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RFID in Logistics Industry

The impact of Radio Frequency Identification (RFID) in the logistics industry has grown extensively within the last decade. As with many technologies, RFID debuted with great potential, but expensive infrastructure and ever-changing technology has made it difficult for manufacturers to create a sound business case. A clear RFID leading provider has not emerged from industry technology specialists, partly due to the lack of a standard technology type from manufacturing customers. Regardless, RFID continues to transform logistics channels and supply chains, providing valuable data and information.

The evolution of RFID has created applications for manufacturing including inventory control, shipping and receiving uses, vendor inventory management and additional uses for safety and maintenance management. However one of the more valuable applications for RFID has been the elimination of the precarious time from the moment a shipment leaves a suppliers dock until it reaches the customer. The integration of this data with manufacturers has enabled better just-in-time shipments and improved process controls. RFID has also enabled manufacturers to maintain tighter controls and more accurate assessments of inventory. The ability of a transportation company or third party provider to integrate with manufacturers for exchanges of RFID information is growing to be a critical part of an effective supply chain.

Logistics Applications of RFID

RFID capabilities have extended well beyond simply being an item identification number. For example, carriers or manufacturers have used RFID in yard management. RFID tags can provide the location information of stored material along with added information such as shipped dates, receipt dates and expiration dates. This is particularly beneficial to carriers providing dropped trailers to manufacturers. RFID has made trailer management far easier with location information stored on RFID tags and additional data that can potentially alert a carrier to when the trailer has been emptied and needs to be picked up.

Customers with particularly high cost items or material needing added security have required RFID of their shippers. Organizations such as the US Department of Defense is one of the highest profile clients that issued RFID requirements to suppliers. The ability of a third party logistics provider to assist their shipping customers with mandated tag usage has grown as RFID use has become more widespread. The ability of a third party logistics provider to integrate these needs has been critical to better management and eliminating the lack of visibility between material departing a supplier and arriving at a customer’s dock.

Logistics providers have benefitted from RFID within distribution centers. The increasing quantity of data available on tags has allowed essential asset information to be stored that can save time and improve efficiency. Tags with location information, details regarding what is loaded on a trailer or whether the trailer is full or empty reduces labor time considerably. The improved visibility of assets allows for better planning and management as well as allocation of labor resources. With the ability to quickly identify available trailers, a transportation provider can respond to pick up requests more efficiently, ultimately obtaining more business.

Using RFID Out of the Box

RFID has been applied for use in electronic toll payment collections. This exists for both carriers and personal vehicles in many major cities throughout the world. This payment system can reduce paperwork and improve cost management for transportation organizations with more precise route analysis costs identified.

Carriers can also use RFID tags on parts for maintenance records which can help to ensure safety or regulatory compliance. Maintaining solid records can help to ensure more preventative maintenance is performed versus corrective maintenance which can be far more costly should it be emergent. Customers will also appreciate the diminished potential for loads being impacted by maintenance issues which may ultimately result in costly freight damage or affect delivery times. With today’s just-in-time and lean environments, there is simply no room for a service failure from a carrier.

The ability to read tags has improved considerably. The readability of tags placed in truck trailers, ocean shipping containers and train cars has improved but is not necessarily perfected. Solutions third party providers have often implemented single item scanning for material being loaded and a master tag that is readily readable and accessible. Infrastructure for reading tags has also improved, from large, stationary types of equipment, to hand held devices and even remote, wireless types of reader equipment.

Leveraging RFID with Customers

Third party logistics providers have recognized the inherent need to come on board with RFID technologies. The very real fact that it is likely to become a minimum requirement of both transportation as well as warehouse and distribution customers  and has led major industry logistics leaders to be first adopters of the latest innovations in RFID. This first adopter strategy has potentially acquired additional customers but it has come at the risk of high profile failure as the technology continues to develop.

Wal-mart is an example of an organization which mandated RFID use from all suppliers. This sent huge waves through the supply chain and ultimately was a very visible failure as the expense of the technology implementation could not be off-set by the savings incurred. Wal-mart has changed their RFID strategy to focus on smaller implementations which is a lesson to all adopters. Third party logistics providers have the opportunity to leverage some of the expense of an RFID implementation in conjunction with their customers. This will allow both to have a vested interest in the process controls necessary for a successful implementation and continued usage.

The use of RFID continues to grow beyond just being an identification tool but expanding in to a location tool, asset management and planning tool for logistics providers. Selling a client on the future savings of a new technology can be difficult, especially when they are typically seeking the services of a third party provider to save money. The option to leverage the expense of the implementation between a logistics provider and a client can help to realize process benefits and an overall return on investment for both parties. Early adoption of the technology comes with costs and risk but the ability to leverage with a client can help to justify the costs and provide valuable visibility that will ultimately generate additional business.

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Author:  Sheryl Platte, Industry Contributor for Rasmussen & Simonsen Intl Pte Ltd

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