In order to improve productivity and control, warehouses are seriously considering the use of radio frequency identification (FRID) tags for day-to-day operations. This wireless technology increases efficiency of warehouse management because, unlike bar codes which must be scanned manually to feed in the information on the computers, RF tags broadcast a signal with information about the product they are attached to and about the location of the product in the warehouse. RFID technology provides an interesting option to complement data collection and product identification in the supply chain management and warehouse operation.
The main purpose of using RFID is to increase warehouse efficiency by reducing labor and logistic costs that are otherwise skyrocketing and provides ever-increasing pressure on profit margins in today’s competitive environment. It is cost-efficient because the warehouses can now streamline several operational areas inside their premises. For example, picture a typical warehouse where staff receives boxes of stock accompanied by paperwork detailing items in the delivery. Staff members then manually check each box’s contents against the manifest. The drawback of this method is that store staff can not see what items are in which box, or whether items were missing until each box had been individually checked. Many of these operation areas might benefit from radio frequency (RF) communications technology. This wireless technology in warehouses can help establish a simple paperless, on-line communication between operations and the staff's computer.
A wireless warehouse, that uses RFID Technology, works by linking warehouse workers to the back-end warehouse management application server where warehouse activities are being recorded via wireless handheld devices, scanning bar codes or RF tags attached to the pallets. These devices help employees to identify where to pick, put away, count, or move products within the plant. This translates to a better control over the movement and storage of materials within the warehouse by maximizing the efficiency of the receipt and shipment of goods, optimizing warehouse space utilization and knowing at all times exactly where goods are stored, allowing employees to improve and maintain high customer service levels.
IT managers are seriously exploring how RFID technology can be integrated into warehouse management systems (WMS) in order to increase efficiency in warehouse management.
The challenges for IT managers are:
- Examine operational flows to find efficient ways for implementing wireless technology in supply-chain and warehouse management
- Prepare the facility in order to make the move to wireless warehouse technology. For example,
- Consider things like racking and aisle placement, bin ranking and numbering (for primary and secondary storage areas), and labeling the bins with barcode labels
- Ensure that the warehouse is properly equipped with RF access points, antennas, and
- Update the product information in computer software
- Align the warehouse software for interfacing with primary business software
- Procure (after considering different options) equipments such as RF/barcodes scanners, portable as well as heavy duty printers, and the appropriate type of labels.
Capabilities of RFID-based warehouse management
RFID-based warehouse management brings several benefits that can eliminate current drawbacks with the help of advanced scanning that improves supply-chain visibility and agility for greater operational efficiency.
- Improved efficiency by using RF tags that facilitate automatic data entry rather than manually making entries of stock first on paper and then into computer terminals. This eliminates the time required for data entry, sending paper order to the warehouse and filling and maintaining the paperwork.
- Wireless warehouse can provide timely information and integration of warehouse data into the ERP system. Integration of warehouse information and ERP system
- Ensures timely and accurate information for invoicing, purchase order payments and inventory tracking.
- Reduces inventory errors, ensuring that the inventory reported is indeed available. By tracking pieces more exactly, companies can more accurately detail what has sold in the last business day, and improve the accuracy of their forecasts about what inventory is actually needed.
- Strengthen security against product theft, loss and counterfeiting
Specific operational goals for RFID-based warehouse implementation
Expected effects on the IT budget
A significant issue for an IT manager is to implement an effective, reliable RFID solution with low total cost of ownership (TCO). This is particularly true since all the benefits of the system will accrue to business operations, while the IT budget will have to absorb an increase in infrastructure spend.
The TCO includes:
- Initial implementation costs including handset and other hardware, software, installation and training;
- IT management (upgrade, maintenances) and end-user support costs. The major expected business productivity improvements include:
- RFID reduces inventory errors, ensuring that the inventory reported is indeed available. By tracking pieces more exactly, companies can more accurately detail what has sold in the last business day, and improve the accuracy of their forecasts about what inventory is actually needed
- Reduced warehouse and distribution labor costs -- Warehouse and distribution costs typically represent 2% to 4% of operating expenses. Replacing point-and-read labor-intensive operations with sensors that track pallets, cases, cartons and individual products anywhere in the facility can significantly reduce labor costs, resulting in savings of 30% or more.
- It helps in reducing errors in order fulfillment and shipping thereby not only lowering the monetary cost of errors, but also keeping customer satisfaction and return business levels high.
The RFID initiative for the warehouse
It is important that the management do a cost/benefit analysis before giving the green signal to RFID-based warehouse management implementation. The justification should present a benefit to cost analysis in alignment with project goals, total cost of implementation and the risks involved with the company’s business objectives and financial expectations. The value of the benefit expected to be achieved over the life of the project should exceed the total investment in the project. The project justification must focus on the operating cost saving estimates from the use of warehouse management system using wireless technologies.