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A major area where businesses focus on to maintain expansion and competition is through improving their Supply Chain Management (SCM). Evidently, the competitions between firms have grown to become a “supply chain against supply chain phenomenon” . Smarter firms realize this and seek technologies that improve their SCM. Radio-frequency identification (RFID) is a technology that thrives in this arena. RFID has expanded from its initial purpose of automatic identification and tracking to become an integral tool for SCM. Wal-mart RFID Mandate and DoD (Department of Defense) RFID mandates have noticeably advanced the technology. The technology is gaining momentum. RFID technology has since improved in price and adoptability that firms have discovered extensive applications in supporting the SCM function. Furthermore, the data collected from RFID systems can create a real-time tracking and real-time inventory for the business.
Visibility of the Supply Chain
Simply put, visibility in this context refers to “when shippers, business partners, and customers know exactly where products are at any point in the supply chain – from the raw materials supplier to the final destination”. RFID enables more transparency and enhanced information visibility of the supply chain. The firms can have a drill down view or even a collective view of the supply chain processes. Specifically, there are numerous advantages throughout the supply chain where RFID not only saves time and money, but importantly allows management evaluation and processing of the data captured to make better business decisions.
RFID Visibility Points in the Supply Chain
Manufacturing and Operations
- The receiving dock doors can have fixed RFID readers installed to capture data on incoming shipments. Logistical support can easily access Warehouse Management System (WMS) and RFID-tagged shipments to verify items received versus the Advance Shipping Notice (ASN).
- The incoming items can have their RFID tags updated with the storage location. Other environmental data could be recorded to create a pedigree for certain items.
- Raw materials that are tagged can be linked to new tag for finished product. The raw materials are bundled together and continue on through the production line.
- Work In Process (WIP) items can be tagged and updated with the latest tasks completed during manufacturing/assembly process.
- Quality certification tag updates are applied as the item passes inspection. Item tags are updated as either pass inspection or failed.
- Logistician can scan and update the tags when storing the completed product in inventory. Products being shipped out can be palletized and the RFID tag can be updated with all the contents on the pallet.
- As pallets make their way to being put on transport, all outbound docks can have RFID readers checking to make sure that pallets are in the right bay and are arranged in the right order for delivery.
Distribution and Logistics
- Distribution Centers can have stationary readers to check in the pallets or cases. The incoming pallets can easily be verified with against the ASN.
- Logistical personnel can update the pallets or cases RFID tags with their destinations and present location.
- Items can be palletized and updated with an RFID for the specific retail location the pallet will need to go. Other data could be recorded to create a pedigree for certain items.
- Receiving portal can read the pallets and items as they come in and can be compared to the ASN. From here, the shipment of goods can be transferred to the sales floor or left in the stock room. RFID Antennas can be installed throughout the stock room area so that the inventory storage area can be easily identified.
- Salesroom readers or even reader-enabled forklifts can update RFID tag to record date and time the item was placed in the sales area.
- Shelf Readers can monitor the sales area to track movement of product. The readers can also be linked to promotional multimedia that relates to the product or cross-selling of other related products.
Advantages of RFID in Supply Chain Management
Adaptive Automation: WIP items and finished products that are tagged could be read while on the conveyor belt and initiate related processes for packaging preparation and shipment.
Inventory Optimization:Out of stock can be remedied by calibrating real time data between supply chain between Distribution Center and Retail Store Locations. RFID data and other sensors can give the supply chain lead times for completion of goods and transport of goods. WIP can be adjusted according to actual real time demand figures from retail warehouse management systems. Management can also work between partner locations to move stock effectively for spikes in demand.
Balanced Pricing and Promotion:RFIDs enables visibility throughout the supply chain to ensure that products make it to the market at the right time. No unexpected costs added when considering that orders are shipped with sufficient lead times. Immediate feedback from the inventory management system and RFID-enabled retail space allows management to determine the effectiveness of the promotion. They can adjust pricing in real time to reflect if there are overages or have excess inventory.
Pedigree Creation:Pharmaceuticals, gourmet grocery, and even high end supplies can be RFID tagged to capture essential information for pedigree. This will ensure that the product received was handled and stored according to manufacturer’s specification. In addition, this enables retailers and distribution centers to detect counterfeit products.
- Coltman, T.; Gadh, R.; Michael, K. (2008). "RFID and Supply Chain Management: Introduction to the Special Issue". Journal of The Applied Electronic Commerce Research 3 (1).
- McCrea, B. (2011). Supply Chain and Logistics Technology: Defining visibility. Logistics Management. Retrieved from http://www.logisticsmgmt.com/article/supply_chain_and_logistics_technology_defining_visibility/
- Janaki, R. & Patnaik, S. (2010). Role of RFID in Supply Chain Management. CoolAvenues.com. Retrieved from http://www.coolavenues.com/mba-journal/operations/role-rfid-supply-chain-management