Benefits of RFID in Supply Chain Management
Benefits of RFID in Supply Chain Management
Supply chain management refers to the processes involved in delivering goods from producers to the end consumer. Supply chain systems are integral components of any business activity. Without such systems, it is extremely difficult for any business organization to attain its objectives. In order to enhance the efficiency of supply chain systems, it is fundamentally essential to explore all potential avenues for enhancement. Technological innovations in recent decades have formed exemplary platforms for streamlining the efficiency of supply chain systems (Li, 49).Radio frequency identification (RFID) represents one of the most outstanding technologies for use in supply chain systems. In RFID technology, there is the prevalent use of unique tags. These tags have the capacity to emit signals which are then interpreted by RFID readers. The integration of RFID technology in supply chain systems has had tremendous implications in terms of efficiency. Additionally, RFID technology presents an excellent platform for minimizing costs for sourcing agents as well as organizations. This paper encompasses a comprehensive assessment of the effect of RFID technology on supply chain management. Additionally, the paper also encompasses an evaluation of the various ways of integrating RFID technologies into supply chains.
BENEFITS OF RFID TECHNOLOGIES IN SUPPLY CHAIN MANAGEMENT
Radio frequency identification (RFID) is among the most innovative forms of innovative technologies. It presents an excellent platform for communications, security and tracking. The widespread use of RFID technology is evident across numerous industries. This is because of its capacity to streamline the efficiency of operational systems (Jung, 76). The fact that RFID can facilitate communications across extensive geographical locations has almost made it an indispensable tool for most industries. The field of supply chain management is not an exception. Through RFID technologies, supply chain systems can attain exemplary standards of efficiency. Consequently, it is fundamentally essential to examine the most outstanding benefits of RFID technology in supply chain management.
Identification of Goods
All supply chains involve the transfer and movement of goods across different locations. For instance, a company in the United States might be importing its raw materials from the Far East. During this process, chances of theft and piracy are extremely high. Without an accurate system for identification, the company might receive counterfeit goods. However, RFID technology helps in averting such eventualities (Schuster, 75). Through RFID systems, it is easy for the company to ensure that the right goods are delivered to the company.RFID technology has an exemplary platform that facilitates for the use of tags and readers. These tags have the capacity to transmit digital information in seconds. This is an essential pillar that helps supply chain managers to identify goods. Without the RFID technology, organizations can lose a lot of money in the supply chain (Hunt, 23). Additionally, organizations would have to hire more employees in order to equip the organization with adequate labor. It is vital to note that it is possible to integrate RFID systems with other forms of technologies. This further enhances the efficiency of supply chain management.
Tracking Products
In addition to the distinct identification of goods, another benefit of RFID technology involves tracking. Security of products is among the most daunting challenges for supply chain managers. At all stages of the supply chain, there are numerous risks of insecurity. For instance, there is the threat of piracy in ocean waters during the shipment of goods. This occurs when malicious pirates attack vessels. The threat of insecurity is also evident during the inland transfer of products. This mostly applies to carriageways that pass across areas with sparse population. In such areas, courier trucks are prone to attacks and hence the theft of goods (Butcher, 72).From another perspective, employees of companies also present a significant security threat in supply chains. Malicious employees might take advantage of insider information to steal precious goods during transportation. Such instances are predominant during the transportation of precious minerals. Such perspectives can lead to huge losses for business organizations.
However, RFID technology presents an exemplary framework for tracking goods throughout the movement process. Through the RFID readers, supply chain managers can establish the actual location of products at any given time. This is because the RFID tags emit signals continuously. In the event of any malicious activity, the supply chain manager can take the necessary action. It is also fundamentally essential to note that radio frequency identification technology helps in streamlining the accuracy of inventory systems (Li, 93). All supply chains involve numerous records. The absence of astute management can cause extensive inaccuracies within the supply chain. However, RFID technologies are vital in averting these types of challenges. This technology ensures that the supply chain managers enter accurate records into the inventory system. This is extremely vital for scheduling and resource allocation within the supply chains.
Enhancing Growth of Supply Chains
Growth is an essential aspect for all supply chains. In the modern world, organizations have numerous avenues for enhancing the growth of supply chain management. For instance, high population increases the demand for most products. In order for organizations to maximize on these opportunities, they must streamline their supply chains. This is possible through RFID technology. The technology enables organizations to keep track of numerous supply chain operations concurrently. Organizations can thus establish an extensive network of supply chains within a short time. This is an exemplary perspective for attaining growth in supply chains (Jung, 14).
