RFID in Logistics Industry

Logistics is the flow of resources between the manufacturing area and the area of supply in order to meet the requirements of customers or corporations. Logistics is a constantly changing field which involves transportation, inventory, material handling and packaging. Radio Frequency Identification (RFID) is a data collection technology that uses electronic tags for storing data. RFID is an automated form of identity verification. Other examples of such forms are Bar codes and scanner. RFID is superior because RFID tags hold more data than bar codes. A major differentiator is the unique serial number in the RFID's Electronic Product Code (EPC) because it allows tracking of individual items.

Logistics is one of the rising fields where the uses of RFID are ever increasing. Products manufactured are tracked right from the point of manufacture all the way to the distribution point or the retail level. RFID is useful in Logistics Industry for all the tracking, recording and verification purposes. Some of important Applications RFID adheres to are:

  • Increasing the inventory efficiency – Inventory accuracy is increased multifold times due to RFID. It gives accurate results of the storage provided. Therefore Inventory loses are reduced.
  • For making the transportation process smooth – Tags on shipping items are of small size and can be easily used. After their usage they are destroyed and new tags can be placed. This lets the controller know about transportation taking place.
  • For handling goods in a safe and secure form -Tracking items and increasing security is made easy and flexible with RFID. The storing and networking of information through RFID gives it an extra edge in security purposes. The tags RFID in Logisticscan trigger security alarms if removed.
  • For packaging in a systematic form – Packaging can be done in an error-free systematic form. The efficient packaging results in cost savings. Thus RFID leads not only to a smooth process but it also leads to reduction in cost loss.

For example, RFID systems are used in cargos carrying the good for retail stores like Wal-Mart. These use tags for a much lesser duration and for a particular job only.

RFID systems have also been used for Logistics in food processing by the Indian Government. These were used to process the grains coming in from farmers all over the nation and store the quality checked grains to the storage areas.

Benefits of RFID for Logistics

RFIDs have started to prove itself as an extremely beneficial component in the Logistics Industry. This is due to the wide ranging benefits that RFID offers. Some of the major benefits which separates RFID from other technologies are-

  • Increased Accuracy – RFIDs in Logistics have led to efficient processing of information and transfer of goods. Sensors can detect missing or wrong shipments and alerts are raised subsequently.
  • Fast and Diligent – RFID is able to scan multiple products simultaneously. This is also done without any human intervention making the process diligent. It therefore acts as a responsible regulator of products.
  • Lower Inventory – Reducing Inventory Losses is one of the primary benefits that RFID provides. It also impedes any product from going out of stock. It makes the system lower in inertia.
  • Visibility – The traditional models used by logistics providers fail to provide the much needed visibility. RFID provides end-to-end uninterrupted visibility for its users.
  • Operating cost improvement – Operating costs are improved drastically through pin-pointed accuracy, visibility in services and faster working. For example, in 2008, Euro RFID project running over 3 years and the project saved funds (around €7,5 million)  through RFID.

Limitation of RFID in  Logistics Industry

RFID Technology has its limitations as it is a technology which is still developing. With innovative measures RFID promises to pass these hurdles with ease:

High investment – RFID systems installations can be of high investment value as compared to its alternatives. Though the initial investments are of higher value, only tags have to be changed eventually for further uses.

Limited range : RFID systems can only be used to a specific distance up to which the reader can identify the assets. Therefore there can be instances of non-tracking. This can be avoided by using Mobile Readers in logistics.

Limited Options : RFID still being a relatively young technology is for only a certain number of systems. Also for different systems there can be a standardization problem for the readers.

Health concern : There has been prevailing health concerns related with RFID tags. Though these concerns have been proved baseless from RFID makers but skepticism prevails.

Non-Reusability of Tags :  For most of the logistics processes RFID tags are used only for a short period of time and are then removed. This is a limitation as the tags have to be changed efficiently. Wring tag may provide an undesired result.

Using RFID in Logistics : Case Study

NYK Logistics

NYK Logistics is a $16 billion company with logistics accounting for around $2.6 billion of its total revenue. The company handles around 75,000 containers and 45,000 trailers annually. NYK wanted to systemize its working. The problem that the company faced in early 2004 was of having a secure systematic control over the containers for a regulated supply.

NYK shortlisted Bar coding, GPS and RFID as the potential technology for proper regulation. Bar coding was not able to provide the required interface between the staff and the containers. RFID was considered over GPS as it was considered more flexible and reliant.

With 20 readers over a 70 acre campus, RFID provided various benefits for NYK. RFID prioritized the containers and helped in parking of the containers in the required spot. This increased the systemization and helped in allotting the containers proper places which could later be properly located. Another advantage was that of an efficient automatic inventory. Additional advantages included an added security with RFID and a lot of time saving for the staff.

Moreover RFID was easy in implementation and helped in increasing the savings tremendously. A timeline of only a month was needed for implementation. The cost of deploying the whole system was around one million dollars. This was paid back in less than a year through the savings. For NYK, RFID was a positive implementation and led to fantastic results.

Unipart Logistics

Unipart started using the services of SaviTrak networks for implementing RFID systems in tracing and information gathering in late 2007. Unipart Logistics is the biggest suppliers of car parts and equipment. Unipart group is a multinational logistics and supply chain company. Its first use in RFID was in transportation of Jaguar auto parts from United Kingdom to United States.
A major problem that Unipart faced was to improve security though tracing and maintaining systematic databases about the auto parts. For this the Logistics services Unipart used RFID services.

With time, the RFID system helped in improving the visibility, lessen time variances and reduce costs linked to transportation. The supply chain performance also greatly improved due to SaviTrak. In addition SaviTrak delivered new levels of performance measurements. There was a better control and visibility over supply chains and helped in making timely and sound decisions for

Future  of RFID in Logistics

Throughout RFID’s development, most logistics providers have stated their thinking that adopting RFID is not a matter of if, but when.
RFIDs importance as a wireless device that has the power of networking can prove to be of immense importance for Logistics Industry. Not only will it show the above benefits it would then be useful in making the process automated and flexible. The promise of a decrease in labor is one of the major benefits which logistics industry should reap from RFID in the future.

In future RFID’s use as a record keeper bases should also prove to be of much more importance than bar coding. It would thus replace the currently preferred manual tracking devices.

RFID devices can thus lead to controlling databases for the retail industry as well. The increasing innovation in RFID sector should mean that the visibility throughout would increase. This can even lead to increase in the base of Logistics Industry, with the responsibility and efficiency increasing as well. 

Summing it all up …

With RFID being increasingly beneficial, logistics providers seek to capture a first-mover advantage in offering RFID-based logistics services. Indicative of the increasing penetration of RFID adoption in logistics is the fact that RFID has already started to be used with leverage in the supply chain management. The move by Wal-Mart was the start and it has been continued by various retail and logistics firms opting for RFID over other alternatives.

Some of the logistics companies currently using RFID are DHL, NYK logistics, UPS, TNT, Menlo Worldwide, are some of the international companies using RFID technology. There are several other logistics firms who have started using the RFID for asset tracking and transportation. This only increases the belief of how indispensable RFID may be in future for the Logistics firms.