40% Warehouse Labor Costs Reductions With RFID

Posted by on Dec 17, 2014 2:50:00 PM


You might have heard that RFID’s are one of the latest improvements in warehouse efficiency - but what exactly are they? Radio Frequency Identification (RFID) is an Automated Data Collection technology that is used to make industry operation at warehouses and distribution centers more efficient.

RFID’s use radio-frequency waves to transfer data between a reader and a moveable item. They can quickly categorize, track, or identify any item. This wireless technology increases productivity in a warehouse because unlike bar codes - which need to be scanned manually - RFID’s broadcast a signal with information about the product they are attached to with the location of the product in the warehouse.

RFID infrastructure products include fixed, handheld and mobile readers, antennas and RFID tags. These are combined with enterprise manufacturing software and applications to deliver operational benefits that impact almost every sector of a warehouse, including receiving, put-away, picking and packing, cross docking, as well as confirming and shipping orders.

RFID for Higher Velocity in Receiving

Many warehouses, factories and distribution centers use traditional barcodes to tag items, pallets and cases during the receiving process. These items are scanned one at a time, which results in a time consuming operation. RFID tags make receiving easier by allowing shipments to be automatically identified as they pass through dock doors.

Shipments can then be verified against the purchase order and instructions to the worker can be sent out. All goods are organized and back orders, damaged goods and normal shipments are ready to be sent to their proper locations in the warehouse.  

Item Tagging At the Point of Manufacture

RFID technology can be used to tag items at their manufacturing point. This provides more precise inbound and outbound figures which are vital for the success of a business. This method can be especially beneficial for manufacturers of luxury goods to verify authenticity, and decrease theft. RFID’s offer superior tracking capabilities over traditional barcodes and allow for greater automation of verification processes.

Another use for RFID’s at manufacturing is when a company and its suppliers are able to share location and various other information of parts and goods. For example, the tire company that supplies tires for Tesla vehicles would be able to provide information to Tesla on the location of the tire and the order and batch of that shipment. This would allow Tesla to automatically reorder wheels if stocks run low to prevent any delays in manufacturing.

Bonus: The Ultimate Barcodes vs RFID Comparison Guide. Which technology is best  for your business?

Real-Time Management of Assets

Asset management is another field that finds RFID useful. Active or passive RFID tags can be attached to assets such as equipment, containers as well as people, where they give real-time status and location of the items. There are special tags that are used for certain types of assets and these systems have been employed in closed loops systems involving returnable assets.

With the arrival of real-time location systems (RTLS), a system that facilitates real-time asset management, the info on assets has never been more granular. A good example of where RFID is used for asset management is the announcement by the Department of Veterans Affairs (VA) that it had initiated a $543 million project to incorporate the RTLS program on all its 152 hospitals as well as 7 outpatient pharmacies. The project involved attaching millions of RFID tags to surgical instruments, medical equipment and supplies in order to have real-time information of their assets.


When an order is dispatched from a warehouse, the retailer will receive information on when the goods will arrive. Goods that are tagged with RFID’s can be tracked directly to the store in order to verify the safe arrival of each pallet. The data from this shipment can be analyzed and compared to the expected shipment and any discrepancies are reported and resolved quickly. RFID usage in receiving increases the efficiency of operations and accuracy of data by eliminating human error.

In 2005 Wal-mart announced that their top 100 suppliers are required to tag all their deliveries, in the past years many major retailers have followed and implemented this procedure. Since then, use of RFID’s grows across many different industries such as agriculture, tourism, and technology.

More Traceability Examples

RFID tags can also be used for tracing equipment. This is a feature that can be employed by the government to track useful information such as manufacture date, expiration date, shelf life, batch and serial numbers. Records can be stored and updated electronically and wirelessly when need be.

An example of this is libraries that have replaced barcodes with RFID tags on library items. The tag contains identifying information that an RFID system can track allowing library patrons to self checkout books and for the library to manage inventory more efficiently without increasing labor costs. This system has been implemented in many libraries, including the Vatican Library in Rome which houses many rare books which benefits even more so from the tracing capabilities of RFID tags.

Benefits of RFID Technology

  • Reduction Of Labor Cost

The cost of labor in a warehouse decreases with a RFID system that can tackle various tasks at once such as scanning, tagging and counting items. These decreases can be significant, resulting in realized labors cost reductions of 7.5 percent or more in warehouse applications, and 5 to 40 percent in regional distribution centers. 

  • Increased Inventory Accuracy

RFID adoption reduces inventory errors by ensuring that inventory stock is always reported correctly and at a quicker speed. Tracking goods more accurately will decrease inventory data discrepancies at any stage of the process. This will also decrease any inefficiency that results from goods being out of stock. In some cases goods can be automatically reordered if a system is set up using RFID’s to alert when there is low stock of that particular item.

  • Increased Security

Using RFID tags protects against theft, loss and counterfeiting, this is especially applicable to luxury goods, electronics, and goods that contain sensitive information.

  • Enhanced Customer Experience

With better management of inventory, RFID’s ensure that deliveries and shipments arrive at the correct time and location. This helps improve demand forecasts and decreases the possibility of out of stock goods. As a result customers are able to get what they want, when they want it.

  • Decrease in Picking Errors

RFID will decrease errors overall, but especially picking errors which can be particularly costly and time consuming. The benefits of RFID tags in picking start with the fact that a warehouse picker can know what’s in a box even before opening it and conclude in being able to verify that the correct item was picked even after shipping.

benefits of RFID

As labor and logistic costs skyrocket and there is an ever increasing pressure on businesses to provide goods faster and more accurately to consumers, as a result RFID adoption is not surprisingly on the rise. As with many new technologies cost of adoption decreases yearly and more and more warehouses are able to streamline their processes with this wireless technology. As with any investment warehouse management will need to consider the cost/benefit applications of RFID technology in order to determine whether the cost of adoption is justifiable for their particular business.


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