Time Management
Time management also serves as a pertinent perspective in supply chain management. For any business organization, time management can either undermine or boost overall productivity. For most clients, timely delivery of goods determines whether they can enter into a contractual agreement with the supplier. If the supplier lacks the capacity to deliver goods on time, it is difficult to convince potential clients. Perspectives about time management also apply to the final consumer.Business organizations should have the capacity to provide goods at the appropriate time. This is extremely vital in terms of averting any inconvenience to the final consumer (Wilsner, 63). The implementation of radio frequency identification technology in supply chains is among the most effective tactics for time management.
In essence, RFID technology has an inherent capacity to quicken the different processes that encompass supply chain management. For instance, RFID technology can enhance the efficiency of inventory systems and thus improve time management. By boosting the efficiency of shipping activities, RFID technologies enhance time management.Time management has an inherent capacity to improve the efficiency of resource utilization in an organization. If too much time is spent on a single task, it compromises productivity of the entire company (Reyes, 69). To attain competence, supply chain managers should have the capacity to maximize time efficiency in an organization. This perspective justifies the integration of RFID technology in supply chain management. In essence, RFID technologies are also useful in averting unnecessary tasks during the process of clearing and forwarding. Consequently, this enhances efficiency of the entire supply chain.
Communication
For any business process, communication is fundamentally essential. The successful completion of all tasks in the organization is dependent upon the quality of communications. A slight communication mishap might cause imbalances within the entire supply chain. For instance, the supply chain manager needs to track the movement of all products. Within a supply chain, managers must be in continuous communication with the various agents on the ground (Rochel, 86). This helps in ensuring that all tasks are completed accordingly. Communication is also a pertinent platform for maintaining high security standards within the supply chain.Malicious agents might take advantage of communication breakdowns to steal goods from the organization. In supply chains, continuous communication is also paramount in terms of quality assurance.
If there lacks adequate platforms for communication, it might be difficult for the supply chain manager to ascertain the quality of products. Numerous RFID systems are available for streamlining communications within the supply chain. This is possible through the RFID tags and readers. Through these platforms, the supply chain manager can assess the quality of products even from a distant location. The RFID tags are also vital in enabling the supply chain managers to ascertain the quantity of products. It is extremely challenging when an organization receives excess supplies. Similarly, deficits are undesirable within a supply chain (Jung, 56).Through the RFID technology, it is possible to maintain the necessary equilibrium within a supply chain. This is because the supply chain manager can easily assess the quality and quantity of products prior to entering into an agreement with the supplier. RFID systems also enhance communications because they are compatible with other technological platforms.
This is extremely vital with regard to streamlining the quality of operations in supply chain management. The numerous logistics in supply chain management require effective platforms for communication.The use of conventional communication systems might not yield the expected standards of efficiency in communication. However, the situation is different with RFID technology. This is because the RFID devices facilitate for swift communication even if the communicating parties are in distinct geographical locations (Wilsner, 51). All these perspectives accentuate the importance of RFID technology for communications in supply chain systems.
Enhancement of Productivity
All operations in supply chain management are geared towards enhancing productivity. A dysfunction in a single task can cause a substantial breakdown in productivity. Consequently, it is fundamentally essential for supply chain managers to develop mechanisms that enhance productivity. RFID technologies have an inherent capacity to enhance the productivity of supply chain in numerous ways. Firstly, the supply chain managers can monitor the activities and operations of agents through RFID systems. This helps in ensuring that the manager is not shortchanged by the sourcing agents. Apart from monitoring operations, RFID tags represent an excellent framework for minimizing irrelevant expenses within the supply chain (Jung, 85). Cost efficiency is a pertinent aspect for productivity in supply chain management. Through the RFID systems, it is possible to identify potential loopholes in which the company can incur losses. Consequently, the supply chain manager establishes adequate mitigation measures in advance. RFID technology also facilitates for productivity because it facilitates for quality assurance. For any supply chain, quality assurance is among the most sensitive attributes. Through RFID devices, supply chain managers ensure that they obtain products of the right quality (Attaran, 12). This is extremely vital with regard to the attainment of the necessary standards of productivity.
Decision Making
Decision making is an integral component of supply chain management. The efficiency of the entire system is strongly dependent on the approaches used in decision making. The availability of accurate information serves as the basis of decision making in supply chain management. If the supply chain managers lack adequate information, it is complex to make valuable decisions. For instance, resource allocation is among the most essential perspectives for decision making. If the supply chain manager lack adequate information about the available resources, it is difficult for them to establish appropriate mechanism for resource allocation (Hunt, 71). However, RFID technology provides an effective framework for supply chain managers to establish appropriate mechanisms for resource allocation based on the available resources. RFID technology has the capacity to streamline the efficiency of inventory systems in supply chains. This is also an essential basis for enhancing the decision making framework in an organization.
