Radio Frequency Identification in Supply Chain Management

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Table of Contents

Introduction
Definition of Supply Chain Management and RadioFrequency Identification
Advantages of RadioFrequency Identification
Disadvantages of RadioFrequency Identification Systems
Conclusion
Reference List

Introduction

Every product passes through various stages and through different organizations or departments before getting to a consumer. These departments or organizations form the supply chain. Supply chains have existed for ages, but the art of managing and controlling the entire process has improved since organizations focus on every stage in the manufacturing process.

The essence of supply chain management is being in charge of every stage in the manufacturing process. Radiofrequency identification aims at improving supply chain management. This essay seeks to define supply chain management, radiofrequency identification and explain advantages and disadvantages of radiofrequency identification in supply chain management.

Definition of Supply Chain Management and RadioFrequency Identification

Supply chain management refers to efficacious management and mastery of all materials used and information available in the planning process. Supply chain management aims at optimizing customer value and realization of sustainable competitive edge. It involves various activities like product design, acquisition of raw materials, planning, production, acquisition and dissemination of information and knowledge.

Radiofrequency identification refers to a technology that integrates the use of electromagnetic pairing through a radiofrequency and an electromagnetic sequence to locate an object, animal or a person. Radiofrequency identification systems have three parts: an aerial, control center and a transponder, which acts as a tag. The aerial utilizes radiofrequency currents to disseminate an indicator that starts the transponder.

On activation, the transponder sends information back to the aerial. The information relayed sends signals to a programmable controller for a response. The area covered by radiofrequency identification depends on the strength of a radiofrequency identification system.

Radiofrequency identification transponders serve various purposes. Business people attach merchandise transponders to products like clothes and electronics to deter theft in retail chain stores. On paying for such goods, those in charge deactivate transponders attached on such goods as a client checks out.

Inventory management transponders assist business people in locating goods conveniently. Aircraft luggage transponders make it easy to track and identify bags while tollbooth transponders in cellular phones allow drivers to go through a toll booth without stopping.

Drivers are able to make payments instantly. Lastly, animal transponders make it easy to locate pets and other animals, either domestically or for research purposes. Radiofrequency identification tags can be either long term in nature and usage or short term. For instance, tags used in retail stores are short-term while those used in toll stations are long-term. Radiofrequency identification has several advantages.

Advantages of RadioFrequency Identification

Radiofrequency identification is useful in alerting business people on out-of-stock goods. When a customer fails to get a product he intended to buy, such a customer opts for a product from competitors or fails to purchase a product altogether. According to a survey, businesses lose over 8.3 percent of revenue per year due to out-of-stock scenarios.

Radiofrequency identification system works to alert a department concerned whenever a customer picks a specific tagged product. As a result, those in charge stock such goods within the shortest time possible. Consequently, business avail goods required by customers all through.

Unlike barcodes, a radiofrequency identification system does not need line-of-sight to read transponders. As such, items do not need any unique positioning for scanning.

This feature assists in computerization of tasks in supply chain management that were previously labor-intensive. Such roles include scrutinizing and scanning incoming goods. In addition, organizations have a clear image of goods level and this translates to reduced inventory costs.

Radiofrequency identification systems play a pivotal role in automation of supply chain to high levels, which in turn leads to minimized labor in the supply chain process. Labor is usually a significant budget item for distribution departments and accounts for around 65 percent of total budgets.

Predictions show that radiofrequency identifications systems would reduce time utilized in receiving goods by around 76 percent, reduce labor costs incurred while picking orders by 36 percent and reduce verifications expenses for freight. For instance, before Collex adopted radiofrequency identification systems, drivers had to leave their trucks at landfills, manually key in their disposal details and then wait for a ticket.

In the same way, drivers had to wait for tickets when leaving the sites. This led to time-wasting, but currently, all a driver does is to hold radiofrequency identification transponder near the reader and receive a ticket in shortest time possible.

Radiofrequency identification systems are suitable for noting entities that need constant positioning and inspection. In addition, radiofrequency identification tags are not detectable on assets making it easy to use them and that way, track how an asset moves, its utilization, and location thus assisting in proper usage of an asset.

