The goal of any successful and long-lasting business organization is to make a profit & grow. But how to keep making a profit? Should we increase the price, improve productivity or outperform the competition? All of them are good ideas, but an essential point that many people forget is cost-cutting. Effective cost-cutting is essential to maintain a profit. One of the popular ways to achieve this is through Supply Chain Management.
But what is supply chain management, let’s discuss.
What is Supply Chain Management?
This term simply refers to monitoring and making changes in the supply chain to make it more efficient and economical. Butt before we talk more about it, you might be thinking: What is Supply Chain?
A supply chain means the entire process of a product’s life, from manufacturing to sales, and every change it goes through within that period. In short, it is the process through which raw materials are transformed into the final product and sold to the customers.
Supply Chain Management involves centralizing control and constant monitoring of the manufacturing, shipment, and distribution of products. There are many benefits of effective supply chain management like cutting costs, saving environment and streamlining operations.
Components of Supply Chain Management
This task is done by a supply chain manager. The duty of this individual is to reduce unnecessary costs and prevent shortages throughout the supply chain. To achieve this task, the supply chain manager’s duties are divided into 5 parts.
Planning
I’m sure it comes as no shock to you when I say the first step to any venture is planning, and so it is with SCM. The supply chain managers must formulate a plan to match the supply volume with the customer demands that product. This is necessary, as it helps the organization ascertain the necessary raw materials it’ll need during production & the potential costs.
Sourcing
Once the plans are drawn, the next step is to attain the raw materials so you can start the manufacturing process. The demand for raw materials will differ from industry to industry and depending on your product. It is essential to have connections with reliable suppliers at this stage, to ensure productive and economical manufacturing. During this process, you need to ensure the quality of the materials, price negotiation, facilitate a source for emergency supplies, etc.
Manufacturing
Now the show begins, once you have the raw materials, now it’s time to convert them into useful products. This process may include the use of machinery and labor to make goods by processing raw materials. As a worker or the manager, you need to ensure that this procedure occurs smoothly without any hitches. But, due to factors like improper maintenance, untrained employees, or damage to machinery, you may lose the efficiency of your manufacturing unit. This will result in you wasting raw materials & resources.
Delivery
Now that the products are manufactured and packaged neatly, it’s time to get them to the customers. Many issues with transit can occur, like delays, damaged goods, theft, etc. These can result in the disruption of the supply chain and lead to a decrease in profit. When it comes to delivery, the most important thing is to have an alternative transit method available.
Returning
Often you will have to process a return for a product. due to an error in processing the order, leading you to dispatch the wrong items. Alternatively, it could be due to damaged or defective products. In any case, returns and recalls cannot be completely avoided, just be reduced with good business practices. During a return, you must ensure that the entire process is quick and smooth and that the customer’s grievance is resolved as quickly as possible.
How are RFID Systems Used in Inventory Control and Supply Chain Management?
Radio Frequency Identification technology is taking a lead role in helping organizations with supply chain management. Due to the fast, efficient, and automated nature of RFID, it will help you make leaps regarding streamlining your supply chain. Let’s discuss how exactly:
Automate Acquisition Database
During the initial stages of a supply chain, i.e. sourcing, you will have to manually put in the information regarding all the acquired raw materials from suppliers. This is often a time taking process, that is prone to human errors. With the help of RFID, you can completely automate this task. An RFID system will log in the necessary information about every item you receive into your system. All you need is an advanced shipment invoice with the necessary information that you can input into your system. With effective RFID software, you can complete this tedious task in minutes.
Security & Inventory Management
Between the production and distribution, you’ll often be storing the manufactured goods in a secure place, ready to go at a moment’s notice. However, storing a such large quantity of goods in a single place comes with its challenge, like inventory shrinkage, theft, inventory management, etc. But all of this can be resolved easily if you use RFID tags like Smartrac Dogbone Tag on your products. By strategically placing RFID readers at important locations like entry, exits, and storage aisles, you can have an eye on every item in your warehouse. In short, an RFID system will update your systems the moment a product enters or exits the premises, with or without authorization.
Transportation Check
Often during the transportation of goods, the transport is subjected to checks. The shipping manifest is regularly inspected to make sure that there is no loss or theft. However, achieving this task manually can take a lot of time, but with the help of RFID tags and well-placed readers, you can completely automate it and remove the risk of errors or bribery.
Tracking Tools & Equipment
Lastly, all machinery needs regular maintenance and even repairs at times. And since a machine cannot operate during this period, it means a halt in production and profit. So, it is very important to make these intervals as short as possible. One aspect of doing that is to have the tools & spare parts readily available. An RFID system allows you to quickly retrieve such items.
Benefits of RFID in Supply Chain Management
As we discussed above, RFID technology doesn’t bring in some new process to your business. It is just an efficient way of accomplishing several time-consuming traditional tasks in a business. There are several benefits of implementing RFID to aid you in supply chain management.
Automation
As noted above heavily, one of the best parts about using RFID is that it completely automates several labor & time-intensive tasks. Doing this saves your workers a lot of time they can use doing something productive.
Removes Risk of Error
Unlike a human being, a computer is not capable of making mistakes. An RFID system eliminates the probability of login items more than once, missing an item, etc.
Efficient
In the case of manual data entry or inventory management, the workers will have to put in the information one product at a time, making it time-consuming. But with RFID systems, a reader can identify and log more than a thousand items in a second.
Security
With the combination of asset tracking & system alerts, an RFID monitoring system can act as the perfect deterrent against theft and inventory shrinkage.
Companies Using RFID in Supply Chain
Since the advent of RFID in the business sector, we’ve seen many brands implement this technology into their organization. Most high-end brands implement RFID to keep track of their products. Even many large businesses use this technology like:
(A). Amazon
(B). Zara
(C). Decathlon
(D). H&M
(E). Nike
(F). Levi’s
These are just some of the popular brands that are known to implement RFID technology in their day-to-day function.
Conclusion
Supply Chain Management is an essential part of any successful business venture. It allows an organization to cut down on unnecessary costs and make its products more affordable for customers. It also helps the organization grow better, resulting in job and wealth creation. By including RFID in this process, companies can make this process even more efficient and easier.
Frequently Asked Questions
Q1. How are RFID tags used in supply chain management?
Ans: RFID tags are used to streamline the steps of supply chain management by automating data/log entries, improving security & making asset retrieval quicker.
Q2. What is an RFID tag in logistics?
Ans: An RFID tag is an essential component of a Radio identification system. It is a small pellet/ tag with an RFID inlay inside. They can come in various sizes and shapes, depending on their application. An inlay consists of a microchip connected to an antenna. An RFID tag can communicate preprogrammed data back to the reader, allowing it to identify the item the tag is attached to.
Q3. What are the 5 basic steps of supply chain management?
Ans: Supply Chain Management, or SCM, essential consists of five steps, these are:
(A). Planning
(B). Sourcing
(C). Manufacturing
(D). Delivery
(E). Return
To learn more about these, read the blog above.
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