Myths of RFID in logistics operations

  • Rajiv Anand

Increasingly, for more companies where logistics is crucial to the operations, RFID technology is fast becoming indispensable technology, almost just as much as barcode once did. Yet, a large number of companies and operations sit on the sidelines carrying the myths about the technology and waiting for a mythbuster to come along and shatter that.

Well, let me attempt.

Myth: RFID doesn’t work 100%

RFID technology has matured over a decade into very reliable technology. When Walmart first started with RFID, it was a very different situation than what it is now. With right choice of tags, readers and software, 100% readability is not something anybody worries about in the RFID industry. If at all, the technology is so sophisticated now that a new challenge is actually to avoid inadvertent reads in some use cases. Right pieces of software in place create a digital twin of physical operations that can intelligently interpret containers (such as pallets and cartons) instead of individual SKUs, further reducing any doubts about 100% reads.

Myth: Active technologies will replace RFID

Passive (battery-less) RFID was born with the use case of logistics. It was imperative for tags to be inexpensive replacement for barcode and in form of labels costing few cents. In spite of hype surrounding it, Active RFID technology (such as BLE, Dash-7) are bulky battery powered tags, not printable, have a short life and cost many orders of magnitude more than passive. New technologies always evolve existing ones but one can confidently predict that in case of passive RFID, a replacement will likely not emerge in next 8-10 years. Are you going to wait for another decade before you start leveraging its benefits today?

Myth: I already am pretty sophisticated

You mean you have robots transporting goods? AI enabled vision? Congratulations, for embracing technologies and automating your operations. Yet, you aren’t really taking advantage of automated receiving, reconciliation, shipment verification, automated cycle counts other benefits that RFID has to offer. Something that matters more than anything else in logistics operations. On average, shipment accuracy between ASN (advanced shipping notification) and actual physical shipment today hovers around 5.8%. You can quickly calculate the RoI of automated verification of receiving and shipping alone.

Myth: Oh! We are different

Most head of operations believe that their company does business differently. Yet, all DCs, warehouses and 3PLs have the same set of components to run their operations such dock doors, conveyors, storage shelves, fork lifts and hanging rails. Even WMS applications from ERP solution vendors are essentially based on the common processes. Yes, your company might have other enterprise applications to integrate to, or incorporate a unique process but the foundation is essentially the same. RFID is just an enabler for automating the same set of operations and bringing close to 100% accuracy in your operations. Off the shelf RFID software, such as Tagit Trapeze, also doesn’t make assumptions about your operations and integrates directly into your systems and processes.

Myth: RFID is expensive

It used to be the case a decade ago and it was hard to justify investment at unit level tracking use cases. As RFID has matured into a highly reliable technology, just like every other semiconductor products, prices have decimated. In fact, I’d argue that if you incorporate the cost of inaccuracy and labor, barcodes are actually more expensive than RFID.

Myth: It takes too long to implement

Let me start by arguing that with omni-channel operations, logistics operations have become more complex than ever. In fact, you are already spending too much money in labor, cost of inaccuracy and missed opportunities to keep up with the complexity. RFID is already a necessity and the approach to implement it and migrate is simple — take baby steps. For example, you can start with storage inventory first and run it as parallel operation that just integrates with your existing WMS or IM applications such as SAP, Oracle or Manhattan. Second step could be to just focus on high value items and possibly just one dock door or just one class of items. Your existing business systems shouldn’t and don’t need to change, while you slowly migrate into higher accuracy, low touch physical operations one step at a time. At every step, you can show the management real value with real RoI such as prevention of wrong shipments and productivity by increased accuracy.

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