Any talk about supply chain practices couldn’t do without mention of Walmart. First introduced a decade ago to track pallets of good travelling along supply chain of Walmart, RFID has led to cutting of excess inventory and helped slash down the out-of-stock occurrences by almost one-third. The implementation of RFID hadn’t been very smooth and Walmart faced reluctance from the suppliers owing to cost of purchasing the technology and training staff to use RFID properly when it mandated the suppliers to use RFID tags for pallets and threatened to penalize them in case of failure to do so. Walmart has exploited the RFID advantage to more bottom level and has even started tagging the goods with these tags, although this move has generated negative reviews from customers who have raised issue regarding privacy.
Coming to India, RFID has displayed favorable results for firms which have showed interest in this new technology. In a pilot project carried out at Tikaria plant, Amethi, ACC cements reported 5% saving in operation cost following implementation of RFID and GPS in logistics (May, 2013). Logistics forms a very critical part of operations in cement industry and accounts for nearly 35% of total cost. RFID implementation within factory premises helps in tracking the historical data of the truck and the gate-in, gate out time. It also helps in tracking the non-value added time and measures to reduce it. GPS helps to track the out of plant movement. Together, these two technologies have reduced the fixed cost of the asset (trucks) as less number of trucks now transport increased quantities of cement in less time. The service levels have improved by 40-50% and increase in evacuation by 15-20%.
Another example of a successful use of RFID has been in Sundargarh Truck Owners’ Association (STOA), the largest association of truck owners in Orissa, comprising of over 2000 truck owners and managing a fleet of over 4500 trucks. Earlier, use of a manual numbering system to prioritize the order in which truck owners were called for consignment loading sometimes led to discrepancy. The truck owners used to apply for a fresh serial numbers before dispatching their current load, resulting in some truck owners getting a new consignment within few hours of completing their assignment while few having to wait for days for their turns. Installing RFID based tracking systems in trucks helped improved the process and brought more transparency in the system.
Moving forward
RFID is evolving in many intriguing directions in supply chain. Companies are increasingly interested in using active RFID tags as sensors to ensure food safety by keeping a check on temperatures in different areas on refrigerated trailers. RFID sensors also help ensure traceability in the event of a recall.
Other advanced transportation uses include installing RFID tags inside gas tanks to automatically record the amount of fuel dispensed and charge the transaction to the system, eliminating the need for drivers to carry credit cards or cash. In addition, RFID tags and readers can help lower costs and reduce CO2 emissions by helping to optimize routing and reduce the number of costly re-deliveries.
RFID technologies can play an important role in helping shippers and logistics service providers gain visibility into the global supply chain.