Warehouse/DC Management: RFID settles in

With suppliers jumping on the RFID bandwagon and more deployments looming on the horizon, the future of RFID remains promising. Here are the market drivers that continue to push ADC/RFID adoption and examples of facilities that are putting it to work.

By Maida Napolitano · April 1, 2013

From keyless ignitions to moisture-sensing diapers, RFID technology continues to permeate everyday living. In today’s supply chains, the technology relies on readers and passive UHF tags to automatically and wirelessly capture and leverage electronic product codes (EPC) encoded with product information and serialization. 

Unlike a bar code, these tags do not need to be within line of sight of the reader, resulting in increased operational efficiencies. Unloading an inbound container, for instance, which may take about two and a half hours to individually scan, sort, and count cartons, may now take less than half an hour with RFID-tagged cartons.

Despite these proven benefits, however, RFID’s adoption in the supply chain has been wrought with twists and turns. Wal-Mart’s initial focus of tagging pallets and cartons of consumer goods has for the most part “languished on the vine,” according to some experts. Instead, in 2010, the retail giant decided to shift its focus and began tagging at the item level. Other U.S. retailers, including Macy’s, Bloomingdales, and American Apparel followed suit, launching their own successful item-level RFID pilots of mostly apparel and footwear, reporting much improved visibility and higher sales at their stores.

Today, item-level tagging remains one of the biggest drivers of RFID adoption. “Those with pilot projects last year are now in full deployment, and that represents big progress for the industry,” reports Mike Liard, vice president of auto ID and data capture for VDC Research. “We’ve got some new retailers on board who are international players and who are significantly enhancing the volume.”

In fact, these early item-level adopters are now busy fine-tuning the process. “They want to know how to deploy RFID faster and more efficiently,” says Patrick Javick, vice president of retail apparel and general merchandise for the standards-setting group GS1 US. “The question now is: ‘How do I get my vendors on board?’” According to Javick, the number of suppliers tagging products with RFID has increased from approximately 200 to as many as 600, and these suppliers now want to know how they can get the extra benefits from the technology.

With suppliers jumping on the RFID bandwagon and more deployments looming in the horizon, the future of RFID remains promising. Being able to automatically capture data by simply passing tagged items through portals and readers—without opening or sorting through cartons—has improved efficiencies in the DC while increasing visibility throughout the chain. In the next few pages we dive deeper into other drivers that continue to push RFID adoption. 

Push towards source tagging
For years, it took a retailer’s mandate to trigger a supplier to move forward with RFID adoption. According to our experts, however, this is beginning to change as an increasing number of retail partners are looking at item level RFID tagging at the point of manufacture.

“The majority of EPC tagging efforts takes place in the DC where it is just not as cost effective,” says Javick. “The last 12 months has seen a significant increase in the number of brand owners (suppliers) in the apparel and general merchandise industry starting to move EPC-enabled RFID deployments back to the source—and industry leaders are expecting to see this trend continue.”
As suppliers start to deploy and tag products at the source of manufacture, the goal is for them to also enjoy the benefits with more accurate inbound and outbound audits in their own DCs as well as more efficient receiving and shipping processes. 

Managing assets
Increased asset management continues to be another leading reason for growing RFID adoption. In this application, passive and/or active tags are affixed to products, containers, equipment—and even people. 

Using handheld computers integrated with RFID readers, organizations can acquire, in real-time, proof of identification and monitor an asset’s location and its current status. Adding a Web-based solution allows users to transfer this information online so that upper managers and other interested third parties can also access the most up-to-date data and make timely decisions regarding these assets from any location in the world, as long as there is Internet access. 

For years, supply chains have been using RFID to track and manage returnable product containers, especially in closed loop systems. The same technology has also been applied to yard management and even warehouse workers on the floor. Depending on the asset, a wide range of unique specialty tags have been developed to solve specific business challenges.

This year, in support of its vision to improve healthcare efficiency, the Department of Veterans Affairs (VA) announced that it was funding $543 million in a project to establish real-time location systems (RTLS) at all 152 of its hospitals and seven outpatient pharmacies. This deployment would involve attaching millions of RFID tags to medical equipment, surgical instruments and supplies, further driving RFID adoption in the healthcare industry to unprecedented levels. 

This project would begin with simple asset management and the management of supplies in laboratories, but is slated to expand to tracking patients and controlling patient wandering. In RTLS, tags attached to objects or people emit wireless signals that determine an asset’s location usually within a building or other contained area.

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About the Author

Maida Napolitano
Maida Napolitano has worked as a Senior Engineer for various consulting companies specializing in supply chain, logistics, and physical distribution since 1990. She’s is the principal author for the following publications: Using Modeling to Solve Warehousing Problems (WERC); Making the Move to Cross Docking (WERC); The Time, Space & Cost Guide to Better Warehouse Design (Distribution Group); and Pick This! A Compendium of Piece-Pick Process Alternatives (WERC). She has worked for clients in the food, health care, retail, chemical, manufacturing and cosmetics industries, primarily in the field of facility layout and planning, simulation, ergonomics, and statistic analysis. She holds BS and MS degrees in Industrial Engineering from the University of the Philippines and the New Jersey Institute of Technology, respectively. She can be reached at [email protected]

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