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How RFID Integration and Blockchain Benefits Supply Chain Management

Supply chain management is the latest in a long line of industries to explore the potential of new technologies. RFID and blockchain are two such technologies that hold a lot of potential for how supply chains are managed. To fully understand the power of RFID integration, and how blockchain can renew approaches to supply chain management you first need a better understanding of what they are and how they work. Let’s start with blockchain.

What Is Blockchain?

Blockchain is also known as Distributed Ledger Technology. In essence, this technology records different kinds of information in a completely transparent, irrefutable, and immutable, or tamper-proof way. A blockchain is a list of data or transactions each cryptographically signed by its owner and are distributed across a network in which all entries can be read by anyone in close to real time. This makes it harder for anyone to gain singular control of the system to hack or tamper it with.

What Is RFID?

Then there is RFID, which is short for radio frequency identification. RFID technology uses electromagnetic fields to identify and keep track of tags that are placed on objects. The frequency means that objects can be easily scanned and their locations recorded, amongst other advantages.

Put the potential of blockchain and RFID integration together, and you have a powerful solution that can radically transform supply chain management as it is known today. Keep reading to find out how:

How Is RFID Integration Used In Supply Chain Management?

There are many benefits to introducing RFID in supply chain management. Some of the biggest challenges in supply chain management include collecting and organizing large amounts of data, lowering operational costs, and mitigating risks related to security while still adhering to regulatory standards.

With RFID, many of the above issues are addressed. Unlike barcodes, RFID tags can be scanned without needing a clear line of sight to the item. Think about how much time is saved in the product logging process, and how easy it is to keep tabs on everything being stored and secured. In grocery stores, for example, RFID tags can be used to keep track of the freshness of produce and the amount of stock. 

RFID, which can be thought of as an automated data collection system, greatly improves the quality and transparency of the data being logged by various businesses. Since the data needs to be as close to real-time as possible, this method is far more effective than barcode scanning and other alternatives used in the past. 

The other major advantage of RFID is how much easier it is to keep track of stock and trace issues, allowing them to prevent counterfeiting, damage, or defects from spilling into supply chains to the end customers. In most cases, RFID-based sensor tags can be impervious to most kinds of damage including humidity, general exposure, and even human error. Another benefit is that RFID relies far less on line of sight or tag positioning. 

Ultimately, these technologies lead to higher efficiency, real-time visibility, and most importantly, increased customer trust and satisfaction for manufactures, distributors, and eCommerce businesses.

What Are the Benefits of Blockchain for Supply Chain Management?

The reason blockchain is often mentioned in conjunction with RFID is because it holds a similar and integrative promise for supply chains. Before we start, however, there is the issue negative perceptions around blockchain and cryptocurrency to address. 

It’s important to separate the idea of cryptocurrency from the idea of blockchain, or a distributed ledger. While crypto and blockchain function together, they are not exclusively connected. As a distributed ledger technology in and of itself, blockchain can be thought of as a decentralized and immutable database that stores and manages information in “blocks” that are interlinked or chained together. 

Blocks are added one by one so that incoming data follows a chronological order. Blockchain is also decentralized, which means that there is no central or single owner, and each data entry is immutable, which means once it is logged, it cannot be altered. This makes it more difficult for any single party to try and tamper with the system or gain majority control of it. Furthermore, and equally as important: the data that each block contains is irrefutable or difficult to prove that it is untrue.

In supply management, this ledger technology is invaluable: 

  • Security and tracing are greatly improved
  • Transactions are fraud-proof and transparent
  • Cuts down on paperwork needed to handle operations. 

The last point is important because large parts of the international supply chain industry are still dependent on paper-heavy processes that prove to be time-consuming and expensive.

Blockchain also offers the promise of quick and cheap payment processing and proof of funds while preventing issues like counterfeiting through its signature smart-contract technology. The immutable data recorded by blockchain is permanently recorded and easily stored – compared to traditional paper-filing systems this saves companies the effort and cost of storing. 

For customers or end-users, the use of blockchain also means major benefits like faster time to delivery, lower shipping costs, improved tracking, and better customer service aided by better information tracking.

Now it’s time to look at how the two technologies synergize together.

Why Should RFID Be Integrated Into Blockchain For Supply Chains?

With the individual purposes and advantages of both RFID and blockchain having been explored, it’s time to come full circle and talk about how they act in synergy. Blockchain with RFID integration is a powerful tech stack for supply chain management and is rapidly growing in adoption around the world. 

What this means for supply management chains is a drastic improvement in how information is tracked, logged and managed. Significant changes in how security, transparency, speed and trust make this move a strong one for companies focused on growth and increased customer satisfaction. 

This hybrid model, while initially costly to implement, ultimately saves companies money over the long-term. Analytics and predictive capabilities within the technology also help optimize supply chains by identifying different risks before they can have an impact.

If you’re interested in using blockchain with RFID integration into your supply chain, you should work with an expert that can meet the specific needs of your business. Our team of operations experts can help you manage resources, integrate new technological solutions and scale to your requirements as you grow. 

Contact us today and sleep soundly knowing your supply chain data and processes are being managed securely through RFID integration.

January 20, 2021

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