RFID
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RFID: plenty to gain in the supply chain

This guest post is provided by Joe Pleshek, the CEO of Terso Solutions. Joe examines a recent survey in which some supply chain executives question the value of RFID technology.
 
I recently read the results of a new technology survey of logistics executives who work in the retail and manufacturing sectors. Just over 20 percent of the survey respondents indicated that RFID technology returned the poorest return of any technology investments within their supply chain.

I thought that RFID was mature enough now for the value to be seen by mangers in all industries, especially the retail trade, which is leading the way for adoption through highly successful item level tagging programs at the store level.

This guest blog was authored by Joe Pleshek, CEO at Terso Solutions.

The old saying goes that you can’t manage what you can’t see. RFID ensures end-to-end supply visibility and serves to greatly streamline the supply chain by providing the visibility to track where a product is and when it is expected to arrive at its destination. RFID helps manufacturers to increase efficiencies by improving business processes, utilizing big data and removing the manual aspects around asset and inventory management.

A recent blog post in Nordic ID’s RFID Arena touts that RFID technology has risen to become a revolutionary element in supply chain management. It is not just a replacement for barcodes, the blog post emphasizes. RFID ensures that the right goods are available in the right place with no discrepancies and zero errors.

Granted, RFID in retail actually got its start in the distribution center and supply chain with Walmart’s misconception that case and pallet tagging was the way to go. Soon after, retailers discovered that the real sweet spot was in tagging items at the store level in order to raise inventory accuracy and decrease out-of-stocks.

And while the store front is the focal point in retail, many of the most advanced retailers are deploying RFID backwards into the DC and supply chain after going live in the store. With source tagging continuing to grow, RFID is becoming more prevalent through the retail supply chain.

The same thing is happening in the medical and healthcare supply chain. I don’t have any statistics to back this up, but RFID probably has a greater role in the medical supply chain because of the high value of the products that move through it. There is a strong desire on the part of manufacturers to track medical implants and pharmaceutical supplies that cost thousands of dollars per unit.

Take the case of Endologix, a medical supplies company that unveiled a new way to treat abdominal aortic aneurysms in 2013. The company’s Endologix Nellix® EndoVascular Aneurysm Sealing System relies heavily on a frozen supply chain to ensure its effectiveness.

Endologix turned to Terso Solutions to help with that challenge, and the company has deployed ourRFID freezer at high volume sites throughout Europe, including locations in Germany, Italy, the Netherlands and New Zealand.

In addition to ensuring that the proprietary polymer used in the Nellix procedure is stored at proper temperatures, the RFID freezer solution also manages access to the polymer and automates the supply and refill process. Protecting the polymer through the frozen cold chain is critical to the performance of the product. RFID tags from Avery Dennison are applied to the packaging at the Endologix manufacturing facility in California, allowing the company full visibility into its products – as well as the environment they are shipped in — as they are transported overseas.

Nowhere is the need for RFID greater than in the supply chain for implantable medical devices. According to the 2011 Hospitals & Health Networks Most Wired Survey, approximately three-quarters of the recordkeeping for these crucial items is still conducted manually, resulting in inaccurate data collection, poor inventory accuracy and a flawed reconciliation process.

Experts believe that inventory accuracy problems for medical supplies like IMDs is even worse than the lack of visibility in retail. Without real-time and accurate inventory taking, huge losses from expired and obsolete products are commonplace. Estimates put that number anywhere between $2.8 billion and $5 billion in losses per year.

As for the 20 percent or so of logistics executives who view RFID as returning a poor ROI, I can only think that they are employed in such low margin businesses that using RFID tags doesn’t make fiscal sense, or that they just don’t have a clear understanding of how to benefit from the technology.

It’s also possible that this group received bad advice that led to a failed pilot or deployment, thus increased expenses and poor results. Either way, I encourage them to give RFID another try. Many of the most successful RFID programs out there failed at the outset, only to thrive on the second or third try.

Another key point: many times the real benefits of deploying RFID are hidden from the initial business plan. Once the technology is deployed, it leads to new use cases and a greater ROI than was projected for the original use case.

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