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Pros and Cons: The Use of RFID for Inventory Management

Knowing your current inventory is at the heart of your company, and for warehouse managers and operations, inventory visibility and control are key to maximizing throughput and boosting productivity. In fact, new inventory management technology, like radio-frequency identification (RFID) tags, have been created to increase visibility and tracking of products, pallets and shipments in warehouses and distribution centers, explains Quest Solution. While the benefits (pros) are astounding, they can have some serious drawbacks, and you need to understand why.

Pros of RFID in Inventory Management.

The primary benefit of RFID in inventory management relies on their automated, low-labor nature. Automated data collection and storage within an existing warehouse management system or other appropriate systems effectively eliminates many of the constraints and issues experienced when using labels or barcodes for tracking. Additional benefits of RFID tags in inventory management include the following:

  • Reduced Labor Costs. Since the tags automatically generate and report information when scanned by an AIDC system, it eliminates the labor costs.
  • No Line-of-Sight Requirements. RFID tags work independently of line-of-sight systems, like barcodes. In other words, workers do not have to turn boxes to align barcodes, apply barcodes or deal with damaged barcodes.
  • Improves Visibility. More information processed and captured leads to better visibility across your supply chain.
  • Contains More Information. More information also has natural benefits for tracking and tracing products and keeping consumers, retail partners and other supply chain partners in the loop.
  • Scans More Items, Faster. RFID tags can also process and catalog information faster than the best handheld barcode scanners.
  • Less Susceptible to Damage. Due to their construction, often in plastic or hard shells, RFID tags are less likely to be damaged in the packing, shipping and receiving process.
  • Prevents Overstocking and Understocking. Since everything is tracked, RFID tags can eliminate stocking issues too and improve security in your facility.

Cons in RFID Inventory Management.

Unfortunately, RFID tags are not necessarily the most cost-effective and workable solution in today’s global supply chains. Some the primary constraints include the following:

  • Costs Can Be Higher. Implementation costs of RFID tags can be significantly higher than continuing to use barcodes.
  • Interference May Cause Problems. Certain materials, like heavy metals and sources of radio waves, may interfere with the transmission of data in an RFID tag.
  • Upgrading Equipment May Be Necessary. The tags also require scanners to automatically detect and register the tags. In addition, your WMS or other warehouse systems may require integrability with RFID systems.
  • RFID May Be Incompatible in Other Countries, DCs or Warehouses. Last, RFID tag information is not regulated by any authority. So, information standards in one region may not reflect information standards in another. As a result, you may need to invest heavily in transcribing APIs or EDIs to navigate these barriers.

Consider Your Immediate Needs and Ability to Use RFID Tags First.

Before you decide to implement RFID tags in your facility, consider your warehousing volume and real-world savings. If the implementation costs cannot bring in a positive return within the next five years, compared to your existing barcode and labor costs, do not implement them yet. But, the good news is that RFID systems are growing cheaper and used by more companies. So, the cons could dissipate sooner than many realize.