How IoT Can Help Rejuvenate RFID Technology
RFID: mature technology with wide applications in supply chain
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Key Takeaways
⇨ RFID has been leveraged in supply chain, warehousing and inventory management for decades and is considered a mature technology.
⇨ RFID can be integrated with IoT to build solutions that currently do not exist thereby enhancing value from existing RFID investment.
⇨ Warehousing and Inventory management are prime areas for combining these two technologies to deliver game changing results.
RFID: mature technology with wide applications in the supply chain
New digital tools and technologies on the horizon bring many promises. The hype for many of these emerging technologies is well deserved. However, before you embark on a mission to embrace emerging technology, you must consider whether you have already leveraged some mature technologies to their full potential in your supply chain. One such technology is RFID. The article assumes that readers know what RFID technology is and how it works. The technology has been leveraged in supply chains for decades now and is considered a mature technology.A common perception I see is that RFID technology has delivered the value it was supposed to, and now is the time to leverage other emerging technologies to replace RFID. Gartner’s hype cycle indicates that the plateau of productivity has been reached as far as RFID technology goes, which is correct, but only if we view and leverage these two technologies separately. So if you consider RFID technology on its own, it has probably reached its plateau of productivity, but within the areas, it has conventionally been leveraged. The beauty of technology and algorithms is that you are limited only by your imagination and intuition. My perspective is that RFID technology was never harnessed to its full potential and a part of that aspect was that we were limited by technology. Despite decades-old technology, many organizations are not yet leveraging RFID across their supply chain. Why that is the case and how they can improve can be a very exhaustive topic and is not the focus of this article. This article hypothesizes that RFID technology, in conjunction with new technologies like IoT, can generate much more value in the supply chain world, specifically inventory management.
Combining RFID with the power of IoT in Inventory Management
Opportunities abound when you combine RFID technology with smart sensors integrated with IoT infrastructure in warehouses. This was one of the areas covered in SAPinsider 2021 research Modernizing Logistics and Inventory Tracking. Traditionally, RFID has been an amazing tool for inventory management. Still, leveraging more recent and advanced RFID technologies like photovoltaic powered RFID tags, RFID 2.0 UHF, and IDAct, you can leverage the power of RFID beyond the vanilla tracking it is primarily used. IoT, in my opinion, can rejuvenate RFID rather than diminish its value. But for that, we need to diminish our obsession with focusing solely on technology and take a step back to understand the opportunities to combine these technologies and some additional technologies available today to design innovative solutions. Based on my understanding, the opportunities are many. And as interoperability between IoT and RFID increases, so will the opportunities to build solutions that combine these two technologies.
But rather than wait for the interoperability to mature (which definitely will), you should start envisioning solutions now to have a headstart. And there are so many areas within the supply chain that you can explore. A very good example is collecting data for warehouse flow optimization. RFID has been a go-to technology solution for inventory tracking within the four walls of a warehouse. With IoT, we have the opportunity to track elements (like storage conditions) in a warehouse in a way that we could not a few years ago. And now, the infrastructure is already available to combine these two technologies. RFID tag readers can also be embedded in smart sensors. The new generation of RFID tags, a new generation of tag readers, the ability to read tags from mobiles, IoT devices with the capability to read RFID tags and transmit that data in near real-time- all this is like music to the ears of those who love exploring the beauty of technology to collect data that has not been collected in a specific fashion before. That data, combined with worker tags and other sensors in the warehouses, provides you with a dataset with priceless data points. You can evolve beyond simulations based on generic distributions and develop warehouse flow models that provide you with a level of precision that has not been available before.
SAPinsider will be publishing a focused research report on Inventory Management and Optimization, so let us take an example of combining these two technologies for inventory management (You can participate in the research by taking the survey). This is one area where RFID has been used extensively already. The fact is that in many large warehouses, ultra-high frequency RFID is the Gold standard. But let us envision a scenario where RFID and IoT technologies can work together. As you may know, one of the advantages of RFID is that it can read each asset, but you can also have a pallet tag that identifies a pallet. A smart camera that has sensors equipped to read RFID tags stationed at various areas in a warehouse can:
- Scan a rack by reading RFID tags to capture what products are stocked on it.
- Use smart vision to determine the volume utilized by the product (s) based on the product data.
- Highlight if the putaway is not optimal, i.e, the rack is not being leveraged optimally.
This is one rudimentary example that illustrates the types of capabilities that can be built. This does not even transcend into inventory planning, where this combination can make a much more significant impact. The opportunities are many and we are constrained only by our conventional approach to thinking about technologies, algorithms, and functions in silos. SAP solutions like SAP EWM allow you to leverage RFID extensively. You can combine this with SAP BTP and IoT devices to build game-changing solutions.
