In the ever-evolving world of inventory management, there’s a constant focus on improving efficiency. Companies of all sizes are regularly evaluating their current capabilities and finding ways to squeeze as much efficiency as possible out of their existing infrastructure while preparing to adopt new technologies that can take their performance to new levels. It is as important as ever for operations management to do the due diligence of thorough research and a proper ROI analysis to fully understand the impact that any change could have on their entire operation.
One emerging technology that has received a lot of attention with the potential to revolutionize the inventory management industry is radio-frequency identification (RFID). This article will explore the current state of RFID tag usage, including pros and cons, and some insights on their utility versus the leading solution for asset tracking and inventory management: barcode labels.
A Definition of RFID Tags
The use of RFID for inventory management requires a scanner which uses radio waves to communicate with an RFID tag. The tag itself contains a microchip which allows the reader to read data and also write data to the tag for real-time updating in place. Each tag is wrapped in a material like plastic or paper for protection and can be affixed to a variety of surfaces for tracking. Most tags used for inventory tracking are passive RFID tags, meaning they contain no battery and are powered by the waves from the readers. Active tags are powered, come at a higher cost, and are used for long-range tracking of machinery such as trucks and railway cars.
Pros in Using RFID Tags for Inventory Management
Using RFID tags for inventory management offers several benefits, such as reduced labor costs and faster scanning. Here’s a look at how RFID tags can be a benefit in the inventory management process.
- Improved visibility and faster scanning. Since RFID tags do not require a “line-of-sight” scan like barcodes, it is possible to read them at a distance for fast inventory processing. They can also be read in any orientation and give you improved visibility into your inventory with the potential for more frequent updates and scanning locations.
- Reduced labor costs. With labor costs accounting for as much as 50-80% of distribution center costs, RFID offers potential benefits in this area. Inventory check-in, counting, and shipment verification can be done very quickly and automatically in a few scans without the need for multiple employees to process them. These savings must be weighed against the cost of investing in an RFID inventory solution, which we’ll discuss in more detail below.
- Tracking of returnable assets. For those companies that utilize a returnable fleet of assets such as containers and pallets, there is often a significant capital investment to protect. Utilizing RFID allows you to track these assets through the entire supply chain loop and provide increased visibility on inventory locations. This has the added benefit of improving returns and reducing theft or neglect.
Cons in Using RFID Tags for Inventory Management
While there are some benefits of using RFID tags for inventory management, the technology also comes with several disadvantages that hinder usability and introduce other concerns, such as security. Here’s a look at the distinct disadvantages of using RFID tags for inventory management.
- Inability to use cell phones as scanners. Even though there are fixed and remote RFID readers available, it is not possible to use a phone to scan them, as can be done with barcodes. This is especially limiting as it requires drivers or employees in the field to carry specific RFID readers to do any scans, and phones cannot be used as a backup if the provided readers fail.
- Prohibitive costs when scaling. RFID tags cost significantly more than barcode labels. In addition, they utilize specific readers that must be purchased from the limited number of RFID equipment manufacturers. This can add significant costs when scaling these solutions with the requirement for additional specialized scanners and RFID tags.
- Demanding infrastructure needs. Setup for these systems requires integration of the readers, tags, inventory management system, network, and building wiring that can take a significant amount of time and resources to set up. In some cases, companies may need to update their inventory management system entirely, as some software platforms do not support RFID. Also, if real-time asset tracking is required, the RFID-enabled system will need to utilize GPS and cellular data to communicate, which can put a significant burden on your system.
- Security concerns. While RFID systems continue to update and improve their data security, they can still be vulnerable to hacking. Remote devices, including cell phones, can sometimes be used to scan tags at close range and copy tag data. This could later be used to create a cloned tag or copy the information to another tag, a risk of particular concern in the retail industry.
While the use of RFID tags in inventory management offers some compelling and tangible benefits, there are is a great deal of work to be done to streamline these systems. Much of the challenge involves scaling this solution in a cost-effective way while updating infrastructure enough to be able to capitalize on its greatest benefits.
RFID Tags vs. Barcode Labels for Inventory Management
RFID can be useful for some applications, but for most companies looking for an accurate, user-friendly, and cost-effective solution for inventory management, barcode labels are a proven and trusted solution. Some barcode labels, such as Camcode’s Metalphoto® inventory tags, are durable enough to withstand harsh environments in both indoor and outdoor applications and offer excellent resistance to chemicals, solvents, and abrasion.
Compared to RFID tags, barcodes are just as accurate – if not better, and they can be affixed to any surface material without impacting accuracy. In contrast, materials like metal can interfere with an RFID tag’s ability to transmit data, and liquid can hinder an RFID tag’s signal. While it’s possible to use RFID tags on metal surfaces or items, it requires the use of a special type of tag with an RFID block to prevent interference, adding to the overall cost.
For companies looking to adopt an inventory tracking solution, it’s important to conduct a thorough analysis of the differences between established technologies such as barcode labels and tags designed for inventory control and newer solutions like RFID to ensure that you will achieve a desirable ROI for your investment. For most companies, barcode labels are the smart and practical choice for inventory management.
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