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Applications of RFID in Logistics and Supply

Chains: An Overview

Conference Paper · November 2012

DOI: 10.1061/9780784412602.0213

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 Applications of RFID in Logistics and Supply
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Chains: An Overview

Xiaoqiang ZHANG, Qin DONG, Fangjie HU

School of Transportation and Logistics, Southwest Jiaotong University, Chengdu,

China 610031.

ABSTRACT: Radio-frequency identification (RFID) is the use of a wireless

non-contact system that utilizes radio-frequency electromagnetic fields to transfer
data from a tag attached to an object for the purposes of automatic identification and
tracking. This technology is especially suited for goods circulation and tracking. For
a supply chain, the RFID technology can be used in several aspects, including
warehouse management, inventory management, freight transportation,
manufacturing, and retailing. With RFID technology, the supply chain can achieve
high performance and tracking.

1. INTRODUCTION
With the development of RFID technology and the internet of things (IOT),
RFID technology is widely used in different fields including supply chains and
logistics. A supply chain is a system of organizations, people, technology, activities,
information, and resources involved in moving a product or service from supplier to
customer. Supply chain activities transform natural resources, raw materials, and
components into a finished product that is delivered to the end customer. In
sophisticated supply chain systems, used products may re-enter the supply chain at
any point where residual value is recyclable. Supply chain applications involve
tracking many items (retail item packages, cartons, cases, and pallets) at a relatively
slow rate of speed (e.g. fork-lift, conveyor, or items on a storage rack or display shelf)
in a protected environment. Oftentimes, the items being tracked in supply chain
applications are of relatively low value.
Logistics is the management of the flow of resources between the point of origin
and the point of destination in order to meet the requirements of customers or
corporations. Logistics involves the integration of information, transportation,
inventory, warehousing, material handling, and packaging. Logistics assets that have
a circular flow are an essential part of the logistics system. These assets are often
reusable, such as pallets, totes, racks, bins and roll cages, shipping containers, and
gas containers that are used to transport goods from one place to another. Procuring,
maintaining, and managing these assets often forms a significant part of a company's
annual expenses. Since theft, damage, and replacement erode asset productivity,
these assets have to be managed in such a way as to minimize loss as much as

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possible. It is in this situation that RFID (Radio Frequency Identification Devices)

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and logistics management comes into effect.

2. RFID TECHNOLOGIES
Radio-Frequency Identification (RFID) technology is a wireless sensor
technology that is based on the detection of electromagnetic signals (McCarthy,
2003). A typical RFID system includes three components: an antenna or coil, a
transceiver (with decoder), and a transponder (RF tag) that is electronically
programmed with unique information (Finkenzeller,2003). The antenna emits radio
signals in order for the tag to be activated and for data to be read and written to it.
Antennas establish the communication between the tag and the transceiver, which is
responsible for the data acquisition. The antenna can be packaged with the
transceiver and decoder in order to become a reader, which can be configured either
as a handheld or a fixed-mount device. The reader emits radio waves in ranges which
can reach up to 100 feet or more, depending on its power output and the radio
frequency that is used. In the case that an RFID tag is found in the electromagnetic
zone that is produced by the antenna, the activation signal of the reader is detected.
The reader decodes the data which are encoded in the integrated circuit of the tag and
then transfers it to any computer system for processing.

3. RFID IN WAREHOUSE AND INVENTORY

Inventory management is demanded globally by enterprises or manufacturers,
and it serves the purpose of satisfying the count audit and management of the
existing inventory. Therefore, inventory count management has been emphasized by
all enterprises and manufactures. There are quite a lot of enterprises that already use
the bar code for inventory management because of these reasons. However, bar
codes have numerous disadvantages, and some companies have turned to wireless
radio frequency identification (RFID) systems in recent years. This technology has
already been classified as one of the most important technologies available.
Traditional inventory count requires a lot of manpower, money, and time, and it
makes the inventory quantity control of goods considerably inefficient and also
influences the time-effect of inventory value. By using RFID technology and image
capture combined with an Oracle back-end database, an inventory management
system can be implemented by using the characteristics of instant read-write-enabled
RFID tags to carry out the regional inventory count in the warehouse. This inventory
management system integrated with a database can be used to identify slow selling
items caused by long storing or near over-due-period. Every item of goods has its
own serial number, and the first-in-first-out management of goods can be used to
keep the product fresh and improve traditional inventory shortcomings. To
effectively manage whether the goods have a flaw or are bad products, all goods can
be traced to the original supplier via the tag on the goods and subsequently returned

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to the original supplier. This entire item tracking system can increase the enterprise's
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competitiveness, and it is a set of intact product life cycles (CHEN, 2009).

