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RFID Inventory Management vs Manual Inventory Management

August 25, 2022

RFID Inventory Management vs Manual Inventory Management

Managing inventory is a crucial process for any business, no matter the size. The traditional manual method of inventory management has been the go-to option for many years, but the RFID technology has come up with a better approach, making it a great alternative. While both options have benefits and limitations, this post will compare the two methods to help you make an informed decision about which inventory management system is suitable for your business.

Manual Inventory Management

Manual inventory management involves physically counting and tracking inventory levels, with the use of pen and paper or an Excel sheet. It is a time-consuming and tedious process, but it may be suitable for small businesses with relatively low inventory levels.

Benefits of manual inventory management

  • It’s the cheapest option as it doesn’t require any high-tech equipment or software.

  • It is a good option for small businesses with low inventory.

Limitations of manual inventory management

  • It is time-consuming, and manual labor can lead to human errors, leading to inaccurate inventory count.

  • Manual inventory management is prone to stock-outs and overstocking due to inadequate inventory control.

  • It is not scalable, inefficiency increases with volume, and it becomes more challenging to keep track of inventory levels as the business grows.

  • Manual inventory tracking also makes it challenging to comply with regulations such as First in, First Out (FIFO).

RFID Technology

RFID (Radio Frequency Identification) inventory management system uses radio frequency waves to transfer data from a tag to a reader. The system consists of RFID tags that can be embedded in product packaging or attached to the product, RFID readers, antennas, and specialized software.

Benefits of RFID inventory management

  • RFID technology saves time, reducing the time required to count inventory by 90% compared to manual inventory management.

  • RFID systems provide accurate real-time inventory data, reducing inventory errors, minimizing stockouts, and overstocking incidences.

  • RFID technology is scalable, perfect for businesses with high-volume inventory management needs, making it easy to manage inventory across multiple locations.

  • RFID inventory systems also provide traceability, enabling the business to comply with government regulations such as first-in, first-out (FIFO).

  • RFID technology reduces the need for manual labor; thus, there are fewer chances of human errors occurring.

Limitations of RFID inventory management

  • RFID technology comes with high implementation costs due to the need for specialized software, hardware, and training.

  • It may require customized RFID tags for specific applications, and these tags can be expensive.

  • RFID technology relies on radio frequency waves, and in some cases, there may be interference, which can impact the accuracy of the inventory count.

The Cost Comparison

The cost of implementing RFID technology vs Manual Inventory Management is an essential factor to consider when choosing inventory management systems. The cost breakdown is as follows:

Manual Inventory Management cost

  • Labor cost: includes the cost of wages, benefits, and overtime pay.

  • Hardware cost: it includes the cost of pens, paper, and barcode scanners.

RFID Inventory management cost

  • Hardware cost: includes the cost of RFID tags, readers, antennas, and software.

  • Labor cost: it includes the cost of implementing RFID technology, including training employees on how to use the system.

Overall, RFID technology has a higher implementation cost, which can be offset when considering long-term benefits such as increased accuracy, reduced theft, and minimal manual labor.

Conclusion

Both manual inventory management and RFID technology have their strengths and limitations. However, we recommend RFID technology as a more efficient and accurate inventory management system. The technology has proven to increase efficiency, accuracy, and productivity while reducing manual errors and costs associated with labor. A properly implemented RFID system can put your business ahead of the competition by providing real-time inventory data that can be used to optimize business operations.

References

  • Martínez-de-Pisón, E., Onieva, L., & Vassallo, J. M. (2014). RFID vs. manual in inventory management. International Journal of Business Information Systems, 17(4), 477-487.
  • Fosso-Wamba, S., Akter, S., Edwards, A., & Chopin, G. (2015). RFID adoption and warehouse management: a literature review. International Journal of Production Economics, 159, 59-72.
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