IMPLEMENTATION OF RFID IN SUPPLY CHAIN MANAGEMENT
In order for organizations to reap the rewards of RFID technology in supply chain management, it is extremely vital to develop a comprehensive framework for implementation. The mechanisms used during the implementation determine the overall impact of the RFID systems to supply chain management. Following is a detailed evaluation of the various factors and issue concerning the implementation of RFID technology in supply chain management.
Cost of Implementation
Availability of resources is among the most pertinent issues of consideration while implementing RFID in supply chain management. It is fundamentally essential for any organization to ensure that it has adequate resources for implementing RFID technology. Depending on the extent of organizational activities, the costs of implementing RFID technology might vary. For instance, a large multinational organization requires extensive capital input in order to implement RFID technology successfully. Although the rates of return on investments for RFID technology are quite high, supply chain managers should conduct a cost benefit analysis. Through this analysis, the supply chain managers can determine when the implementation of RFID is feasible or not. In most instances, companies can recover the capital spent on RFID technology in months. This is because RFID enhances the standards of efficiency in supply chain management (Jung, 38).
Employees’ Technical Skills
In addition to the costs of implementation, another perspective that influences the implementation of RFID technology in supply chain systems pertains to the technical skills of employees. It is fundamentally essential for the employees to have adequate skills of handling the different devices for RFID technology. For instance, they should be proficient in interpreting information in RFID readers. If employees are unfamiliar with the operational aspects of RFID technology, the implementation process is quite complex (Li, 90). Consequently, it is vital for supply chains to establish adequate platforms for training employees about the operational perspectives of RFID technology. This forms an excellent basis for implementing RFID in the supply chains.
Compliance Standards
Compliance is another pertinent aspect that influences the implementation of RFID technology. It is extremely crucial for the RFID technology to conform to industry standards for compliance. For instance, the RFID devices used in the supply chain should not pose health risks to the users. It is also pertinent to ensure that the RFID devices do not result into the violation of the prevailing standards of ethics. For instance, some RFID platforms can cause the violation of privacy. This might occur when RFID devices are used to monitor the activities of employees even while they are out of work (Schuster, 78).The lack of compliance can seriously jeopardize the efficacy of implementing RFID technology in supply chain management. Consequently, it is extremely pertinent for organizations to ensure that they establish the necessary standards of compliance while implementing RFID technology. From a different perspective, there are various regulatory policies that control supply chain operations in different industries. Supply chain managers must work within the stipulations of such policies. This is also an essential aspect with regard to compliance.
Conclusion
The paper encompasses a detailed review of the incorporation of RFID technology in supply chain management. Organizations can benefit enormously if they integrate RFID technology into their systems for supply chain management. Among the most notable benefits include the enhancement of inventory accuracy, streamlining communication and minimization of operational costs among others. All these perspectives facilitate for growth and improved productivity in supply chain management.Despite the exemplary effectiveness of RFID in supply chain management, it also has various shortcomings. For instance, extensive resources are necessary in order to facilitate the implementation of RFID. Additionally, employees must have adequate skills in order to understand the operational framework of RFID technology. During the implementation of RFID in supply chain management, organizations must ensure that they attain the relevant standards of compliance.
References
Attaran, Mohsen. Critical success factors and challenges of implementing RFID in supply chain management. Journal of Supply Chain and Operations Management. 10(1), 2012
Butcher, J. & Mangan, J. Global logistics and supply chain management. Hoboken, NJ: John Wiley & Sons, 2008
Hunt, Daniel. & Puglia, Albert. RFID: A guide to radio frequency identification. Hoboken, NJ: John Wiley & Sons, 2007
Jung, Hosang. & Chen, Frank. Trends in supply chain design and management. New York: Springer Publishers, 2007
Li, Ling. Supply chain management: Concepts, techniques and practices. World Scientific Publishing, 2007
Reyes, Pedro. RFID in supply chain. New York: McGraw-Hill Companies, 2011
Rochel, R.C. (2005). RFID technology introduction and impacts on supply chain management systems. GRIN Verlag, 2005
Schuster, Edmund. & Allen, Stuart. Global RFID. New York: Springer Publishers, 2007
Wilsner, Joel. Principles of supply chain management: A balanced approach. Mason, OH: South-Western, 2011
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