Radio-frequency identification (RFID) is a method used to store and receive data remotely by using devices known as RFID tags. The evolution of RFID has led to the replacement of Universal Product Code (UPC) as well as manual systems, which is a provision that has affected the manner in which business is conducted. The capability of the systems affects business regarding increasing productivity, improving inventory, and security. One of the primary reasons that make RFID attractive to wholesalers, distributors, and retailers is the beneficial element of stock control as well as improved security. Manufacturers produce a bulk of products for different customers also benefit from RFID tagging fundamentally due to the quality control capability, particularly if the manufacturer produces items that have a limited shelf life (Sabbaghi & Vaidyanathan, 2008).
Concerning the aspect of production growth, manufacturers use RFID to streamline assembly line operations. By automating the production line, the companies not only reduce cycle time, but they also realize an increase in production throughput (Sabbaghi & Vaidyanathan, 2008). RFID enhances process automation as well as tracking capabilities, which is vital for improving the visibility and the velocity of products in an organization’s supply chain. This process assists the manufacturers with their just-in-time assembly lines. For instance, Sabbaghi and Vaidyanathan (2008) indicate that in the year 2008, Procter & Gamble were expecting to save working capital and inventory carrying costs by up to $1 billion and $200 million respectively, through the implementation of RFID. For this reason, it is possible to determine that RFID not only enhances production efficiency but also ensures the reduction of the cost of doing business.
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One of the fundamental processes of meeting the requirements of a customer and improving the effectiveness of supply chain is order fulfillment (Attaran, 2007). In this light, RFID has enabled process automation in different aspects such as picking, shelving, and the implementation of consolidation operations. The automation has assisted in the reduction of costly logistics mistakes that include sending products to a wrong destination. By using RFID, suppliers can be able to determine the location of their products, tracking the journey of the particular product through their supply chain, and make routing decisions. For instance, a company can use RFID portáis, which it can set in at strategic points in the company’s distribution center, to read tags, consequently updating the inventory quantities automatically as the tagged cases enter the distribution center (Attaran, 2007). This process can enable the business to free-up the labor-intensive exercise of checking product quantities and the receiving process.
The security of the RFID system is also vital in the supply chain. One of the by-products of the RFID system is the prevention of theft. RFID vendors have been able to improve security through the encryption of data transfers, the implementation of different querying protocols, and using the blocker tag technique (Sabbaghi & Vaidyanathan, 2008). On the other hand, the RFID system can improve the security of the supply chain when the RFID tags are used to seal containers electronically, consequently monitoring their movement to track for possible tampering. Active adopters of this technology include pharmaceutical companies, who use RFID to improve the security and safety of their drug supplies. This example is indicative of the pervasiveness of wireless technology, which affects every aspect of businesses. RFID streamlines the business processes through the automation of manual tasks that might attract errors.
References
Attaran, M. (2007). RFID: an enabler of supply chain operations. Supply Chain Management: An International Journal , 12 (4), 249-257. doi: 10.1108/13598540710759763
Sabbaghi, A., & Vaidyanathan, G. (2008). Effectiveness and Efficiency of RFID technology in Supply Chain Management: Strategic values and Challenges. Journal of Theoretical and Applied Electronic Commerce Research , 3 (2). doi: 10.4067/s0718-18762008000100007
Stambaugh, C. T. & Carpenter, F. W. (2009). RFID: Wireless Innovations in Inventory Monitoring and Accounting. Retrieved from http://sfmagazine.com/wp-content/uploads/sfarchive/2009/12/RFID-Wireless-Innovations-in-Inventory-Monitoring-and-Accounting.pdf
