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When effectively implemented, RFID technology
can help manufacturers answer fundamental questions that they
have always struggled with: What quantity of goods should
we produce? When should these products be made? Where do they
need to be shipped? Where in the vast supply chain is that
shipment right now?
Early
pilot projects are showing that with timely and accurate answers,
manufacturers can run much more efficient forecasting, production
and distribution operations. In fact, by deploying RFID, "just-in-time
manufacturing" can give way to "real-time manufacturing".
Experts agree, RFID is the quickest way manufacturers can
manage raw materials and reusable assets, optimize assembly
processes, simplify product recall efforts, reduce out-of-stock
items, cut the amount of safety stock and reduce shrinkage
by 10 percent.
In
addition to providing benefit at the shop floor level there
will also be productivity gains and more accurate data throughout
the supply chain, resulting in improved inventory methods
that reduce labor costs and increase sales. For example, RFID
can reduce or eliminate the need for many manual processes,
such as hand-counting items to keep track of inventory.
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Manufacturers
will have to overcome many challenges and uncertainties before
RFID becomes commonplace. For one, they must grapple with
the issue of consumer concern about privacy. There also are
regulatory issues to deal with. For example, in order to attach
a tag to a medicine, pharmaceutical companies must get government
approval to change the labeling. Manufacturers also need to
integrate RFID with existing production systems and ensure
that the new technology works consistently and reliably. And
then they need to decide when to move out of pilot projects
and when to start tagging large volumes of products.
Finally,
as with most RFID implementation strategies (regardless of
industry) different categories of products produce different
paybacks from RFID deployments. Because of that, companies
that produce higher ticket products likely will adopt RFID
first.
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