RFID chips stand to be one of the most transformative technologies in the manufacturing supply chain because of the role they can play in IoT-enabled logistics — despite being developed more than 50 years ago.
“Smart” objects give manufacturers, health care providers and business enterprises the information needed to track inventory, manage machines, improve efficiency and save money. According to Intel, by 2025, the global worth of IoT technology could total as much as $6.2 trillion— with manufacturing responsible for $2.3 trillion. Furthermore, 40.2% of the market for IoT technology will be in the business and manufacturing sectors, including real-time analytics of supply chains and equipment as well as robotic machinery.
RFID chips play a significant role in logistics and in making the manufacturing process “smart.” Their ability to track, connect and read objects directly fits into the technology that comprises the Internet of Things. Those small, wireless chips with antennae can each carry roughly 2KB of data, which can be recalled by a reader within close range virtually instantly. That means a warehouse pallet of thousands of devices can be read and tracked immediately.
Although RFID technology has been around since the 1970s, until recently, the technology was expensive to employ in a widespread manner. That cost decrease has made the tags “throwaway,” so manufacturers can identify products using RFID without wasting money: For example, Gillette recently bought 500 million RFID tags from Alien Technologies at a cost of approximately 10 cents per tag.
The time when a certain percentage of missing product — called shrinkage — was acceptable is long gone. Using RFID tags to maintain strict inventory can reduce or eliminate that issue. Distributors can use warehouse management systems (WMS) with RFID capabilities to track the exact location of each piece of inventory in a facility. A label with a transmitting micro-chip are attached to each item. Those transmitters are constantly sending the current location of each back to the WMS software.
RFID chips, attached to individual items or pallets, can transmit a wide variety of information, including identification, location, temperature, pressure and humidity. By using RFID not only on products but also within transportation systems, manufacturers can:
- Reduce the amount of goods lost or misplaced in transit since each product will transmit its location.
- Avoid damaged goods when the chip signals oncoming adverse weather conditions, such as high temperature or humidity.
- Minimize the impact of late shipments, because they transmit traffic conditions and drive-specific data, such as average speed as well as driving patterns, to the main office.
Because each RFID-tagged device or pallet continuously transmits its location, supply-chain managers are hopeful that lost cargo will become a thing of the past. Some trucking fleets are also incorporating RFID devices with sensors, computerized databases and tracking devices. In that way, both truck and driver are apprised of the daily route and an RFID reader in the truck can confirm each stop was made, as well as update connected parties about traffic and weather conditions that may impede delivery.
Any special needs of the cargo, such as temperature and humidity, can be monitored in real-time, and adjustments made as needed. Finally, the contents of the truck and their storage are accounted for as well as information regarding the trucker's driving habits.
Manufacturers cannot manage what they cannot see. RFID chips bring a new level of transparency to the supply chain. Such end-to-end visibility helps manufacturers discover and resolve difficulties, and to track deliveries in order to set schedules — and expectations — accordingly.
In addition, RFID offers valuable insight to the supply chain, and can provide answers to questions such as: Why are there receiving delays? Can I streamline the inventory process? Which suppliers are most efficient?
A “granddaddy” of technology, RFID not only continues to play an important role in helping manufacturers and logistics service providers gain visibility into the global supply chain, but also will likely become more critical as the IoT increasingly becomes a part of everyday manufacturing.