How to RFID-Enable Your Warehouse

By Jennifer Zaino

These six steps will help you determine whether RFID is the right option for your warehouse operations—and, if so, how to proceed along the path to deployment.

In warehouses around the world, many employees still manually record receiving, picking, packing and shipping activities, and that information is communicated after the fact to warehouse management systems (WMS).

That may be OK for some companies, depending on factors such as the type of warehouse, the kind of goods stored there, the value of those items and the cost of labor. But for those organizations whose objective is to improve efficiency in terms of identifying and locating inventory, or to ensure that goods arrive where they are supposed to go when they are supposed to be there—or both—some kind of automated identification system is generally warranted.

Of course, many warehouses are already performing some automatic identification with bar codes. But the technology has limitations: For instance, workers must still spend time unloading pallets to scan the bar codes on each box on a pallet before products can be moved into the warehouse. And if the warehouse is a link in a cold chain, bar-code scanners won't be effective, because condensation can build up on the scanner window as employees move in and out of freezing temperatures.

RFID provides many organizations with warehouse operations a promising alternative for improving inventory throughput and accuracy, as well as enabling cost savings. This includes consumer packaged goods manufacturers that are already tagging pallets and cases for customers just before they leave their facilities, in addition to companies in other industries that are not yet employing RFID.

The following six-step plan is based on the RFIDeploy program offered by Intermec, which designs and manufactures RFID devices and provides accompanying consulting, technical and software services. It is intended to help you determine whether RFID is the correct option for your warehouse operations—and, if so, how to proceed along the path to deployment.

1. Identify the business problem.

While warehouses in various industries have different processes, the first step for any company is to answer the question: What business problems do you need to solve? Common answers include:

  • Gaining better visibility into—and a more accurate picture of—inventory
  • Reducing errors associated with warehouse operations
  • Increasing the efficiency of stowage receipt, which can cut the number of receiving lines and free up individuals for more critical tasks
  • Reducing the high rate of mis-picked orders that don't match shipping information
  • Supporting business growth, as distribution goes from national to international and accurate inventory becomes an increasingly pressing priority

The answers to this question will form the foundation for understanding whether RFID is the right choice for your particular needs. "We believe it is very important to understand the business problems the client is trying to solve," says Chris Kelley, Intermec's director of RFID and data capture, "and let the technology evolve from that."

Some warehouses, for instance, lack a natural, logical location for inventory. Since inventory changes location based on the time of day, or the day of the week, a real-time locating system (RTLS) may be an appropriate choice for obtaining an accurate picture of items in such a dynamic environment. In another warehouse, operations might be very crisp and orderly, and a company might just need to know when a pallet arrives, which can be ascertained using passive RFID.

2. Determine RFID's feasibility in your environment.

Once you've defined your business problem, you should construct a formal business case. But before you can do that, you'll need to perform a feasibility analysis to determine if RFID is a realistic and practical solution for your needs. You should also consider factors such as the business processes already in place, the particular environment—indoors and pristine, or outdoors and chaotic—types of inventory and budget.

"Sometimes clients think they need RFID," Kelley says. "Typically, someone is enamored or focused on the technology and looking for a problem to solve, vs. what we ought to do, which is understand the business need and determine what are the right ways to support it."

The feasibility analysis provides an objective and detached review of what you are ultimately trying to achieve, enabling you to decide whether technology is the answer and, if so, what type of technology. This high-level exercise will ensure that your goals are formalized and well understood—and it could save you wasted time, energy and money by determining that RFID can't support your business goals, processes and application environment.

Say, for instance, you define your overall goal as reducing costs; you have more items than you need in a warehouse, or you ship out extra items to customers. A feasibility analysis could reveal that the bar-code processes currently in place for scanning incoming items only record an average of about 15 percent of all receipts, and typically miss 15 percent of outgoing shipments. That would clearly show an opportunity for RFID technology to help cut costs by increasing accuracy, thereby helping you avoid over-ordering or over-shipping items into and out of the warehouse.

