Sunday, June 19, 2005
Using RFID for inbound logistics (Place post#3)
What is Goal of Logistics System?
The goal of marketing logistics should be to provide a targeted level of customer service at the least cost. The objective is to maximize profits not sales(According to text book page 420).
How RFID can be used for Inbound Logistics?
The use of RFID on the inbound supply chain is currently in its infancy, but its eventual impact is expected to be significant. Some of the benefits of using RFID.
1.Industries that bring production materials from overseas or that use contract manufacturers between the supplier and the OEM can clearly benefit from the closer material tracking that is possible with RFID.
2.Companies looking to streamline inventory will benefit from clearer lead time and consumption data
The biggest obstacle to the use of RFID for tracking shipments from suppliers to buyer/manufacturers is the lack of infrastructure currently in place to read the tags along the journey. While the growth of that infrastructure may take some time, some manufacturers are using RFID internally at their plants to track inventory. This technology would be useful in addressing the logistics issues(refer Winita's presentation on logistics challenges) that are being faced in the developing countries like China and India.
How can the objectives of Logistics can be met using RFID?
RFID technology enables companies to maintain optimum levels of inventory and at the same time with out disrupting the production. This might not make any difference with respect to customer service however having optimum levels of inventory has direct impact on the companies profits.
Just to give an example how Boeing using the RFID for inbound logistics. Boeing buys and uses a large amount of expensive specialized paint that costs as much as $200 per gallon. Historically, the company has had a difficult time tracking the paint's consumption which made it difficult to order. And because the paint has a limited shelf life, it cannot be ordered in too large a quantity because any paint that expires before its use is a total loss. To get a better view of that consumption, Boeing is using RFID tags to track the cases of paint inside its factories.
The goal of marketing logistics should be to provide a targeted level of customer service at the least cost. The objective is to maximize profits not sales(According to text book page 420).
How RFID can be used for Inbound Logistics?
The use of RFID on the inbound supply chain is currently in its infancy, but its eventual impact is expected to be significant. Some of the benefits of using RFID.
1.Industries that bring production materials from overseas or that use contract manufacturers between the supplier and the OEM can clearly benefit from the closer material tracking that is possible with RFID.
2.Companies looking to streamline inventory will benefit from clearer lead time and consumption data
The biggest obstacle to the use of RFID for tracking shipments from suppliers to buyer/manufacturers is the lack of infrastructure currently in place to read the tags along the journey. While the growth of that infrastructure may take some time, some manufacturers are using RFID internally at their plants to track inventory. This technology would be useful in addressing the logistics issues(refer Winita's presentation on logistics challenges) that are being faced in the developing countries like China and India.
How can the objectives of Logistics can be met using RFID?
RFID technology enables companies to maintain optimum levels of inventory and at the same time with out disrupting the production. This might not make any difference with respect to customer service however having optimum levels of inventory has direct impact on the companies profits.
Just to give an example how Boeing using the RFID for inbound logistics. Boeing buys and uses a large amount of expensive specialized paint that costs as much as $200 per gallon. Historically, the company has had a difficult time tracking the paint's consumption which made it difficult to order. And because the paint has a limited shelf life, it cannot be ordered in too large a quantity because any paint that expires before its use is a total loss. To get a better view of that consumption, Boeing is using RFID tags to track the cases of paint inside its factories.
# posted by Rambo @ 9:15 AM 
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seems like excellent technology to increase 'intelligence' within the supply chain and ultimately reduce costs while maintaining customer support.
Thanks for your comments. This technology is being used by Wal-Mart also for inbound logistics. All the Wal-Mart’s top 100 vendors are supposed to implement the RFID technology by 2005, not sure what exactly the status at this point.
As Wal-mart aims for Everyday low price, this technology would help them in meeting their objective.
As Wal-mart aims for Everyday low price, this technology would help them in meeting their objective.
Not sure if you came across this in your research or not...
The Pharma industry is looking into RFID to track shippments of drugs (for safety and reimportation). Also, there is talk of putting RFID cips into individual tablets when the technology allows. Not sure how I feel about that one.
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The Pharma industry is looking into RFID to track shippments of drugs (for safety and reimportation). Also, there is talk of putting RFID cips into individual tablets when the technology allows. Not sure how I feel about that one.
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