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Effective radio frequency identification (RFID) warehouse management relies on precise coordination to manage product receiving, inventory, storage, packing, and shipping. To improve these operations, many warehouses and distribution centers are deploying new technologies. RFID is one technology warehouses worldwide are using to streamline their operations.
RFID is a form of wireless communication that uses radio waves to communicate between devices. For warehouse operations, RFID offers a scalable solution to identify products. This identification system accurately displays what is entering, being processed, or exiting the warehouse in real time.
The four main components of RFID include tags, antenna, reader, and host system. Products or pallets have RFID tags attached to them, which send data to an RFID reader through the antennae. The reader sends that data to a host system to store and evaluate the data.
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Pros of RFID in Warehouse Management
Offering accurate insight into real-time information while not requiring a line of sight, RFID can simplify product identification. Fixed RFID readers can automatically scan items as they move through areas like loading docks, forklifts, or conveyor belts. This means that people do not need to manually scan items with RFID tags.
Auburn University and GS1 US® studied how well RFID tags worked to track items as they moved through the supply chain. Specifically, the study tracked how products moved from the maker to the brand owner's warehouse and then to the store's warehouse. Results from the study show RFID technology can significantly lower costs for warehouses and distribution centers of all sizes.
Achieving Accuracy for Omni-Channel Fulfillment
With increasing consumer and trading partner demands for omni-channel fulfillment, effective and accurate management of inventory and inventory levels is vital. Maintaining accurate inventory counts helps inform decision-making and manage profits. The real-time capturing of product identity allows for inventory tracking that is more efficient, more accurate, and more transparent; from start to finish, RFID technology optimizes inventory management, raising item-level inventory accuracy to over 95%.
Reducing Operating Costs and Increasing Profits
Along with increased accuracy and improved management comes increased cost efficiency and profits. Meeting the needs of your customers better than competitors means no longer missing sales opportunities because of inefficient inventory.
According the GS1® and Auburn University Study, RFID can reduce retail out of stocks by up to 50%. This 50% drop is impressive and can significantly reduce the chances of your customers seeking business from competitors.
This can also increase the likelihood of customers returning to make additional purchases. Products are consistently in stock, ensuring they are always available when customers need them. This availability encourages customers to come back and buy more. In today's competitive market, companies that combine efficiency with exceptional service are the most successful.
Finally, automation and increased efficiency reduce the need for more labor, another cost savings. Ultimately RFID can help to reduce human error and monotonous tasks and their associated costs, increasing your profits and margins.
Loss Prevention
Communication among suppliers, warehouses, and retailers is critical for the continued movement of products through the supply chain. When communication breaks down, it can cause missing items or wrong packaging, leading to expensive disputes between trading partners. These disputes can be at the cost of revenue and relationships.
RFID helps businesses catch mistakes in packing or shipping before they send packages out. It also allows receiving facilities to confirm packing accuracy automatically, reducing claims and return costs. The benefits associated with claims reduction have been documented to easily outweigh the costs of RFID tags, scanning equipment, and other setup costs.
Limitations of Using RFID in Warehouse Management
RFID in warehouses has limitations. However, integrating it with other systems can maximize the benefits of an RFID warehouse management system.
Physical Limitations
With warehouses ranging in size, some may see limitations given the physical property of the space. Hand-held readers are not always suitable for reading at long distances, and some areas may be too large for fixed readers. The use of forklifts as fixed readers can alleviate some of these concerns but will also require additional labor.
Implementation Costs
Using RFID in a warehouse can cost differently based on the reader type—mobile, forklift-mounted, or fixed readers. You should also consider software costs to ensure the RFID system can integrate with existing warehouse management software. You need to consider ongoing costs, which include support and maintenance on both hardware and software. GS1 US Solution Partners can help with equipment, including both software and hardware.
Software
Software cost has various levels available, including the basic model, mid-range, and enterprise options. Let's break down the differences in common software available:
- Basic or entry level—This is a great option for most small businesses and usually involves a yearly subscription price.
- Mid-range—This software will likely integrate with existing software, supporting more inventory. The price point usually supports advanced analytics.
- Enterprise—This is ideal for large-scale operations, with extensive custom options.
Scanners
- Hand-held RFID scanners—These types of scanners offer increased mobility and are entry priced.
- Fixed RFID scanners—These types of scanners are great for entry and exit points; think loading docks and doorways. They help make monitoring in real time easy.
- Standalone RFID scanners—These scanners are somewhat unique, as they do not need to be connected to a larger network to function and are also portable. They have built-in displays, making them easier to use by multiple retail employees.
Get Started With GS1 US
Establishing a standard way to encode data in RFID tags is important when working with other systems. You should agree upon this with your suppliers or factories. This will ensure smooth communication and alignment among systems that use RFID technology. When using GS1 Standards, RFID can accurately track product identification across different systems and partners.
If your suppliers aren't using RFID tags on their products, talk to them about the benefits of getting on the same page. Since companies commonly use GS1 Standards throughout the supply chain, the impact on your supplier could be minimal.
If you are in manufacturing, gather a team of internal stakeholders. Explain and introduce RFID technology to them. This can help you get their support to begin rolling the technology out.
GS1 US offers education and training to help you learn about technology, how GS1 Standards can assist with technology, and the benefits that technology can bring to your company.
Qualified solution providers that have partnered with GS1 US can help with adopting, enabling, and implementing GS1 RFID standards.