In maritime industry, radiofrequency identification assists shipping companies to track containers as they move around the globe. This way, such companies keep track of valuable goods and adhere to regulations by various governments regarding use of containers since radiofrequency identification sends out information on history of a container as well as chemical composition of goods in a container.

TrenStar, which produces beer kegs, adopted radiofrequency identification system that shows the movement of beer kegs in the supply chain. As such, the company gathers comprehensive data on the whereabouts of carts and communicates with retailers who have not sent empty beer kegs to the company.

Radiofrequency identification systems assist in product level tracking. This feature enables retailers to take stock at any given time and re-order goods that are out of stock. In addition, product level tracking minimizes theft incidences and promotes smart shelves. Smart shelves refer to shelves fitted with radiofrequency identification system that enable them monitor products automatically.

Smart shelves keep such useful data as date of manufacture and expiry date. Wal-Mart is among the few fully automated companies in product level tracking area and is now able to track all products from reception to check out of a good.

Radiofrequency identification systems, used along Electronic Product Code (EPC), assist manufacturers in the areas of warranties and mass recalling of products. Lack of proper details concerning warranties on goods issued and instances of mass recalls can lead to big losses for distribution companies.

Radiofrequency identification system and EPC enable manufacturers to recall specific products and not all products in a particular class of products. This way, manufacturers are able to keep a strong company image.

Concerning warranties, it becomes possible for companies to authenticate a warranty to ascertain that it has not expired. If a customer returns such an item, radiofrequency identification system monitors how the product moves and therefore, a company can inform a customer on the progress of repairs needed.

Radiofrequency identification systems grant companies the ability to check quality of goods both internally and throughout the manufacturing process, thus maintaining quality control of products as well as services.

Radiofrequency identification system allows gathering of real-time data in the manufacturing systems for quality control function, decreasing chances of a consumer encountering a defective product as well as decreasing time used in monitoring and reworking on products.

Currently, a pilot project under the U.S. army is testing the use of radiofrequency identification system transponders to monitor locations where they ship goods. Such transponders accompany food products sent to troops to make sure that utilization of food takes place before an expiry date.

Use of radio frequency identification systems leads to enhanced inventory management by assisting manufacturers get suitable goods to right retailers in good time.

Radiofrequency identification system achieves this function and lowers cost of handling goods. In addition, radiofrequency identification system transforms how manufacturers predict demand, manage stock and distribution. Radiofrequency identification system leads to lower inventory levels and increased sales.

It is hard to imitate radiofrequency identification system tags and this makes them appropriate for security programs, which deter theft of goods from the supply chain as well as goods in on transit in airlines or railway lines. Theft of goods while still in the supply chain or product shrinkage leads to massive losses by companies in the supply chain.

Radiofrequency identification systems, used alongside EPC network, enable manufacturers detect loss of goods in the process and take proper steps. In addition, radiofrequency identification system tags can minimize shoplifting incidences in retail stores. Rampant cases of loss of uniforms at Star City Casino prompted authorities to attach radio frequency identification system tags to uniforms to avoid theft.

Use of radiofrequency identification system assists organizations in making optimum use of available assets. Such assets form part of the company’s capital and records must be in place to prevent misuse of assets.

Unfortunately, workers store assets in various trucks making it difficult to monitor such assets. Radiofrequency identification system comes in handy and enables companies keep track of all assets without necessarily offloading assets from trucks for manual counting.

Unlike other tags, radiofrequency identification system tags are durable and can withstand any weather. Tags operate in all temperatures and do survive even after coming into contact with corrosive liquids like acids.

In addition, radiofrequency identification system tags find use in heavy machinery industries as they withstand every condition and more significantly, radiofrequency identification system tags usually last longer than objects of their use. Radiofrequency identification systems have their disadvantages too.

Disadvantages of RadioFrequency Identification Systems

It is costly to install radiofrequency identification systems because they require hardware, software, design and maintenance. Such costs apply both at the inception of using such systems and during the use of radiofrequency identification systems.

