatically.
"Not long ago, a passive RFID tag -- the kind found on many consumer products -- cost from 30 to 50 cents," he said. "Now it's down to about five cents."
RFID beyond the warehouse
Companies might soon use RFID tags in less traditional ways.
RFID has potential beyond the warehouse and distribution center, said Tim Zimmerman, a research vice president at Gartner. New opportunities include adding RFID tags to shipping containers to find them faster or using the tags to identify and inventory railroad cars. Some organizations are now using RFID tags to streamline truck arrivals at large cross-docking facilities.
"They will put a tag on the truck to make sure the driver gets to the right door," Zimmerman said.
Meanwhile, automakers and agricultural machinery companies are using RFID tags to keep track of inventory, he said. These types of applications have been available but are now embraced more broadly.
"These are all cost-effective, people-time-saving implementations," Zimmerman said.
However, RFID tags for these purposes aren't the cheap, five-cent RFID tags used on consumer goods, he said. These tags have antennas and usually include a magnet for attaching to vehicles or containers. They are often designed for reuse and typically have their own built-in power supply, and some can communicate with satellites. Prices are typically in the range of several dollars per unit.
[RFID can] be combined with other things like AI and IoT as part of a digital transformation strategy.
5G leads to more RFID
Increasing connectivity, including 5G availability, is also contributing to increased RFID adoption.
"Whether in a plant or distribution center or on the road, you always had a lot of potential RF interference with traditional RFID, and that threatened its ability to actually function in certain environments," said David Petrucci, supply chain and operations leader at Protiviti, a global consulting firm located in Menlo Park, Calif.
But because 5G is an open cellular network and is within a facility's network, it enables more RFID applications, he said. For example, picking up signals was sometimes unreliable in a manufacturing environment with lots of moving metal machinery and components. Now 5G as a small local network has better strength and less signal attenuation, making data movement faster and more reliable.
RFID and digital transformation
RFID tags can potentially help with digital transformation efforts, which is a major goal for many organizations.
"One thing that has come out of all the supply chain disruptions is the realization that we are far from the 'control-tower' level of management that we really need," Kent said. "[RFID can] be combined with other things like AI and IoT as part of a digital transformation strategy."
Anything that can help a digital agenda is likely needed, as the pandemic has forced companies to shorten their digital agenda timeline, Kent said.
"What was a five-to-10-year roadmap is now being compressed to two years, in many cases," he said. "And RFID is a big part of [bringing that about]."
RFID tags could increase visibility across the supply chain, potentially signaling problems early on, Kent said.
For example, a warehouse employee could use an RFID tag to locate a product that should have shipped on a delivery truck and confirm that it is still in the warehouse. The employee can then alert others that the product is not in transit and is delayed.
RFID in supply chain management is a revolution by providing real-time visibility into stock levels, enabling informed decisions on when to restock products, how much to order, and where to allocate inventory. Moreover, RFID improves the ability to forecast demand and plan inventory levels more precisely.
RFID systems offer the reliability of in-stock product tracking. Real-time data on inventory levels is achieved through the integration of RFID and warehouse management systems. Improved inventory management has boosted efficiency and created a safe work environment.
RFID plays a crucial role in supply chain management by providing real-time visibility into inventory levels, streamlining logistics operations, reducing errors, and enhancing traceability. With RFID technology, organizations can achieve improved inventory accuracy, operational efficiency, and customer service.
Utilizing RFID allows you to track these assets through the entire supply chain loop and provide increased visibility on inventory locations. This has the added benefit of improving returns and reducing theft or neglect.
RFID technology is used in supply chain management to improve inventory accuracy and streamline processes. RFID tags have an antenna and chip that stores information about the item. They attach to products or packaging. When an RFID reader comes within range, it transmits an activating signal to the tag.
Despite its already routine and expanding use — 61% of retailers plan to be using it by 2026, according to Zebra Technologies' latest global research — it remains underutilized, experts say. Yet, RFID could be instrumental in solving shrink and theft issues that are confounding the industry.
With SCM, companies can cut excess costs and deliver products to the consumer faster and more efficiently. Good SCM can help prevent expensive product recalls and lawsuits as well as bad publicity. The five most critical phases of SCM are planning, sourcing, production, distribution, and returns.
In short, RFID chips embedded in various cards and passports contain information that is conveyed via radio waves. It makes for quicker transactions or transits because it allows scanners to pick up the information with less physical interaction.
RFID systems are much more efficient for scanning a large number of items but can be more expensive and require more setup than barcodes. On the other hand, barcode systems can sometimes be more accurate but are less durable and secure than RFID.
RFID technology is integral to supply chain management, particularly in tracking the movement of items into and within warehouses. It provides essential real-time data on various aspects of the supply chain, including the whereabouts of goods, the status of shipments, and the efficiency of supply chain partners.
Achieving high inventory accuracy is crucial for a strong supply chain. RFID technology enhances accuracy by enabling item tracking without line-of-sight, scanning multiple tags simultaneously, and updating inventory counts in real-time.
RFID inventory systems offer quick scanning, improve visibility, reduce manual labor and automate inventory control, resulting in increased inventory accuracy.
Real-Time Visibility: RFID tags provide real-time visibility into the movement and location of products. This real-time data ensures that inventory levels are accurate and up-to-date, reducing the risk of overstocking or stockouts.
It gives a strategic advantage that empowers businesses to operate more efficiently, respond to changes quickly, and build more resilient and customer-focused supply chains. It contributes to overall supply chain excellence and competitiveness in the marketplace.
RFID tags can tell you when items come in to or leave the warehouse: In addition to that, they can also tell you where items are located inside of the warehouse. RFID readers can be placed at entrances and exits to your facility, allowing real-time tracking of inventory as it moves in and out of your warehouse.
RFID technologies may improve the potential benefits of supply chain management through reduction of inventory losses, increase of the efficiency and speed of processes and improvement of information accuracy.
Addressing reader collision and interference presents a significant obstacle in RFID deployment within logistics and warehouse environments. With multiple readers operating in close proximity and relying on radio waves for communication, there's a risk of compromised scanning efficiency and data accuracy.
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