The advancement of technology, combined with demand from customers, has continued to fuel interest in radio frequency identification (RFID) tagging systems. Yet for all the attention paid to RFID, data from APQC’s Open Standards Benchmarking in logistics shows a majority of organizations have not adopted an RFID tagging strategy (Figure 1). The remaining respondents use three strategies most often:
- tag all products in manufacturing;
- place tags on products before shipping to comply with customer mandates (“slap and ship”);
- maintain separate inventories of tagged and untagged items.
Given the variety of RFID strategies organizations can adopt, it can be difficult to determine which strategy (if any) is best. To decide, organizations must consider multiple factors, including potential benefits to logistics operations and any customer requirements.
The potential benefits of RFID tagging on inventory management are well known. These include greater accuracy in tracking inventory, more efficient inventory counting and improved trend forecasting. However, organizations participating in APQC’s Open Standards Benchmarking indicate other potential benefits. These organizations were asked to select up to three of five possible benefits that they believe will result from implementing RFID tagging. One of the top benefits is meeting compliance requirements, which is in line with the rise in RFID tagging requirements from customers such as Walmart and the U.S. Department of Defense. The two other benefits identified most by respondents are improved distribution processes and reduced distribution center or warehouse cost.
To determine whether one RFID tagging method results in better logistics performance than the others, APQC looked at how organizations with different strategies perform on metrics related to distribution processes and warehouse cost.
