RFID Inventory | 4 mins read

RFID Inventory Management - Pros and Cons

rfid inventory management pros and cons
Hanh Truong

By Hanh Truong

The retail landscape continues to evolve as new advancements in technology are introduced. Recently, businesses have been integrating radio-frequency identification, or RFID, into their inventory management systems to streamline the process of tracking stock.

This new form of technology enhances efficiency and helps companies of all sizes improve productivity. However, before adopting RFID, management teams should learn more about how it can be effectively used, as well as consider the different pros and cons of its functions.

How RFID Technology is Used in Inventory Management

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Radio-frequency identification technology commonly comes in the form of a tag that contains a microchip.

Retailers can input product details into the tag and attach it to any inventory item. When tracking or processing stock, staff can use a scanner to find data on the item or update new information.

Generally, businesses that use this technology for inventory management will use passive RFID tags, which are tags that do not require batteries and only need radio signals from the scanner to be activated.

Pros of RFID Technology

RFID technology enables business owners to automate their inventory control and improve operational efficiency. These advantages appear in many different ways.

Accessible Scanning

Unlike common barcode labels that require the scanner to be in a fixed position, RFID tags can be read at any angle. This allows employees to quickly scan goods and also reduces the extra work needed to reposition scanners and items.

Additionally, RFID readers can scan several tags at once; therefore, staff can process large volumes of shipments simultaneously.

Lower Labor Costs

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The process of inventory counting, picking and packing, and order fulfillment can be automated and streamlined since many RFID tags can be scanned quickly in a short amount of time. Managers can then reduce their labor costs since they will not need multiple employees to perform each of these tasks.

Better Visibility into Inventory

RFID scanners can be affixed onto a doorway or any opening in the warehouse, therefore, all inventory products that go in or out will be accounted for. Warehouse employees can have better visibility into their stock and improve their tracking system with this feature.

It also ensures more accuracy, compared to using barcodes because staff may forget to scan an item.

Data Storage

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Compared to linear barcodes that can only support a limited volume of data, RFID technology can store large amounts of data, as well as different forms of metrics.

Increased Durability

Modern RFID tags are weatherproof and are less susceptible to physical damage. This is important because products are constantly moved within the area, from packing to receiving, and can easily be roughed up during the process.

Businesses that use barcodes, however, would have to be diligent since these labels can easily fade or fall off if it is exposed to sunlight or chemicals.

Cons of RFID Technology

While there are great benefits of RFID technology, there are also some disadvantages.

Costly Implementation

Integrating RFID technology may be costly for some organizations. Many businesses will, instead, buy these tags to track their most important or high-value products.

Executives should thoroughly assess their budgets and financial capabilities to see if implementing RFID tags to their inventory management system will affect their profitability.

Potential Interference with Radio Signals

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Some materials and chemicals, such as heavy metals and liquids, can interfere with the radio signal of the tag. This can cause issues with retrieving information and may require a different type of tag to function effectively.

Widespread Integration

Organizations that have multiple warehouses or storerooms may need to upgrade all the equipment in their facilities to reap the benefits of RFID technology.

Business teams must collaborate with their suppliers and transportation providers to ensure that the right equipment is used correctly. If the solution is not used within all sites, it will be harder for management to have full visibility into their inventory.

Additionally, widespread integration may require more time and capital to be allocated towards RFID since executives will have to purchase large amounts of tags and scanners.

High Volumes of Data

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Having high volumes of data is great for businesses because it provides insight into their inventory performance, however, managing all these metrics may be a challenge.

Business owners will need to spend time to analyze their data or they may have to look into employing a data analyst to assess their trove of information

Incompatibility Issues

Management may experience incompatibility issues with their RFID technology due to their tag type or the industry they are in.

Businesses that have warehouse facilities in different countries may also find discrepancies, in which they will need to use different systems in order to track their goods overseas.

Key Takeaways

  • Businesses have been improving their inventory management efficiency by implementing new technology, such as RFID tags and scanners.
  • RFID tags streamline inventory-tracking processes and can help businesses minimize labor expenses and errors, unlike traditional barcodes.
  • However, RFID technology can be costly for some companies and can lead teams into various compatibility issues.
  • Managers should conduct comprehensive research to determine if RFID technology aligns with their business's needs.