Supply Chain Management

Supply Chain Management

Benefits of implementing RFID in Supply Chain Management

Supply chain management is generally seen as complex and knowledge intensive process. In this article Roksana Parvin, a supply chain management professional, elaborates on the benefits of implementing RFID in supply chain management.


The term Supply chain covers all possible processes involved in the flow of goods from manufacturing to customer; including manufacturing, distribution and transportation. Thus, supply chain management covers all these steps in combination with marketing decisions, customer demand, in alignment with general corporate strategy and goals. Usually considered as a complex and knowledge intensive process, management of supply chain can benefit significantly from the implementation of RFID technology.

RFID technology has risen to become a revolutionary element in supply chain management. It is not just a replacement for barcodes. RFID ensures that the right goods are available in the right place with no discrepancies and zero errors. It makes the supply chain considerably more precise and improves the efficiency and reliability of the entire chain. As real-time information is made available also administration and planning processes can be significantly improved.

This article aims to give insights into the benefits of RFID usage in supply chain management processes. For simplification, the processes are described in the order they take place. We chose to describe the processes of the FMCG (fast moving consumer goods) industry in this article. However, the benefits of RFID in supply chain management can be reaped also in other industries.


The market of FMCG's, fast moving consumer goods, is one of the fastest moving markets in the world. In the FMCG industry, products have to be counted several times already in the manufacturing process: during the stages of production, washing, and packing. Traditionally, these operations are performed manually. But by utilizing RFID tags and readers, products can be counted in seconds. This is due to the fact that RFID tags can be automatically scanned without being in the line-of-sight of an RFID scanner and multiple tags can be scanned simultaneously. For manufacturers this translates directly into cost reductions as labor intensive tasks can be carried out faster and more accurately.

In addition to faster authentication of produced goods, manufacturers can also benefit from increased information gathered with the help of RFID technology. RFID tags can store far more information than conventional barcode labels. This information can be used to optimize production processes. Accurate knowledge of the real-time movements of raw materials and the time needed for specific production steps can be integrated into efficient production planning.

With the help of RFID, manufacturers can also benefit from increased information in regards to repair and maintenance of their machines and equipment. This allows manufacturers to have visibility into valuable data such as: which machine has been repaired or undergone maintenance and when has this been done? This information helps to plan maintenance schedules. Hence, maintenance can become part of production planning and help to prevent costly production breaks.