4. RFID IN FREIGHT TRANSPORTATION

A well-functioning freight transportation system is an essential element in any
successful logistics system. The freight transportation system will face challenges
that will require the development of new paradigms of operations and technologies.
The impact of information technology such as RFID, EDI, GPS, and GIS on the
freight transportation system has been significant and likely will increase sharply in
the oncoming years. The steadily declining prices of new technology coupled with an
increased awareness among freight operators of the technology’s potential benefits
will encourage the freight industry to increase its use of information technology. The
industry has already implemented cutting-edge technologies to improve customer
service and to reduce expenditures. Information technology also will have varying
effects on the different modes of transportation. Carriers in all modes will
increasingly rely on continuous updates on the location and status of the vehicles and
containers in their system. Additional growth in the intermodal freight market
requires an increase in information sharing across companies. The productivity of
integrated freight transportation providers such as Federal Express and United Parcel
Service will improve with increased use of information technology.
Transportation RFID tags must be designed for years of continued, reliable use in the
harshest of operating environments. Consider, for example, RFID tags affixed to all
rail cars used by Class 1 railroads operating in North America. These tags are
subjected to every imaginable harsh environmental condition (heat, cold, snow, ice,
dirt, rain, oil, and, in certain cases, temperatures over 350°F), yet they are required to
be installed once and operate indefinitely with 99%+ reliability. Also, consider
transportation tags used in road tolling applications. These tags are installed on
vehicles’ windshields where temperatures range from sub-zero to 150°F and must
operate for many years or indefinitely with 99%+ accuracy.
RFID technologies can be use to transportation in the following aspects (Chris
Brown, 2011):
Firstly, RFID can be used to automate yard management; In this aspect, the
RFID technology can be used to automate workflows and processes while capturing
data on tracked assets at multiple sites and to identify shipping bottlenecks in order
to quickly adjust delivery schedules within the supply chain. Also, it allows access to
historical data on the location and status of assets, eliminating written logs. It
provides increased visibility into the supply chain to help meet service level
commitments.
Secondly, RFID technology can used for Vehicle Tracking and identification.
This will reduce labor costs for vehicle processing and decrease on-site dwell time,
enabling better yard throughput and increased responsiveness to dealer and customer

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demands. It will also enhance quality by ensuring that no process steps are missed
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and that every vehicle departs in accordance with dealer/customer specifications

Futhermore, RFID can be used to Streamline Break Bulk and General Cargo
Operations. It will improve control over the Container Freight Station (CFS) and
support for all types of roll-on/roll-off (Ro-Ro) Vehicle Operations. It will reduce
labor costs for vehicle processing and decrease on-site dwell time, enabling better
yard throughput and increased responsiveness to dealer and customer demands. It
will also enhance quality by ensuring that no process steps are missed and that every
vehicle departs in accordance with dealer/customer specifications

5. RFID IN MANUFACTURING
Manufacturing enterprises and their associated production activities are becoming
increasingly information intensive, but the information systems used often rely on
data that is assumed rather than actual. RFID-enabled manufacturing can bridge the
gap between the physical flow of materials and the associated information flow.
For today's manufacturer, RFID has become an indispensible tool that lets
organizations see their entire process in real-time. Applications built around RFID
can help report immediate deviations and exceptions to any process. RFID has
allowed companies to build authentication and confirmation into previously error
prone processes. RFID is eliminating costly mistakes, resulting in fewer
manufacturing errors due to incorrectly used parts or wrong specification settings.
RFID is being used to locate semi-finished goods and eliminate costly delays due to
lost or hard to find inventories. RFID also works hand in hand with Six Sigma. While
Six Sigma seeks to improve the quality of process outputs by identifying and
removing the causes of defects, RFID lets a company identify, time stamp, and
confirm the location of all measured elements.
All of these advantages are reasons that manufacturers have looked to RFID
technology to help them run more efficient operations that help minimize production
down time, optimize material and parts inventories, and improve and maintain
optimal labor output.
In addition to improving manufacturing performance, RFID is being used to improve
safety by authenticating operators to ensure only properly trained personnel have
access to potentially dangerous equipment or sensitive information. Benefits include:
(1).Real-time tracking of inventory, part kits and sub-assemblies
(2).Maintains current item information on the tag - ideal for managing production of
complex or customized products and assemblies, eliminating the need for separate
paperwork on assembly status and content.
(3).Automatically notifies the central product database when each process has been
completed
(4).Field personnel can use RFID tag information to determine product features, date
of manufacture, and revision levels

