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For Small to Midsize Container Companies, RFID Makes Sense

Based on a study involving a real-life logistics provider, the average payback period for an EPC Gen 2 RFID implementation is between 12 and 24 months.
By Melanie Hippler
Sep 28, 2009The decision to deploy radio frequency identification can be a difficult one, as an organization considers the costs and operational changes resulting from the technology's adoption. Even with the increasing demand for cargo to be shipped via container, many small to midsize companies have yet to invest in track-and-trace devices as they wait for the technology to become more standardized, and for costs to become lower. Therefore, these businesses continue employing labor-intensive procedures (phone, fax and e-mail), particularly when locating a container during shipment.

Outfitting each container with a permanent rugged passive UHF EPC Gen 2 RFID tag enables the unique identification of that container throughout its full lifecycle. In contrast to visual identification, such as labels printed with text or bar codes, RFID is a more efficient automated option.

Container tracking can deliver several benefits for supply chain management. The main demonstrable advantages that RFID tracking can provide are cost reductions and revenue increases that may add up to several hundred dollars per container, smaller inventory, fast transportation and routing troubleshooting, lower insurance rates, greater efficiency and heightened security.

Reduction in direct labor cost is undoubtedly one of the fastest paybacks to RFID. However, this is valuable only when such a reduction is tied to increased data input and the elimination of redundant, error-prone manual tasks, such as keyboard data entry, bar-code scanning and paperwork. Various studies have estimated that an enterprise can realize labor savings of 15 percent to 50 percent of the time employees spend in the following areas:

• reduced time to determine container location
• automation of record keeping with data written to and derived from a tag
• automatic updating of the system regarding container location
• real-time condition monitoring

Companies deciding whether or not to invest in RFID technology do not often consider the first item to be relevant. But great savings can be made in this area. The ability to automatically capture data regarding a container's location enables a reduction in manual labor by as much as 50 percent, and an estimated 10 percent to 15 percent reduction in errors. It also allows for improved customer service, by being able to report a container's actual location at the moment such information is required.

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