Why RFID Technology is Gaining Traction Across Industries
Across industries, cheaper and more advanced RFID tags are growing in popularity to achieve a variety of goals—including increased productivity, more accurate inventory tracking, and improved supply chain visibility.
Recently, Supply Chain Dive reported on UPS’ plans to implement its “smart package” initiative—which includes the use of RFID tags to optimize processing speeds.
Citing the company’s Q1 earnings call, Supply Chain Dive said the initiative will have a major impact on the need for manual scans by UPS employees—reducing them by a projected 20 million daily.
“If that doesn’t drive productivity, I don’t know what will, and it will avoid all the missorts,” CEO Carol Tomé is quoted as saying. “When a package gets missorted and it goes into the wrong package car, that’s not a very good experience for our customer, and [it’s] actually just a drag on productivity.”
A Boost in RFID and IoT Investments
Investments in supply chain innovations like RFID and Internet of Things (IoT) are expected to increase “dramatically” over the next two years, with nearly 80% of supply chain leaders surveyed for the 2022 MHI Annual Industry Report indicating their “digital transformation has accelerated due to the pandemic.”
In “Evolution to Revolution: Building the Supply Chains of Tomorrow,” for which more than 1,000 manufacturing and supply chain leaders from various industries were surveyed at the end of 2021, projected adoption rates over the next five years were assessed for 11 categories of technology—including Internet of Things, as well as sensors and automatic identification.
Respondents indicated that “all technologies covered by the survey are expected to achieve an adoption rate of 66% or higher over the next five years.” Among technology-specific findings, “Industrial Internet of Things, currently 21%, is expected to grow to 80%.”
RFID and IoT in Supply Chain Management
In “Review of RFID and IoT integration in supply chain management,” recently published in Operations Research Perspectives, the authors studied the integration of RFID with IoT—which they refer to as “RFID-IoT”—related to its “advancement in terms of effectiveness, interoperability, scalability, and compatibility in supply chain management.”
Citing the increasingly “complex and dynamic” nature of supply chain management (SCM), they said that RFID and the IoT are “expected to play a significant role in fulfilling customer requirements in the supply chain.”
“RFID-IoT strives to develop automated sensing, seamless, interoperable and highly secure systems by connecting IoT devices through the internet,” according to the abstract.
Additionally, the authors noted that although RFID has existed for a long time, there has been more interest in this technology in recent years since its components have become “miniature, less expensive and more effective, which makes it easier to implement in many applications.”
“The evidence of RFID advancements can be witnessed in the blooming integration of RFID and Internet of Things (IoT) technology,” they explained. “IoT constitutes Wireless Sensor Network (WSN) to form a complete IoT system. WSN is a technology that integrates multiple small and intelligent sensors and scales in a more extensive area for various applications, including retail, healthcare, agriculture, and military surveillance, to overcome the limitation of wired solutions.”
Saying that RFID-IoT offers a “new operating solution” for the supply chain related to “manufacturing, retail shops, inventory, transportation, assembly, asset tracking, location, and even environmental detection,” they said research indicates that “the evolution of RFID-IoT will bring a significant impact to the revolution of Supply Chain Management (SCM).”
Noting that operational processes can be improved and SCM costs reduced through the adoption of RFID-IoT technologies, the authors said this is due to the ability of RFID and “other IoT technologies” to provide “information transparency, product traceability, compatibility, scalability, and flexibility.”
“With the ubiquitous interconnectivity offered by RFID-IoT technologies, each stage in SCM can be interconnected to ensure correct processes and products are delivered at the right time, at the right quantity, to the right places,” they explained.
How RFID is Impacting Retail
As noted previously, RFID is being implemented across many industries. The following provides a glimpse of the impact it’s making in retail.
According to an April 2022 benchmark report by Retail Systems Research, “A Deep Dive Into Retailers’ Views About RFID And The Internet Of Things,” the uncertainties created by the pandemic, shortages in the supply chain, and economic challenges “have caused retailers to examine signaling technologies (RFID, beacons, anything Bluetooth-enabled etc.) – and the visibility they bring to various areas of the enterprise - with all new interest.”
In a summary of key findings, managing partners Brian Kilcourse and Steve Rowen provided an overview of report highlights. Here are a few excerpts:
“RFID-based technologies are rapidly gaining retailers’ interest, as 95% say the ability to reliably know where their inventory is – and relate accurate information about it to shoppers - is becoming a key component to their digital transformation strategy.”
“Despite all the various Opportunities these new technologies can address, retailers’ imaginations for what IoT can and will help them achieve from an operational standpoint remain squarely transfixed on the supply chain. RFID – and the Internet of Things, as a whole – are a way to get a handle on inventory and fulfillment issues first and foremost.”
“To get the full measure of the benefits that IoT technologies can offer, retail leaders must think beyond the transactional mindset that is so systemic to the operational model.”
“IoT adoption is a work-in-progress across the retail industry, but when we asked retailers how far they are on the adoption curve, Retail Winners clearly are being more aggressive (To wit: 62% of over-performers are already using events-based alerting and exception management, compared to only 24% of average and underperformers.)”
A February 2022 IDC TechBrief, “RFID-Enabled Retail Supply Chain, Inventory, Returns, and Loss Management,” reported similar results.
“RFID tagging is a technology that has shown great efficacy for retailers in the areas of supply chain management, inventory tracking, and loss prevention,” according to a summary. “ IDC expects that by the end of the year, 80% of retailers will be in the process of (or will already have completed) putting some form of RFID capability in place (source: IDC's U.S. IoT Decision Makers Survey, July 2021). But RFID uses aren't limited to knowing where items are; retailers should think ahead, piloting new uses for their RFID infrastructure, such as creating merchandising hotspots and smart fitting rooms that increase customer engagement and drive traffic into stores.”
Quoted in the summary, Leslie Hand, GVP, IDC Retail Insights, said, "When it comes to customer satisfaction and engagement, RFID is a triple threat. Retailers that adopt RFID for inventory tracking will also find they've unlocked the potential for workforce optimization and customer engagement when they use RFID data streams to automate new processes. My advice: Light up product information that is currently not visible and connect it to other edge-enabled use cases in store to achieve the greatest value."
Walmart is one major retailer increasingly embracing the potential of RFID technology.
In the following January 31, 2022 8th & Walton podcast, the company’s expansion of its “RFID initiative to more store categories” is discussed. Host Jarod Davis is joined by Mike Graen, who “has been leading RFID initiatives for most of his 40 years in retail. Mike joins the podcast this week to share his experience in launching RFID at Walmart, Proctor and Gamble, and lets suppliers know how they need to prepare today to meet Walmart's September deadline.”