RFID uses small radio tags to track goods moving in the supply Chain – from the production line to the final destination. Wal-Mart and the US Department of Defense require large suppliers to label all products and outer packaging by the end of 2005, and such requirements have led to a surge in demand for these 40-cent units. In addition, the pharmaceutical, food and tobacco industries have also driven the introduction of regulations in which RFID will eventually become mandatory to help improve traceability and fraud prevention.
Overview
There is no doubt that wireless radio frequency identification (RFID) is not a fleeting, trendy technology. According to Datamonitor's survey of the top 300 manufacturers in the US and Europe, 60% of companies have started to run RFID projects - more manufacturers are investing.
However, many companies are eager to meet institutional requirements and gain the benefits of RFID without properly understanding the basic architecture that supports these smart tags. Improper implementation led to nearly half of the RFID test projects in 2004 failing.
How can we avoid project failure? Exactly, what components of RFID are currently composed, and what RFID technology should manufacturers begin to prepare for the future? Below, we will discuss this industry, industry challenges and solutions in detail.
The status quo of RFID and its impact on warehouse logistics
RFID uses small radio tags to track goods moving in the supply chain – from the production line to the final destination. Wal-Mart and the US Department of Defense require large suppliers to label all products and outer packaging by the end of 2005, and such requirements have led to a surge in demand for these 40-cent units. In addition, the pharmaceutical, food and tobacco industries have also driven the introduction of regulations in which RFID will eventually become mandatory to help improve traceability and fraud prevention.
Suppliers forced to implement RFID in response to regulatory requirements are now beginning to reap the full benefits of RFID. We are beginning to see that technology adoption is shifting from a purely “pick-and-go†approach to helping suppliers improve efficiency and leverage the wealth of information inherent in the supply chain.
RFID will affect all employees in the manufacturing enterprise, from forklift operators to logistics managers. RFID increases warehouse and distribution center efficiency, reduces lead times, increases productivity and reduces human error, while ensuring timely replenishment of products that are out of stock in the supply chain (thus reducing costs), preventing counterfeiting and theft, and helping The company receives information on key customers and their activities.
RFID can significantly reduce subjective inventory management and thus have a significant impact on warehousing. The supply chain in the real world is seriously lacking in visibility, so the company maintains a large inventory in most warehouses to prevent out-of-stocks when the planned amount is less than the actual demand. While this approach can effectively avoid out-of-stocks, the cost of storing and managing large inventories is high—up to $300 billion in the US alone. RFID creates opportunities for migration from “just in case production†to “just-in-time productionâ€.
RFID hardware, combined with a unique electronic product barcode (EPC), transforms the supply chain and enables manufacturers to correlate large amounts of information with each tagged object. However, if companies want to create a truly demand-driven supply chain, RFID should be fully integrated into business processes and shop floor systems.
What mistakes have we made and what are the challenges?
In 2004, many RFID projects failed due to the lack of consideration of the manufacturer's environment and the types of products they were to tag. For example, detachable parts require special labels, some labels should be heat resistant, and some labels need to be placed in very precise locations.
Del Monte Foods is one of the most challenging environments for RFID. Del Monte Foods is the largest canned food manufacturer and distributor, and is currently using the SSA Warehouse Management 4000 product from SSA Global, a world-renowned extended enterprise solutions provider. To take advantage of the RFID function. Del Monte products are usually high-viscosity cans - liquids and metals are the two most difficult materials for RFID. As a result, Del Monte had to separate the cans to ensure that the RFID signal was strong enough to record multiple boxes on the pallet. However, compared to the company's advantages, these initial difficulties are simply not worth mentioning. The company can not only meet institutional requirements, but also use supply chain efficiency and cost savings opportunities in the near future.
Another challenge facing the company is the actual cost of RFID implementation, with the main cost coming from the label itself. In view of the special circumstances, Del Monte needs to pay 50-60 cents per label - the industry average price is only 10 cents.
Another cost comes from upgrading existing IT systems to handle the vast amount of information generated by tags. In addition, as technology and tags advance, manufacturers need to replace existing RFID hardware such as readers to take advantage of state-of-the-art RF technology.
In addition to these costs, companies need to consider whether the systems used to process large amounts of information are up and running. Real-time transactions create huge commercial wealth, but require IT infrastructure and software systems to be responsive and resilient.
Before implementing RFID, manufacturers should review existing technologies and standards and ensure that the latest hardware and software are being used. Manufacturers should also conduct ROI business analysis so that it is cost-effective to demonstrate to the board the real-time visibility of the investment supply chain to improve the lack of visibility.
Trend forecast
RFID is still in the early stages of rapid change. The early stages of RFID have many similarities to the bar code technology that emerged 20 years ago. Just like RFID, the original bar code implementation was to meet Wal-Mart's requirements. Early deployers need to wait for a while to achieve a return on investment within the organization. There are readability and development issues, and standards are urgently needed. But all of these problems have finally been overcome, and the commercial advantage of bar code labels is now beyond reproach.
Now, RFID has also developed rapidly following the same path. On this journey, the second generation of labels will be launched at the end of the year, representing a major turning point. This tag will significantly extend the reader's readable distance, harmonize standards and increase safety.
Once the second generation of tags is on the market, the deployment of RFID will show a leaps and bounds, mainly because these tags use open standards. This will drastically drive large deployments of large hardware, ensuring lower label costs and increasing the popularity of RFID – deployments will continue to evolve over this cycle. This standardization lowers the barriers to accessing new suppliers, lowering prices, increasing competition, promoting innovation and providing selectivity.
Once RFID is actually deployed, the world – not just the supply chain – will undergo radical changes. In the envisioned future world, as long as the goods are removed from the shelves and placed in the shopping cart, the smart store shelves automatically register and automatically replenish the shelves to ensure consistent inventory levels. At the time of checkout, we only need to push the shopping cart to pass, without having to take out all the items, let the RFID reader scan them one by one. In fact, we can even settle these items outside the store – the RFID payment devices in our pockets and the labels on the items will allow us to automatically checkout. Some devices are able to select the relevant cycle settings based on the tag information on the laundry, making laundry easier. The practical application of RFID is endless.
DC Logistics - typical case
DC Logistics is one of the companies that benefit from RFID deployment. The company's RFID distribution center in Dallas uses SSA's RFID for Distribution solution from SSA Global to label and test suppliers' products before shipping them to Wal-Mart. The software allows companies to automatically locate inventory in the supply chain by reading RFID tags. DC Logistics found that the automatic data collection and analysis capabilities provided by SSA RFID for Distribution are critical to the successful development of RFID Deployment Center. The company is able to meet industry requirements and be able to create value for its customers immediately.
in conclusion
According to Gallup, real-time retailing will be a must for competitive advantage over the next 10 years, just as in the 1990s, companies had to improve their supply chains to survive. Although RFID is not yet a "off the shelf" solution - perhaps never, RFID will appear on all manufacturers' recent purchase orders. However, in order to keep pace with the development of RFID and its standards, we encourage manufacturers to work closely with trusted suppliers to ensure that they can anticipate and meet the challenges and realize the tangible benefits of RFID.
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