08 May 2014
In today's competitive market, material handlers are expected to do far more than simply manage the level of inventory in warehouses. They need a complete, real-picture at all times that enables them to know exactly what stock is available, where it's located and how to best meet their or their clients' distribution requirements.
Material handlers must also be increasingly agile in accommodating new inventory and distribution process flows to meet rapidly changing market and customer demands. To do this, they need to be able to accommodate a variety of different warehousing models and processes in order to safely store and transport a variety materials, including high value, excised goods or dangerous chemicals, either within dedicated or public facilities. And at the core of effective warehousing management of different types of materials is the accurate tracking of stock within each facility.
Though most within the logistics industry acknowledge the benefits of RFID technology, in particular the faster, more streamlined processing of goods and better security, across the whole supply chain uptake on RFID technology is still relatively low, largely due to the relatively high cost of the necessary tags and equipment.
However RFID technology is now more and more commonly utilised by shippers, logistics service providers and freight forwarders, particularly those handling high value or controlled goods, as an integral part of their existing warehousing management processes. When integrated with warehouse management systems (WMS), RFID can significantly reduce the time taken to handle inbound shipments, reducing the associated processing costs.
Take Seacon Logistics as an example. The Netherlands-based global multimodal logistics service provider and Kewill logistics software user has improved efficiency by replacing paperwork with wireless scanners, which are integrated with the Kewill software. Using RFID in this way has reduced the inbound process for each standard container from 40 minutes to an average of 5 minutes.
As well as speeding up processing within the warehouse, RFID technology can also be used very effectively for asset management. It reduces thefts and can help material handlers demonstrate the robustness of their operations to customs authorities. Using RFID chips also has the added benefit of track-and-trace to ensure goods are securely delivered to their destinations, a key advantage as businesses, particularly in the high-tech, electronics and pharmaceutical sectors increasingly seek more complete visibility of goods under transportation to enable better KPI tracking and exception management.
In theory it would not be difficult to utilise that same technology to track the path of vulnerable goods, down to the pallet level, right the way through the supply chain from manufacturer to distribution centre. But this of course would rely of all manufacturers, distributors and logistics service providers absorbing the cost of using RFID tags, installing readers and incorporating this into their logistics planning.
An easy solution to a difficult problem? Not quite… The above scenario doesn't take into account the thorny issues of accountability, standardisation of messages and control. Adding in the cost and worries over complexity means that many logistics services providers and freight forwarders are not yet using RFID routinely or to its full potential.
In fact, a recent study by Transport Intelligence for Kewill found that a surprisingly high number of logistics services providers and freight forwarders do not have sufficient integration with partners. Less than 20 per cent had links with other supply chain companies, though it is encouraging to see that 89 per cent are looking to increase information sharing/collaboration in the future.
Done properly, RFID can remove some of the need for multiple and complex integration as the RFID chip can store the necessary information. RFID therefore reduces the need for integration and what is needed is standardisation and the hardware and software to read the RFID chips. The cost of RFID chips is mainly what has held back adoption, but the cost is falling rapidly.
Harnessing RFID in a wider and more standardised way would certainly involve planning and investment. However there is definitely further scope for its expanded role improving supply chain operations and much greater benefits that are yet to be realised.