RFID- Its Importance & Benefits in Supply Chain Management

Posted by Neeraj Purbia January 14, 2018, 11:18 pm

RFID- Its Importance & Benefits in Supply Chain Management

In today’s era, Supply Chain Management has become a logistic nightmare for companies. However, the use of RFID can reduce the problem to a great extent.

Benefits of Using RFID in Supply Chain Management:

The term Supply chain management (SCM) involves the oversight of materials, information, and finances as they move from a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. Supply chain management is generally seen as a complex and knowledge-intensive process but this can be made easier with the use of RFID.

Now the question arises how RFID can make SupplyChain Management easier. 

Now, letus see the importance of RFID in different supply chain management:

In manufacturing company, products have to be counted several times during the stages of production, washing, and packing.  Traditionally, these operations were performed manually. But now by utilizing RFID tags and readers, products can be counted in seconds and RFID tags can be scanned automatically without being in the line-of-sight of an RFID scanner and multiple tags can be scanned simultaneously. This directly benefits the manufacturers by labor cost reductions and by carrying intensive tasks faster and more accurately. RFID also benefits from faster authentication of produced goods, increased information gathered with the help of RFID technology. RFID tags can store far more information than conventional barcode labels. This information can be used to optimize production processes. Accurate knowledge of the real-time movements of raw materials and the time needed for specific production steps can be integrated into efficient production planning. The benefits just don’t end here it also provides benefit for increased information in regards to repair and maintenance of their machines and equipment. This allows manufacturers to have visibility into valuable data such as: which machine has been repaired or which has to be repaired. This information helps to plan maintenance schedules.Hence, maintenance can become part of production planning and help to prevent costly production breaks.

Once production has been completed industries packaging is the next step to be followed.Products are packed into cartons and delivered to the warehouse or to the buying company. Keeping track of a theselarge number of cartons is a very complex as well as time and labor consuming process. So, RFID can be implemented to ease the situation by installing read-write equipment at the entry to a warehouse. Every product is equipped with RFID tags and all the information related to the tags are stored in a central computer of the warehouse. When the products are moved in or out of the warehouse, the read-write equipment registers it and forwards the data to the back-end system. This allows the management center to manage the vast amount of products going into and leaving the storage in the warehouse. The information that is gathered with RFID can lead to significant improvement as the tracking and handling of the products can be done in real-time and with great accuracy.In the warehouse, products are easily located as all product movements are tracked and this information is automatically registered in the system.While the stock is accurately tracked valuable information concerning losses is also recorded.


•    Less manual work and cost

•   Improved visibility and planning

•   Visibility of accurate real-time information

•    Fastlocating of products

•   Possibility of record losses

•   Ability to plan product locations strategically

•    Offers visibility of real-time cargo movement

•   Improves efficiency and increases accuracy

•   Accelerates the speed of delivery

•   Reduces distribution costs


Over the last few years, more and more companies are integrating RFID technology into their strategic planning, since it provides significant advantages to supply chain performance. There are far more benefits gained by RFID implementation into the supply chain and logistics operations than just improving identification of products, shipments, and assets. Nevertheless, already the most common benefits prove that RFID is worth the investment.