How to Find Losses In Your Distribution Center (DC) with RFIDs

How to Find Losses In Your Distribution Center (DC) with RFIDs

In distribution centers (DCs), lost shipments can have a significant impact on the bottom line. Identifying and minimizing losses is crucial for operational efficiency and profitability. Fortunately, Radio Frequency Identification (RFID) technology provides a powerful tool to help DCs uncover and address potential sources of loss. By implementing RFID systems, businesses can gain real-time visibility and insights into their inventory, enabling them to proactively tackle issues and optimize their operations.

What is RFID technology?

RFID is a wireless technology that utilizes radio waves to automatically identify and track objects or assets. It consists of tags or labels attached to items, which contain electronically stored information. These tags can be read remotely by RFID readers or scanners, allowing for seamless and real-time data collection.

RFID benefits

  • RFID Tracking. RFID utilizes radio waves to automatically identify and track items through tags attached to them. These tags contain unique identifiers and can be read by RFID readers or scanners. This technology enables real-time data capture, seamless tracking, and improved inventory management.
  • Total Stock Visibility. To leverage the benefits of RFID in loss identification, start by implementing RFID systems within your DC. This involves tagging your inventory, installing RFID readers at strategic points, and integrating the RFID data with your existing inventory management systems. The RFID system should be capable of capturing data on item movement, locations, and other relevant information.
  • Track Inventory in Real-Time. One of the primary advantages of RFID is its ability to provide real-time visibility into inventory. With RFID, you can continuously monitor the movement of items as they enter, move within, and exit the DC. This enables you to have accurate, up-to-date information on stock levels, locations, and any anomalies that may indicate potential losses.
  • Conduct Daily Inventory Audits with Automation. Use RFID technology to conduct regular inventory audits efficiently. Instead of relying solely on time-consuming manual processes, RFID enables automated and accurate data capture. By comparing the RFID-generated inventory data with your expected inventory, you can quickly identify discrepancies and potential sources of loss, such as missing or misplaced items.
  • Monitor Stock Movement. RFID allows you to track the movement of items in real-time. By analyzing this data, you can identify patterns or trends that may indicate losses. For example, if certain items consistently go missing or if there are unexpected delays or deviations in the movement of goods, it could signal potential issues. RFID helps you pinpoint specific areas or processes within your DC where losses may be occurring.
  • Enable Exception Reporting. Implement exception reporting capabilities within your RFID system. This means setting up alerts or notifications for specific events or conditions that deviate from the norm. For instance, if an item is scanned as it leaves the DC but not scanned when it arrives at its destination, an exception alert can be triggered, indicating a potential loss. This allows you to take immediate action to investigate and rectify the situation.
  • Analyze Data and Take Action. Collecting RFID data is only valuable if it is analyzed and acted upon. Leverage data analytics tools to gain insights into loss patterns, identify root causes, and make informed decisions. By analyzing the data, you can uncover trends, identify common areas of losses, and implement targeted solutions to mitigate them.
  • Continuously Improve Processes. RFID technology provides an opportunity to optimize DC processes and minimize losses on an ongoing basis. Regularly review and analyze the data captured by RFID systems, identify bottlenecks, and implement process improvements. This could involve redesigning workflows, enhancing security measures, or implementing new inventory management strategies.

What Is the Role of RFIDs in Verifying Incoming Shipments to the DC?

Imagine you’re working at a Distribution Center (DC), and a new shipment has just arrived. You have the task of verifying the incoming items to ensure everything is in order. This is where RFID (Radio Frequency Identification) technology steps in to make your job easier and more efficient. Throughout this article we will explore the role of RFIDs in verifying incoming shipments to the DC.

But how does the process of Verification with RID actually help me?

As mentioned, when it comes to verifying incoming shipments at the Distribution Center (DC), RFID (Radio Frequency Identification) technology can be a game-changer for you and your team. Imagine the ease and efficiency of quickly scanning products without the hassle of manual entry or scanning barcodes. With real-time visibility and instant updates to the inventory system, you will have peace of mind knowing that you are working with accurate information. And when exceptions arise, RFID technology will have your back, alerting you to any discrepancies so that you can swiftly address them. Besides that, with seamless integration into your Warehouse Management System, you and your company will experience a seamless workflow that saves time and reduces errors. Embracing RFID technology in verifying incoming shipments empowers you to work smarter, faster, and with confidence, ensuring a smooth and efficient supply chain operation at your DC.

Now I understand how RFID helps me with asset management and losses. What about frauds?

