September 18, 2005
RFID deployment in the field of Logistics
Even though RFID promises to revolutionize supply chain, not many logistics companies are eager to buy that promise. This, inspite of the fact that the railroads adopted RFID quite some time back and even integrated it with technologies like GPS. The reason is that the benefits that accrue from RFID are a function of the scale at which RFID is implemented. Logistics companies are a little chary of investing in a technology, which if unsuccessful, may place them at a disadvantage. In order to track container-information, reduce the size of the fleet and improve overall efficiency, it is important that wide scale item-level tagging be carried out and a proper reader infrastructure be installed.
The calculations involved in determining efficient logistics management are aimed at arriving at a fleet size that is ideal for satisfying business needs and reducing stock-outs. The data required for such calculations includes past data on fleet usage; description of equipment and its location, whether with company or with customers; cost of opportunity lost by not having an equipment in possession. RFID helps to gather the relevant data; it enables equipment tracking, which allows companies to commit to a delivery with a degree of certainty, for example it can tell the availability of chassis in terms of customer, vehicle, terminal, and the day of the week. rfidjournal.com reports:
When a customer needs a chassis and there isn't one, what's the cost? An accountant will tell you that the opportunity cost is the forgone profit from the move the customer would have made. The line manager will complain that the carrier lost all the revenue from the move. And the sales guy might tell you that not having equipment available will cost the entire account.
Read More:The Math Behind RFID in Logistics
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