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Is RFID Essential in Manufacturing?

One day, all large manufacturers will use the technology to cut costs and streamline their operations.
By Mark Roberti
Sep 05, 2017

After I wrote last week that radio frequency identification technology will be a must for all retailers in the future (see Why RFID Is Essential in Retail), several readers sent me emails asking if I thought it would also be a must in manufacturing and logistics. I do believe that all large manufacturers and logistics companies will one day use RFID, but it's difficult to say that they won't survive without it. Let me explain why.

For retailers, inventory accuracy is the key to surviving in a world in which a similar product is just a click away. Manufacturers are facing global competition like never before. They are under a lot of pressure to lower costs, streamline operations and deliver the correct product to the proper place at the right time.

If you make consumer items—area rugs, ceramic plates, furniture, garments or any of a million other products—a retailer could switch to a competitor that is using RFID to make them cheaper and deliver them on time. But there is the issue of brand loyalty. If Apple didn't use RFID and its supply chain was not as efficient as Samsung's, for instance, would loyal iPhone users switch to the Galaxy S because it was cheaper? Perhaps not.

Manufacturers that sell to other manufacturers may be protected, at least for a while, by historical relationships and unique expertise. If you made a part for a car or airplane that you had a patent for and no one else could make, then Honda or Boeing could not throw you over because your shipments were only 92 percent accurate or your operations were not as efficient as they could be.

That said, RFID clearly offers a better way to manage raw materials, parts, subassemblies, tools and work-in-process (WIP). Scaling a manufacturing operation to produce millions of anything is hard. Managing an inventory of millions of parts a year and making sure parts get to the line on time is a challenge.

Manufacturers have come a long way in my lifetime. With Six Sigma, kanban and other efforts, defects have been reduced, quality improved and deliveries made more accurate. But RFID, because it allows you to distinguish between different units of the same part, doesn't require line of sight, nor does it require human involvement, so the technology offers a better way to manage inventories.

RFID also allows you to collect data automatically to analyze and better manage the movements of parts, subassemblies, tools, WIP and so on. A decade ago, Killdeer Mountain Manufacturing pioneered the use of RFID to match its production with the consumption of its customer, Boeing. It used RFID to offer Boeing visibility into the status of parts it was making for Boeing military aircraft (see Aerospace Contractor Using RFID to Enable Just-in-Time Manufacturing). This is the future of manufacturing—and, for some, the present.

Each manufacturer needs to make tough decisions regarding what to invest in and when. But clearly, as a growing number of companies show the value of using RFID in manufacturing, it will become more apparent that manufacturers should be using the technology to improve production, cut costs and tie themselves more closely to their customers.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

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