Published by MBA Skool Team, Published on July 12, 2012
The world of the 21stcentury has arrived with great technological and scientific prowess, and it’s fast approaching a tunnel of greater vision and distance in various aspects of space-time complexities. These leaps and jumps that led to the snapshot of the present world have come from pursuing the road of excellence through ups and downs of unbroken intellectual inputs. Contemporarily, some call it as innovation.
Innovation has always been in the mind-set of the people working in any part of the world, irrespective of the job, sector and industry. It has educated the people to cultivate its art and skill for the betterment of human lives and values. In this article we will get to know about the applications and implications of one of the most radical and earmarked innovations in the modern era, RFID(Radio Frequency Identification), and how good this innovation has brought solutions into the field of operations.
As customer wants and desires soar up, there are endless ways for businesses to make their ends meet. With these businesses spurring and spiraling up along the career of ambitious runners, there are a lot of prospects for people gearing up their stakes in these new ventures.But these business opportunities tread on a platform concreted on solid and genuine data. Moreover market competition, customer expectations and quality require exact and proper information in an orderly and a timely manner.
Having given due importance to information in any business, an efficient and successful supply chain management/business involves information sharing as well,not just with forward and backward channels but also with its customers in hand. The integration of information about the product and its availability, prepares the customers’ perception about the brand resulting in a positive or a negative cascading effect for years to come. This necessitates safety, reliability and transparency in systematic delivery of goods taking care of transportation and storage in the due process.
Throughout the century, innovations have been thought to have made significant changes in the way we look and approach matters in hand. But RFID has certainly proved to have made these changes with information and precision.Now let us have a closer look at this technological wonder.
What is RFID
As the name stands for Radio Frequency Identification, RFID is exclusively used across many industries ranging from automobiles through FMCGs to pharmacy and Healthcare. It is a generic term for technologies that use radio waves to automatically identify individual items.
RFID is a system that uses radio frequency electromagnetic fields to transfer data from a tag which is attached to the item, for use in many drives like identification, data collection and retention. The system has a chip which has all the information of the item (serial number, item details), and an antenna that transmits these details to the RFID reader. The reader converts the radio frequency data to a readable form that can be fed to a computer.
Having given a picture of its functionality lets cruise to the practicality of RFID in the subsequent pages.
Technology is the most critical part of execution across the entire segment of supply chain. The application of RFID, especially in this field, is one of the most coveted and anticipated technologies for ages to come.Presently, the technology of identifying goods through bar codes has various limitations in terms of data authenticity, availability and adaptability, thus decreasing the efficiency of supply chain.
The bar code technology which involves human intervention can lead to many impromptu delays resulting in irreparable losses at the end customer level. For instance, at the time of product check out/in at the warehouse, the task of having the units label scanned manually may create human oversight and process delays causing unnecessary stopping points. These stopping points can exponentially cascade through the remaining processes causing huge demand-supply constraints and pricing issues. We will look how these likewise issues are handled by RFID in the following section.
RFID has made significant contribution in the logistics industry. Logistics providers are greatly dependent upon their integrity and trustworthiness. They regard these traits to be important for their survival and growth of their business. RFID just makes it all come true. RFID works hand in hand with the GPS system, so the tracking information on the assets can be monitored and traced at any point of time instilling the customers’ confidence upon them. Adding to their credibility, RFID effects in streamlined operation, improved security, loss reduction,quicker transit and cost reduction.
In SCM RFID tracks products from the point of manufacture to retail, in the commercial markets. This results in mobility of goods across the system incurring fewer costs. Furthermore, they are extremely useful for the manufacture of serialized products like computer parts, electronic equipment, printers, etc. in which individual entities have to be marked and properly identified.
Having seen the importance of RFID in transportation, another area that is closely intertwined with the movement of goods is the storage of goods (inventory/warehousing). Commonly,inventory management has huge overheads in terms of the type and method of allocation and storage of goods depending on their rate of defilement. This may result in difficulty for scanning the items and have it recorded in the system.
The physical inventory which could be undetectable in a warehouse can be tracked and observed in the logical inventory of the computer system using RFID - real time locating system (RLTS). Moreover, with this information at hand key management decisions can be taken as to what amount of inventory to be held and what amount to be shipped out/in. Thus RFID real time locating system facilitates in efficient yard management through increased productivity saving labour and operating costs.
Thinking of the paybacks of RFID, one must also accept that these welfares come at a price which makes us to think twice before implementing RFID.
One of the pressing concerns for RFID is the system reliability. The data that is stored in the system could not be heavily relied upon, as there is a possibility of data compromise through unfair means or by unauthorized resources. This may end up in fraud and mismanagement of goods causing huge financial turmoil in the business.
Another concern that tops the mind-set of the users is that the Radio waves, especially in UHF and microwave frequencies, are blocked by metals and liquids. So RFID tags attached to any metal or surrounded by liquids can effectively blind the readers during automated scanning. This may result in faulty and inaccurate data forcing handlers to revisit their operating procedures. However, remedies have been undertaken in these cases by reading the items over multiple times from different angles giving a better picture of the product status. Though this is considered as the best alternate option available, reading an item over multiple times increases processing time resulting in a surge of operating costs.
As RFID is new in the application of logistics, it can be unreliable at times owing to defective tags and interference issues of readers. Concurrently, the reading range of the tags in the working environment is much less than what they are configured and tested for. These technical glitches may prevent tags from being read contributing to incorrect and improper data.
Since the tags can be read without swiping or scanning, RFID tags pose serious security issues over disclose of private information. The tags that are mounted on clothes, mobiles, laptops and other items can be read without one’s knowledge and could be potentially marked for crime or robbery.Moreover, these tags of small sizes could be embedded inside a product where consumers cannot see them and prove to be a spoil sport in this scenario.
RFID tags which use radio waves can be unreliable in data detection and transfer because of its property of getting jammed easily, resulting in widespread chaos and confusion especially when they are implemented in critical sectors like transportation, banking and power.
Nevertheless of the above said implications these hurdles that undermine the integrity of this future light are sure to be hopped over with technological up-gradation and influence in the forthcoming years.
Having given a brief picture of RFID and its plausible implications in SCM and other related sectors, one can get carried away to consider it to be a panacea for the failures of bar code technology.However, it is imperative that before investing in this sophisticated innovation one must need to know what this technology can provide and what can one achieve through it.
He/she must know how this information that is provided by RFID can be used to gain competitive advantage over his fellow competitors. Furthermore,innovations can be potential game changers at a small scale but at large scale many socio-economic and political constrictions may fall in place. Keeping patience as the shield, these constraints are to be taken up with improved technology and understanding, proving a tough but a proven path in its direction.
This article has been authored by S Raj Sharan from IIFT Kolkata.
Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.
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