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(5).When errors are detected, the ability to track at the item level reduces the impact
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of quality recalls

6. RFID IN RETAILING
The retail industry represents one of the largest industries in the world. The retail
sector is one of the most important business sectors that finds potential in the use of
RFID technology in order to keep a competitive edge and to achieve profitability in
short or long terms.
The expected growth of RFID usage in the retail industry is a result of the perceived
benefits that could be obtained by implementing the technology. RFID can provide
benefits such as operational efficiency, improved visibility, reduced cost, improved
security, improved customer service levels, better information accuracy, and
increased sales. For the retail industry, RFID can be used as outlined in the following
section (Mithu Bhattacharya et al., 2007):
(1).Merchandise planning: It is an approach aimed at maximizing ROI through
proper planning of sales and inventory. This approach is all about maintaining a
balance between sales and inventory in order to increase profitability.
Accepted to Decision Science Institute (DSI) Conference, Phoe1ni2x AZ, 2007.
(2).Assortment Planning: It is the retailer’s planning for selection of merchandise
both in terms of depth and breadth (e.g., what and how much).
(3).Sales planning: It is a business process to plan the routes to reach the target
customers.
(4).Price management: It is the process of understanding, managing, and improving
pricing processes based on predictions and forecast data. It has direct impacts on
profit.
(5).Promotion planning: It is the process of planning and managing promotions that
drive demand and profit. It also depends on forecast data.
(6).Replenish, allocation and scheduling: It is the process to replenish products to
avoid out-of-stock situation. It has the potential to reduce inventory and influence
improved customer services.
(7).Warehouse management: It is the process of achieving improved distribution of
products across diverse facilities. It has the potential to reduce inventory.
(8).Distribution: It is the process of distribution of products accurately to the correct
destination.
(9).In-store operation: The management of various store operations like receiving,
shelf stocking, and product ordering for store replenishment.
(10).Sales: Managing the sales process which is directly associated with revenue
generation.
(11).Return: Managing return merchandise to make reverse logistics streamlined.

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CONCLUSION
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RFID technology is being widely used, especially in supply chain management

and logistics. Due to the decreasing price of RFID tags, RFID technology will soon
replace bar codes in more applications within supply chains.

ACKNOWLEDGMENT
This work is supported by Science and Technology Research and Development
Program of Ministry of Railway of China(No: 2011X026-A, 2011X026-B), Science
and Technology Research and Planning Program of Sichuan Province, China, and
Sichuan Province Cyclic Economy Research Center(No: XHJJ-1007)

REFERENCE
Chen,Hui-Ling, Inventory Issuing and Receiving Tracking System By Using
RFID,ASIA UNIVERSITY, thesis, 2009,
Chris Brown, 2011, Part 1: 5 Advantages of RFID in Transportation & Logistics,
HTTP://blogs.zebra.com
Finkenzeller, RFID-Handbook, 2nd edition -Fundamentals and Applications in
Contactless Smart Cards and Identification, JohnWiley & Sons, April 2003
J.F. McCarthy, D.H. Nguyen, A.M. Rashid, S. Soroczak, ‘Proactive Displays & The
Experience UbiComp Project’, Adjunct Proceedings of the Fifth International
Conference on Ubiquitous Computing (UbiComp 2003), 12–15 October 2003,
Seattle, pp. 78–81.
Mithu Bhattacharya, Chao-Hsien Chu, Tracy Mullen,2007,RFID Implementation in
Retail Industry: Current Status, Issues, and Challenges,Decision Science Institute
(DSI) Conference, Phoe2ni3x AZ, 2007.

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