Real-Time Tracking Systems Key to Ease Supply Chain Disruptions

Supply chain disruptions have become a major challenge for the global economy since the start of the COVID-19 pandemic. Shutdowns of manufacturing facilities in China, lockdowns in several countries across the world, labor shortages, robust demand for goods due to an e-commerce boom, disruptions to logistics networks, and capacity constraints have resulted in big increases in freight costs and delivery times. Global supply chains are clogged up amid booming consumer demand. These trends are expected to remain unchanged through the holidays of 2021. Smaller companies have reported up to nine-month fulfillment delays on orders from China, while larger ones are struggling to keep inventories filled in North America and Europe.

One of the major reasons for the disruptions has been the surprising resilience of both U.S. consumption and Chinese production post-pandemic. The U.S. recession that followed was relatively short, and wealthier Americans are now spending avidly. Chinese manufacturing also recovered faster than expected from its crisis period early last year. However, shipping companies had already cut their schedules, causing disruptions that are still reverberating through the overstretched global system.

A shortage of shipping containers, which are critical to modern supply chains, is contributing to the disruptions. The containers normally circulate worldwide, but many are now stuck in North America. For every 100 containers that arrive in North America, only 40 are sent back to Asia or Europe. Excess containers are piling up in Los Angeles and other American ports while Chinese suppliers fight for them. It will take months before container manufacturers in China ramp up to meet demand.

Another factor is fears of another wave of coronavirus outbreak and as well as impending lockdowns. Recent lockdowns in Vietnam after mass reshoring efforts have disrupted shipping worldwide. This issue is particularly acute in China, where most foreign travel remains off-limits, including a lot of outbound travel. Ports are especially sensitive spots, with regular shutdowns for mass testing in the case of infected employees.

The ongoing disruptions have further highlighted the need for real-time traceability so that executives can identify bottlenecks and take a more proactive approach to get around disruptions. Radio-frequency identification (RFID) can be an effective solution to get past these hurdles. RFID uses electromagnetic fields to identify and track tags attached to objects. When triggered by an electromagnetic interrogation pulse from a nearby RFID device, the tag transmits digital data, usually an identifying inventory number, back to the reader. It can be used in logistics and inventory management to obtain granular visibility in real-time to pinpoint inefficiencies. RFID gives companies a comprehensive overview of ongoing processes and where/when exactly the lags are occurring by automating the ‘check-in’ process for items at each point within the supply chain.

RFID can also be applied to enhance rapid fulfillment. Many major retailers have introduced omnichannel shopping initiatives such as BOPIS (Buy Online, Pick-up In-Store), BORIS (Buy Online, Return In-Store), and curbside pick-up. This requires a sustained level of inventory accuracy and a speedy fulfillment and replenishment process. With the help of RFID solutions, every inventory operator can swiftly report precise stock levels to streamline rapid fulfillment. A growing number of logistics operators and retailers now opt for RFID to enhance their operations efficiency and ‘future-proof’ their in-store inventory management process.

RFID tags can also be placed in orders and packaging items such as totes, boxes, pallets, and containers. Through these tags, companies and customers can validate that orders are genuine and in acceptable condition. It can also track the entire lifecycle of a product from manufacturing to sale. This could be a popular option while shipping high value items or large volume business-to-business B2B orders to ensure product integrity. Although global supply chain disruptions seem to be a sustained issue, solutions like RFID that allow real-time traceability at a granular level can help executives look for effective alternatives to overcome ongoing challenges.