Why RFID for supply chain management is still relevant

Product tracing and RFID

RFID's potential benefits to the supply chain are likely driving the recent increase in use.

RFID adoption is increasing because the tech can help companies improve their track and trace functions, which are crucial to mastering the contemporary supply chain, said Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management, a not-for-profit education company located in Chicago. If a product has an RFID tag attached, an employee can quickly locate it.

"Not knowing where things are is problematic, especially when lead times have been extending," he said. "Predictability of shipments is at a historic low."

RFID could potentially help address that problem.

Tech improvements and cost decreases are both likely driving adoption as well.

RFID now uses a range of different frequencies and antenna and transponder technology, so the range that RFID can accommodate has grown, Kent said. Perhaps more significantly, the cost of basic tags has dropped dramatically.

"Not long ago, a passive RFID tag -- the kind found on many consumer products -- cost from 30 to 50 cents," he said. "Now it's down to about five cents."

RFID beyond the warehouse

Companies might soon use RFID tags in less traditional ways.

RFID has potential beyond the warehouse and distribution center, said Tim Zimmerman, a research vice president at Gartner. New opportunities include adding RFID tags to shipping containers to find them faster or using the tags to identify and inventory railroad cars. Some organizations are now using RFID tags to streamline truck arrivals at large cross-docking facilities.

"They will put a tag on the truck to make sure the driver gets to the right door," Zimmerman said.

Meanwhile, automakers and agricultural machinery companies are using RFID tags to keep track of inventory, he said. These types of applications have been available but are now embraced more broadly.

"These are all cost-effective, people-time-saving implementations," Zimmerman said.

However, RFID tags for these purposes aren't the cheap, five-cent RFID tags used on consumer goods, he said. These tags have antennas and usually include a magnet for attaching to vehicles or containers. They are often designed for reuse and typically have their own built-in power supply, and some can communicate with satellites. Prices are typically in the range of several dollars per unit.

[RFID can] be combined with other things like AI and IoT as part of a digital transformation strategy.

5G leads to more RFID

Increasing connectivity, including 5G availability, is also contributing to increased RFID adoption.

"Whether in a plant or distribution center or on the road, you always had a lot of potential RF interference with traditional RFID, and that threatened its ability to actually function in certain environments," said David Petrucci, supply chain and operations leader at Protiviti, a global consulting firm located in Menlo Park, Calif.

But because 5G is an open cellular network and is within a facility's network, it enables more RFID applications, he said. For example, picking up signals was sometimes unreliable in a manufacturing environment with lots of moving metal machinery and components. Now 5G as a small local network has better strength and less signal attenuation, making data movement faster and more reliable.

RFID and digital transformation

RFID tags can potentially help with digital transformation efforts, which is a major goal for many organizations.

"One thing that has come out of all the supply chain disruptions is the realization that we are far from the 'control-tower' level of management that we really need," Kent said. "[RFID can] be combined with other things like AI and IoT as part of a digital transformation strategy."

Anything that can help a digital agenda is likely needed, as the pandemic has forced companies to shorten their digital agenda timeline, Kent said.

"What was a five-to-10-year roadmap is now being compressed to two years, in many cases," he said. "And RFID is a big part of [bringing that about]."

RFID tags could increase visibility across the supply chain, potentially signaling problems early on, Kent said.

For example, a warehouse employee could use an RFID tag to locate a product that should have shipped on a delivery truck and confirm that it is still in the warehouse. The employee can then alert others that the product is not in transit and is delayed.