RFID (Radio Frequency Identification) Technology helps Enterprises in reduction of cost and improvement in Efficiency
RFID technology helps in tracking movement of goods and items through the supply chain of Enterprises helping in reduction of costs and improvement in efficiency. The movement of goods starts right from supply of raw material from initial suppliers to manufacturing unit of Enterprises and then movement of finished goods to Customers through distribution channels consisting of dealers, Wholesalers and retailers. The transportation of material in cartons and pallets to warehouses takes place via ships, rail road, air and trucks. Companies like Wal-Mart have successfully used the RFID Technology and rose to become number one company in the world after beating big Conglomerates like K-Mart and Sears in their own game of retailing.
RFID technology has been used by major companies other than Wal-Mart like Target, Tesco, Metro, and Albertsons and by Government departments like U.S. Defence- All of which require suppliers to provide goods with RFID tags. However this requires some investments to make in RFID Tags, readers and hardware and software infrastructure.
Traditionally Bar Codes have been utilised for identification of the products and thereby efficient flow of goods in the various phases of the supply chain. The bar code system generally used in Europe has been EAN (European Article Number) and in the United States a corresponding code has been UPC (Universal Product Code). A more comprehensive code GSI-128 CODE is also used for ordering and identifying transport units and pallets.
RFID is expected to be next technology that will revolutionize Logistics and probably the bar code.
What is RFID Technology
RFID is a wireless technology working on UHF range of frequencies. RFID system consists of transceiver equipped with an antenna, a tag and a reader acting as an intermediary between the identification and the background system consisting of computer system and associated software displaying the information about Goods like country of origin, description, expiry date, destination, handling details etc. Electronic product code is the key standard for RFID in Retailing driven by EPC global which works in close collaboration with GSI. RFID tags were earlier used for marking cattles and pets and as such are not a new invention. However during the last few years plans encompassing entire value chain using RFID Tags right from procurement of material up to the finished goods available on the shelves at the point of purchase for the customers have emerged. Tags make it possible to identify each Logistics unit or even each individual product and track their way through the supply chain.
RFID Tags are used in different shapes and sizes and their costs have been brought down to few cents. The Tags are divided in two parts viz Active and passive:
Active Tags can usually be complemented with new information as they proceed in the supply chain. Whereas Passive Tags are for one time use and only send data which is stored in them initially. A passive tag draws energy from the reader whereas an active tag has its own battery and draws power from there. Read – write tags can be erased and can be used many times along with the ability to rewrite the data. Wal – Mart made it mandatory the use of RFID Technology by its top 100 suppliers at the case level.
Advantages of RFID Technology over traditional identification methods like bar code
• RFID Technology makes it possible to read large number of items simultaneously
• The process is automatic without involving manual intervention.
• The devices are always on and ready to read.
• Code reading does not require a visual line of sight so it can take place even through the side of truck without unloading.
• Tags can contain large amount of information.
RFID Benefits for Enterprises
With the openness and transparency in the value chain, RFID enables significant benefits in the form of smaller shrinkage, especially during shipping and inventory handling-Missing units can be identified easily and much faster. Any corrective action can be taken much faster. This also prevents products stolen by employees or suppliers. RFID tags shall be widely used for tracking valuables and courier assignments. The shipping tools such as cartons and pallets are widely tagged. The technology can be used in manufacturing to check the availability of entire bill of materials relating to a specific purchase order or the combined inventory of finished goods. Manufacturers who experience bottlenecks in traceability of goods or who want to reduce labour costs with material management and replenishment are excellent candidates for implementing RFID technology. Numerous industrial applications requiring work in progress tracking, parts identification, asset and fleet management have huge scope to derive cost benefits and increase their efficiency by going whole hog for this technology.
