Benefits of RFID Technology in Warehouses
With the growth of online shopping, having an efficient supply chain has never been more important. Customers expect their orders to be fulfilled quickly and accurately. Online shopping means more returns to process, putting further strain on the system. Warehouse managers and supply chain experts need ways to adapt to face these challenges and strengthen their supply chain systems. One of the technologies that enables improvements in supply chain accuracy and efficiency if Radio Frequency Identification (RFID). Before covering how RFID can benefit warehouse management and bring an ROI, let’s briefly cover how RFID works.
How RFID works
It’s almost guaranteed you have used RFID in your daily life. NFC technology in Smartphones and contactless banking cards use a form of RFID, which is in the high frequency band. Warehouse management applications use UHF RFID, because the tags are inexpensive to produce and it has a long read range of up to 20 metres. With a UHF RFID system, you have a reader with an integrated or external antenna and a tag. The reader and antenna send out a radio frequency signal to the tag, which reflects the signal and sends a response with it’s data. This is known as backscatter. This process enables RFID readers to identify several hundred tags per second, without needing to have a direct line of sight with the tag. This brings numerous advantages when compared to barcoding systems.
Benefits of RFID for warehouses
1. Improved accuracy
The first major benefit of using RFID over using a barcoding system is the improvement in order accuracy. Being able to scan hundreds of items at once makes taking inventory much faster, enabling full stock checks to take place frequently, to identify and adjust any disparities in stock. This leads to much higher inventory accuracy. According to GS1 UK, 10 major retailers who trialed RFID found an improvement in inventory accuracy from 65-75% to 93-99%. This greatly improved inventory accuracy means fewer out of stocks and fewer overstocks. This also means a more efficient use of warehouse space, as you have an accurate picture of what stock you hold and what stock needs to be ordered. The improved accuracy also comes in with the picking and packing process. Using a handheld reader, a warehouse worker can quickly confirm whether the correct products have been added. Having accurate fulfillment saves time, reduces losses from overpacking and prevents disgruntled customers or chargeback penalties from items missing on the shipment.
2. Saving time
Labour is the single biggest expense for most warehousing companies. In fact, labour can account for as much as 65% of warehouse operating costs. Saving time for your business means saving money. This is one of the biggest benefits of RFID. In the case of a fixed reader system, you can have real-time stock data, either through continuous reading of the warehouse or through the use of portals on your warehouse doors. This practically eliminates the need for a manual stock take. With handheld readers, the process of doing inventory is very fast. In the case of Walmart, a 10,000 item inventory used to take 53 hours with barcoding. Now, they are able to do it in just two hours, making RFID 25 times faster than barcoding in this instance. The increased productivity through implementing RFID is a key driver of your Return on Investment (ROI) for the solution.
3. Know where stock is
Lost stock and spending time looking for the right stock can be a headache in warehousing. Saving your staff time by not having to search for items is another area where RFID can bring an ROI. One method is implementing a Real Time Location System (RTLS) in your warehouse. This system the tagged items in your warehouse, so you have a real-time view of what is available. The other option is to have handheld readers with a Geiger counter. When locating a certain item, the reader will beep faster as the signal strength increases to lead you to the correct item.
You can see that the benefits of RFID are massive when implemented correctly. There are some important considerations when designing and installing an RFID system, such as the right reader, the right tag, the placement of the tag and the physical environment. With careful planning and a thorough proof of concept, RFID can bring a great return for your business.
To learn more about RFID, request a free copy of our RFID Warehouse Solutions Guide.
If you have a warehouse in the UK and are looking to start your RFID project now, click the link below to book a free 30-minute Zoom consultation to discuss your RFID requirements.