Using RFID technology For Real-time Inventory Tracking

WBSP073: Using RFID for Real-Time Inventory Tracking w/ Andrew Johnson

RFID technology has been available for a long time, but its adoption has mostly been limited to high-value assets. Many manufacturers are skeptical about using RFID technology in their supply chain networks. They often overlook its potential to track everyday items and serve as an excellent replacement for barcode labels. Unlike barcode labels, which require warehouse and production workers to hold a scanner and scan each item, RFID tags can significantly save time, speed up the scanning process, and provide real-time visibility and replenishment of inventory.

In this podcast, our guest, Andrew Johnson, an expert in supply chain technology and the leader behind ShelfAware, shares valuable insights on how RFID tags have evolved and how this technology now tracks not just high-value items but also everyday products. Additionally, he talks about the problems with traditional vendor-managed inventory systems and how RFID technology can solve these issues. By providing a smooth, real-time inventory tracking system for manufacturers, RFID technology offers a powerful alternative to old methods.

What is RFID and How Has It Evolved?

RFID, or Radio Frequency Identification, has existed for some time. Initially, it was costly and complicated. However, recent improvements have made RFID more affordable and reliable, making it an excellent tool for inventory tracking across various industries.

Advantages of RFID and Inefficiencies in Traditional VMI Systems

RFID tags offer several advantages over traditional barcode systems. Unlike barcodes, which require a direct line of sight to be read, RFID tags can be scanned from a distance and through certain materials. This ability enables faster and more accurate inventory tracking. Moreover, RFID tags allow you to scan multiple items at once, which saves time, reduces costs, and minimizes errors.

Traditional vendor-managed inventory or VMI systems, on the other hand, use outdated 1980s technologies and are inefficient. These systems, similar to coil vending machines, require manual scanning and management, involving physical inventory checks and complex barcode systems. This approach is time-consuming, error-prone, and disrupts supply chain. Many VMI systems require distributors to visit factories, using clipboards or barcode scanners to manage inventory. This method is inefficient and fails to take advantage of advancements in internet and remote monitoring technologies. Therefore, it is clear that traditional VMI systems lag behind modern solutions.

Implementing RFID in Your Supply Chain

There are two primary approaches to using RFID into your supply chain:

  • Manufacturer-Led Implementation

Manufacturers can encourage suppliers to adopt RFID systems. This approach can help widespread adoption and provide manufacturers with better visibility into their inventory, aiding in more accurate supply predictions.

  • Supplier-Led Implementation

Suppliers can take the initiative by using RFID in their vendor-managed inventory (VMI) systems. Although this method may take longer to establish, it can scale efficiently over time. Suppliers can manage inventory across multiple locations without significant additional equipment, saving money and enhancing customer service.

Challenges in Using RFID Technology

Although RFID offers many benefits, its adoption has faced some challenges. Initially, radio waves struggled to operate around liquids and metal objects. However, advancements in technology have reduced these issues. Additionally, RFID tags have become more cost-effective. Despite these improvements, the most significant challenge now is that some manufacturers lack the necessary IT infrastructure to handle and utilize RFID data effectively. Therefore, upgrading data management systems or investing in new technology may be required to fully utilize RFID capabilities.

Using RFID Technology with Your Existing Systems

ShelfAware simplifies the use of RFID technology without requiring extensive changes to existing systems. They provide various integration options. For instance, companies can use simple data imports for basic needs. Additionally, they offer advanced connections that allow real-time data exchange with common business software. This enables automated tasks like purchase orders and inventory tracking. For more complex needs, API integrations facilitate real-time data exchange between ShelfAware and ERP systems like SAP and JDEdwards. Consequently, businesses can seamlessly incorporate RFID technology into their existing operations.

Now, RFID tags are also affordable, costing about five cents each. Additionally, you can easily print and encode them using Zebra ZT410 printers. Moreover, the tags enhance inventory management by providing real-time visibility and transparency. You can track this information using handheld guns or fixed scanning stations, thereby improving overall efficiency.

However, some manufacturers may still face difficulties with internal data management, complicating RFID integration with other systems. Therefore, there’s need for companies to address these data management challenges to maximize RFID technology benefits.

The Technology Behind ShelfAware

ShelfAware operates as a web-based application designed to connect suppliers and consumers more easily. It integrates with existing ERP systems of both parties without replacing them. The main technology, RFID, allows suppliers to attach RFID tags to product packaging, making smart packaging that can be monitored remotely. When inventory is used on the factory floor, the consumption data is immediately reported to the supplier. This ensures timely restocking based on actual demand rather than forecasts.

This approach ensures that supply chains are lean and efficient, with real-time visibility into inventory levels. Manufacturers benefit from an all-in-one supply chain platform, allowing them to scale the system across multiple product verticals and suppliers seamlessly. This transparency and accountability ensure that inventory levels are optimized, reducing the risk of running out of stock or having too much inventory.

Even though the technology has existed for over 30 years, it has only recently become practical for tracking low-cost items. The entry barrier for suppliers is quite low, needing just an RFID printer and a wireless RFID scanner for inventory checks. The RFID tags themselves cost about a nickel each, and the software is offered as a service, making it both accessible and scalable.

Real-World Application: A Success Story

One of the first successful integrations of ShelfAware happened with Eskridge Manufacturing, a company that makes highly engineered gearboxes. Initially, they used ShelfAware to manage O-rings and gaskets, covering about 250 inventory SKUs. The system worked so well that Eskridge’s management decided to expand it to other product categories, such as janitorial supplies, MRO supplies, fasteners, and hoses.

The scalability of ShelfAware enabled Eskridge to manage multiple product lines through independent suppliers on a single platform. This all-in-one approach gave Eskridge real-time visibility and transparency, ensuring they never ran out of essential inventory. The system’s efficiency increased inventory turnover rates, greatly enhancing the company’s supply chain management.

Security Concerns With Using SelfAware RFID technology

Security is a major concern when linking external systems to a manufacturer’s network. ShelfAware tackles this by setting up separate networks or using cellular connections, ensuring manufacturing data stays secure. Additionally, RFID tags are encrypted, keeping the information protected. Each tag has a data key that unlocks detailed information in ShelfAware’s database, allowing for secure and efficient inventory management.

The Future of Manufacturing with RFID

To stay competitive, U.S. manufacturers must adopt new technologies. Countries in Southeast Asia have already embraced automation and data-driven methods. Therefore, U.S. manufacturers need to be open to innovation and actively use software and cloud solutions from other companies to improve their operations. By constantly looking for improvements and trying out new technology, manufacturers can achieve more success globally.


RFID technology stands as a game-changer in supply chain management, offering unmatched efficiency and transparency. By overcoming implementation challenges and investing in strong IT systems, manufacturers and suppliers can fully harness RFID’s potential, leading to major improvements in their operations. As the industrial world keeps evolving, embracing these advancements becomes essential for staying competitive and achieving long-term success.

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