Thought Leadership

How Radio Frequency Identification (RFID) can reduce the cost of inventory holding in South Africa

By February 23, 2021No Comments

The Internet of Things is playing an increasingly critical role in smart workplaces. Automated data collection and transfer technology has vastly improved the warehouse and distribution efficiencies of enterprises – consequently delivering unimaginable cost savings. For many large retailers it has become standard practice to accept only goods carrying digital data encoded in smart tags which are applied to items at the point of manufacture. The data is interpreted by dedicated readers, whether fixed at entry points of warehouses or handheld.

As far back as 2005 the CEO of Walmart predicted that RFID technology would reduce the cost of stock holding and handling to their organisation by as much as $1 billion per annum. Hot on their heels was Marks and Spencer, replacing bar codes on food trays with tags which were to be read by doorway interrogators. They, too expected that their investment in the technology would deliver full payback within a year.

RFID vastly reduces the cost of real-time visualisation, stock control, inventory replenishment and EPC (electronic product code) tag voiding. Tags, readers and software reduce carrying costs by collecting data automatically and conducting calculations that result in increased business efficiencies and the optimisation of inventory. These stock replenishment systems provide precise data which results in reduced overheads, shrinkage prevention and the opportunity for enterprises to pass on cost cuts to clients.

Microchipped tags do not need the line-of-sight visibility required by barcodes. It is possible to read them remotely on a number of devices. Another benefit is that of more frequent updates and more scanning locations.

Not only does RFID make it possible to identify objects as they pass through the doors of storage facilities, stock gets automatically verified against purchase orders. Back orders, damaged goods and normal shipments can then be directed to their allocated areas in the warehouse.

The US Food and Drug Administration estimates that over 20% of foodstuffs are spoilt in the delivery supply chain. This amounts to tonnes of food and a lot of money going down the drain – not to mention the additional pressure it places on our precious planet. Now, we are able to reduce costs by ensuring better product presentation and improved supply chain traceability.

Retailers estimate that out of stock situations lead to customers choosing a competitor brand in as many as 50% of cases. Automated replenishment mitigates against this loss of revenue.

Seamless and reliable article surveillance is now part of the trading landscape. Adopting new technologies to improve existing infrastructure and outcomes – and pass on the resultant savings to customers – will be the key to future success.

The benefits, not only to retailers, but also to industries such as healthcare, agriculture, tourism and technology device manufacturers are endless. Real time tracking of stock, automated orders, counting and shipment verification now need no human intervention. Worldwide, the average reduction in the cost of labour required for warehouse management is estimated to be 40 – 60%. Another unexpected consequence of asset tracking was a resultant drop in theft and negligent behaviours in stock locations.

Smart shelves now know the manufacture date, expiry date, shelf life, batch and serial number of every product – and shelf pickers will know the exact content of every palette and box before opening it. Best of all, the system enables trend spotting as businesses will have full oversight of consumer behaviour and preferences.

Sound a bit like supply chain management heaven? Altron Managed Solutions is your RFID partner. Contact us today to discuss your needs.

Altron Managed Solutions

1 Vlak Street, Selby Ext. 5, 2092, Gauteng,
South Africa
PO Box 3591, Johannesburg, 2000,
Gauteng, South Africa