Supply Chain Metrics: Choose an RFID Strategy Carefully

RFID tagging offers the potential for more efficient logistics processes, but be wary of additional costs and longer delivery times.

Sep. 6, 2012 Becky Partida, knowledge specialist, supply chain management, APQC

APQC's data indicates that there is no clear best choice among RFID tagging strategies. Organizations that have adopted a specific tagging strategy perform better on some logistics metrics than on others. When the potential for RFID requirements from customers is considered, the situation becomes more complex.

Percentage of Sales Orders Delivered on Time

One metric related to distribution processes is the percentage of sales orders delivered on time. Figure 2 presents the performance on this metric for organizations without RFID tagging strategies as well as for organizations with the top three RFID tagging strategies presented in Figure 1.

Although the difference among the groups is not significant, organizations that tag all products during manufacturing have a slightly higher percentage of sales orders delivered on time, and all organizations with an RFID tagging strategy perform higher than organizations without RFID. This could be because RFID tags make items easier to find during the packing and shipping process, and organizations that tag items during the manufacturing process do not have to spend extra time tagging items before shipping.