On the other hand, the feasibility analysis could reveal that RFID is not your best option. You might discover, for instance, that while RFID could improve one process, it would disrupt five others. Or you might find that bar codes are a more economical choice than RFID in warehouses full of metal tubes; you could solve the performance problems of RFID tags attached to metal objects, but at a cost. RFID might not even trump decidedly non-technical solutions, such as hiring additional workers in regions of the world where labor is cheap and plentiful. "Maybe in Washington state, the best way to solve a problem is with an RFID system," Kelley says, "but in a developing country, the way to solve that may be to hire some more people."

If the analysis reveals RFID to be an appropriate solution, you can then create a formal business plan. In that case, you will need to validate your goals against technology options and ROI scenarios.

3. Determine the specific RFID hardware and setup you require.

According to Kelley, the next step is to choose the technology solutions that match the processes you're trying to improve. According to Intermec, you need to:

  • Decide which products—pallets, cases or items—you wish to tag, where to apply the tags to get the best read rates, and where in your production process you'll do the tagging
  • Determine optimal types, quantities and locations for RFID interrogators and antennas
  • Choose tag programming data and format
  • Decide what read rate percentages are acceptable

Keep in mind that in a warehouse environment, you could have RF-friendly products, such as paper towels, co-existing with RF-unfriendly products, such as cases of bottled water or metal cans of paint. To get successful read rates, Kelley says, you might require a variety of tags or antenna designs.

Economics will also play a role in how and where you deploy RFID. Say, for example, you've identified your business problem as being a high turnover in warehouse staff, which is impacting shipping costs and customer satisfaction; new employees can't tell one dock door from another, so they load the incorrect pallet onto the wrong truck. To ensure that the right shipments get to the proper location, you could deploy RFID technology on forklifts, or on portals on the dock doors.

"While it is typically more expensive to equip a forklift-truck than a dock door with RFID, one forklift can usually handle the load for four dock doors," Kelley explains. "So if you have a lot of dock doors, it actually could be more cost-effective to RFID-enable the fork-truck than the dock doors." (See How to RFID-Enable a Forklift.) This step can also help organizations nail down their budgets, because they would then know exactly what they needed to do.

4. Conduct a site analysis.

Most RFID systems, such as those conforming to EPCglobal Gen 2 requirements, operate in an unlicensed band, and there could be other users of that band that you might not control. "You definitely need to do a site survey to ensure the radio spectrum you intend to use is available and clear," Kelley notes.

According to Intermec, the site analysis serves as a reality check to help ensure that a proposed design for deployment can be realized effectively, and that success criteria can be met or exceeded. (See How to Perform an RFID Site Survey.)

5. Follow up with testing.

Once you choose the specific RFID technology and install it on site, you'll need to test and validate the system. Before moving to the pilot stage, it's a good idea to first conduct a proof-of-concept by setting up a parallel-track environment—for, say, receiving or stowing items—that exists outside the production environment. That way, you can work out the kinks before introducing RFID into your live processes.

At that point, you can move to the pilot stage, where you conduct controlled tests in a live environment. If you're deploying RFID in an automotive warehouse, for instance, you might only test how well RFID can track small-lot parts, such as lug nuts or seat belts. If all goes well, you're ready for a broad deployment.

6. Link RFID data with your warehouse management system.

Of course, RFID-enabling your warehouse is about more than just interrogators and tags. "You have to have the systems to act upon the data," Kelley states, "and present it to you in a meaningful way." That's what your warehouse management system is for.

Many WMS vendors have built in support for RFID—whether EPCglobal Gen 2 data in the retail supply chain, or other data formats common for a particular industry. But if you are not using such a WMS, you might need RFID middleware to filter and process the tag data and connect the data with the WMS software. (See How to Choose RFID Middleware.)