Being a relatively new technology, radiofrequency identification systems demand more research, redesigning based on user feedback, constant testing and marketing or these systems. Currently, a transponder goes for ten British pounds while system set up requires over fifteen British pounds. This is quite costly and risky, especially if competitors stick to barcodes.

With such costs, radiofrequency identification systems might prove risky for small businesses. Radiofrequency identification systems need a lot of time to install as well as time for operating them. They decrease capital budget and if not checked well, installation of radio frequency identification system can result in massive losses for any business venture.

Radiofrequency identification systems require more time for further research and implementation stages. It usually proves hard to calculate the return on investment expected from installation of radio frequency identification systems since they are relatively new in the market. In addition, being a new technology makes it hard for companies to budget on it.

Radiofrequency identification systems are quite intricate and vast. It is hard to replicate radio frequency identification systems because each installation is peculiar to a situation. For instance, an installation meant for goods on transit is different from an installation on retail store goods.

In addition, each business environment provides different factors for consideration and this demands changes or modifications to a radio frequency identification system.

Testing stages in radiofrequency identification system installations are unpredictable and hard to plan for in a budget and this leads to more complications. Use of radio frequency identification systems failed to find its way into small businesses many years after inception. This arises from lack of enough case studies to establish standard operating procedures for radio frequency identification systems.

Concerning adoption and transformation, radio frequency identification systems demand training users on ways of optimizing systems. Adoption of radio frequency identification systems further demands physical tagging of all goods as well as recording such goods.

Employees need to tag objects using both hardware and software, take care of gadgets and keep a workstation in order. Such exercise exerts pressure on staff members and leads to low production before staff members adapt to new system.

There is no universal understanding of principles of radio frequency identification systems. Each country has its own regulations and standards for radio frequency identification system and enforcement concerning interference with the system is currently unavailable.

Knowledge on radio frequency identification systems remains a preserve of manufacturers as educational hubs and government programs do not support such ideas anymore.

Radiofrequency identification systems are susceptible to disruption. Since radio frequency identification systems utilize electromagnetic strips, they can easily jam and thus lead to distress, especially if they are in use in areas like hospitals, military installations, among others. Transponders that utilize dry cells are likely to wear such cells down, leading to a disruption in the system.

Radiofrequency identification systems usually encounter reader collisions. This happens when warnings from two or more readers mix up and prevent a transponder from responding.

Some radiofrequency identification system tags prove difficult to remove from items such as clothing since the transponders are at times too small. On the same line, someone with a reader is able to gather information from an innocent customer.

Conclusion

Supply chain management aims at controlling and managing all aspects that make up the supply chain process. It involves various activities like acquisition of raw materials, planning and designing of products. It involves various organizations that link up using physical communication. To improve supply chain management, organizations adopt technologies such as radio frequency identification systems.

Radiofrequency identification systems assist an organization in various ways that lead to reduction in operational costs. Radiofrequency identification systems have several advantages and disadvantages.

Advantages include easy management of inventory, prevention of theft cases, minimizing of out-of-stock occurrences, monitoring of products while on freight as well as monitoring of chemical compositions to keep them on the level recommended by authorities.

Disadvantages include complexity of radio frequency identification systems, high cost of installation, lack of universal standards and incidences of collision between two radio frequency identification systems.

Reference List

Buzzle 2011, Advantages and Disadvantages of RFID Technology. Web.

Electronic Cash News 2013, Benefits of RFID for Supply Chain and Logistics Operations. Web.

Handfield, R. 2011, What is Supply Chain Management. Web.

Mobile Burn 2013, What is “RFID”? Web.

Pigni, F. 2012, A guideline to RFID application in supply chains. Web.

Pissello, T. 2013, The ROI of RFID in the Supply Chain. Web.

Rouse, M. 2012, RFID (radio frequency identification). Web.

Tech Terms. 2013, RFID. Web.

Techno Velgy. 2012, Problems with RFID. Web.

UK RFID. 2013, RFID Disadvantages. Web.

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