Manufacturers, warehouses and distribution centers have moved from tracking pallets with RFID to employing item-level tags that can pass inventory data from packaging to store shelves. As these programs spread and the information platform behind them opens up to more partners, manufacturers are best positioned to introduce tagging at their stage of the supply chain.
RFID is supplanting barcodes for many applications because it can be scanned much more quickly, a benefit initially felt by the retailers themselves. Distribution centers were the next to start seeing benefits because inventory controls and order fulfillment can be verified as shipments move through multiple gates.
Retailers started requesting the DC take part in item-level RFID tagging to keep tabs on high-value items or items that are being tested in different ways in different markets. At this early stage, DCs and manufacturers had little financial incentive to install RFID systems.
Now that the tags are starting to be demanded for more shipments or entire orders, yard management systems can take advantage of this free-floating data and keep track of inventory and equipment as it moves throughout the yard. Retailers placed the initial demand, but companies like Motorola now build tools for the DCs themselves. Initial innovation checking item-level tags is focusing on inspecting shipments, both inbound and outbound.
These checks can replace employees opening up shipments for verification and other manual tasks, typically requiring multiple employees, with a check that automatically takes place as soon as a pallet or truck is driven through a location with an installed gate or tunnel. Automation improves the speed for a yard’s inventory management and is far more accurate than manual counts. An RFID scan checks 100% of inventory delivered, while manual checks often limit themselves to 10% to 20% of received inventory.
As easy as it is to verify shipments on inbound lanes, distribution centers can even use the same gates and tunnels for their outbound shipments. Using the same tunnel can require something as simple as a preliminary scan showing a shipment coming from the loading dock instead of the fence.
The Next Step
While distribution centers are the current place where RFID is seeing its investment, the true end-game is to have the manufacturer themselves tag the goods. This requires a deeper integration with supply chain and inventory software between the manufacturer, DC and retailer.
Thankfully, cloud systems have enabled the dissemination of item-level data before the tags themselves were ready. Now, we’re tasked with the goal properly applying tags and determining ways to ensure that RFID tags and printers are communicating properly.
System checks are essential and can be performed throughout the initial packaging process. However, DCs will need to perform visual verification during inbound processing – perhaps when sorting the goods – not only to verify the shipment itself but to verify that the information being sent through supply chain management software is accurate.
The questions that all parties involved will need to answer are whether the investment is worth it and what is needed to establish a level of trust for the consistency of both tags and shipments. Logistics partnerships need to determine where they see value in these tags and how far through the supply chain they should reach.
After determining the tags usefulness and its testing, manufacturers should push for the ability to tag retail goods within their facilities instead of at the distribution center. For us, labor costs are minimal since the process can be automated and will only need to be increased during the initial testing phase.
With the sophistication of our lines and systems, we can easily add tags to the desired range of goods. While some retailers prefer to tag small batches, the manufacturer has a strong value proposition for moving this to tagging all of the goods because of the increased tracking and visibility that are introduced throughout the entire supply chain, a value-add for the DC as well as the retailer.
The Benefits of Adding Item-Level RFID