RFID utilization to transportation and logistics service provider
The technology can make the receiving of a truck much faster and cheaper. ODPL, a trucking and logistics provider in North America whose drivers operate from 117 service centres banks on RFID technology to operate its fleet of 2600 trucks and derives immense cost benefits by getting the loading and unloading of trucks with less labour cost deriving value in terms of faster delivery of the material and goods to its end customers. The system thus streamlines loading and unloading operations where the wasting of time is directly proportion to lessening of profits for Logistics companies who require their assets more on the road.
RFID for Asset Management
RFID technology is highly adaptable that many other types of business can use it for improving the tracking, availability and utilization of their assets whether they are tools and tackles on the assembly line or semi finished or finished goods or work in process machinery. Asset tracking by RFID thus can minimize thefts and losses increasing thereby return on investments. Due to RFID Tags being read in automated operation without requiring manual intervention, unattended and constant tracking is provided by the well designed RFID systems.
Product tracking and genealogy in Aviation industry by RFID
RFID technology is a boon to aviation industries which requires tracing genealogy of the components used in aeroplanes for proper maintenance and upkeep or provide life time identification. Aviation industry in fact is a leader in developing RFID product tracking standards and applications. Misidentification and record keeping errors could potentially cost airlines millions of dollars in unnecessary replacement costs. Actually in aviation industry aeroplanes can’t fly if positive identifications and life time records are not available for a specific part.
RFID in Automotive industry
In the automotive industry where just in time, just in sequence delivery requirements are a routine requirement, automakers and their suppliers use RFID to identify subassemblies to insure they are installed in the correct chassis.
A fully operational and well implemented RFID technology can eliminate the need for manual counting and bar code scanning at the receiving dock. It can also be used to get an exact count of incoming items and items in storage.
RFID in Retail Sector-How Wal-Mart used RFID technology for reduction of cost
World’s biggest retailers like Wal-Mart, Tesco and Metro are actively promoting adoption of RFID Technology. Wal-Mart chose their suppliers globally from countries like China and cut down their procurement and manufacturing costs and could sell every item cheaper than their nearest competitor. They carried out computerization coupled with ERP (Enterprise Resource planning) software throughout their value chain and shared the customer’s information liberally with their suppliers, distributors and dealers through networks based on information Technology resulting into cutting down inventory carrying costs in the warehouses and supply what customer exactly wanted at the right place, at right time and at right price. With customer centric approach, Wal-Mart set up huge distribution centres where merchandise goods in cartons were identified and redistributed with help of Radio Frequency Identification Technology tags and they could dispatch the replenished good in huge Malls just in time delivering the goods before expiry date through prioritization of cartons. This way they could make most of the merchandise including FMCG goods always available on the shelves and were ahead of their competitors in reducing the lost sales arising due to non availability of goods on the shelves.
A new and rising standard towards RFID is reading near field communication standard (NFC).It enables reading RFID tags through mobile phones. The mobile phones are equipped with NFC while mobile phones read RFID tags embedded in shelf labels and wirelessly exchange the shopping list information with a dedicated point of sale to facilitate an Express check out. During the shopping trip, customers can monitor what they spend and save time bypassing the queue at the check out.
In near future mobile phones may include a personal trainer or weight watching application that calculates calories in the shopping basket and shall offer useful tips to customers for choosing healthier products such as containing less salts. Similarly doctors may prescribe a certain diet for someone who can use a mobile application warning of unsuitable products when shopping. These technologies will have a significant impact on Retail development. Store employees can be provided with handy terminal devices using this technology.
RFID Technology in India
The RFID technology is still in a nascent stage in India and costs of RFID tag is a biggest deterrent though bar code technology with infrared readers has reached a stage of maturity. They are omnipresent in Malls and stores throughout the country. Few Foreign Logistics service providers like Schenker present in India as a multinational company are using the technology in coordination with their foreign principals. It is expected that in the retail sector, the use of RFID technology would be geared up by companies like Wal-MART and Carrefour who are waiting in their wings to start their fulltime operations with companies like Bharti and reliance Retail.
Written By
Professor Akhil Chandra
Institute of Logistics and Aviation Management (ILAM)