In the world of retail, battling against frauds has always been a challenge. One area that often raises concerns is vendor fraud, where discrepancies between what was promised and what was delivered can occur. But that is not all—transport fraud adds another layer of complexity to the mix. How can retailers combat these issues and protect their business? Well, implementing RFID technology to your company can definetily be a game-changer in detecting and preventing such fraudulent activities. During this article we will clarify how powerful RFID can be in helping safeguard your business. 

RFID and Vendor Fraud

Vendor fraud refers to deceptive practices conducted by suppliers or vendors, intentionally misleading retailers or businesses during the procurement process. It can involve various fraudulent activities, such as packing fewer items than agreed, misrepresenting the quality or specifications of products, or inflating prices. RFID technology offers a powerful solution to combat vendor fraud by providing enhanced visibility and control throughout the supply chain. By using RFID tags on individual items, retailers can track and monitor the movement of products in real-time, ensuring that the quantity and quality of items received match the agreed-upon terms. RFID-enabled automated systems enable swift and accurate reconciliation of received goods, minimizing the risk of errors or intentional fraud going unnoticed. Additionally, RFID’s item-level traceability allows retailers to identify any gaps or discrepancies in the supply chain, such as stolen or misplaced items during transportation, enabling timely action against fraudulent activities. By leveraging RFID’s capabilities, businesses can effectively detect and prevent vendor fraud, ensuring the integrity and transparency of their procurement processes.

RFID and Transport Fraud

Transport fraud refers to fraudulent activities that occur during the transportation of goods in the supply chain. It involves discrepancies between what is reported as being shipped and what is actually received, often resulting from theft or unauthorized access to the shipment. RFID technology plays a crucial role in combating transport fraud by providing enhanced visibility and security measures. By using RFID tags and readers, retailers can track and monitor the movement of goods in real-time, ensuring that the quantity and condition of items remain intact throughout the transportation process. RFID-enabled seals and tamper-evident tags can be used to secure transport boxes and pallets, making it easier to detect any signs of tampering or unauthorized access. Moreover, RFID-enabled systems facilitate the crosschecking of shipping documents against the actual goods received, minimizing the risk of fraudulent activities going unnoticed. By leveraging RFID’s capabilities, businesses can significantly reduce the occurrence of transport fraud, safeguard their supply chain, and ensure the integrity of their goods throughout the transportation process.

All my items are transported and moved inside boxes, how can RFID technology assist with its controls?

In the world of retail, the unfortunate reality is that due to time constraints, the verification process for incoming shipments is often rushed, leading to potential discrepancies going unnoticed. Even when goods are counted, it typically happens at a box level, providing only a partial view of the received items without revealing the actual quantity within each box.

Fortunately, RFID technology offers a revolutionary solution by providing granular visibility at the item-level. This means that retailers can accurately track and monitor each individual item, enabling the early detection of vendor and transportation fraud. With RFID, the job of loss prevention (LP) teams becomes more efficient as they can easily gather evidence and build strong cases against fraudulent activities.

Moreover, RFID ensures that stock levels at distribution centers (DCs) and stores remain accurate. By continuously updating inventory information in real-time, retailers can swiftly identify any discrepancies and take immediate action. This not only protects businesses from potential fraud but also enhances overall operational efficiency. With RFID technology, fashion retailers can proactively tackle vendor and transportation fraud, keeping their stock levels precise and their business secure.

What Is the Role of RFIDs in Reducing Internal Theft Within the DC?

RFID technology plays a significant role in reducing internal theft within distribution centers (DCs). By implementing RFID tags and readers, businesses can enhance security measures and increase visibility throughout the DC environment. RFID enables accurate and real-time tracking of inventory movements, making it easier to identify any suspicious activities or unauthorized access.

RFID tags can be attached to individual items or packaging, allowing for precise tracking of their location and movement within the DC. This level of visibility acts as a deterrent to potential thieves, as they are aware that their actions can be easily detected. Additionally, RFID systems can be integrated with security measures such as access control systems and video surveillance, providing an additional layer of protection against internal theft.

RFID technology also enables quick and accurate inventory reconciliation. By conducting regular inventory checks with RFID readers, discrepancies between recorded stock levels and actual inventory can be identified promptly, helping to uncover any instances of internal theft.

What Is the Role of RFIDs in Verifying Outgoing Shipments to the DC?

At last, we should turn our attention to the verification of outgoing shipments from the distribution center (DC). This step is crucial to ensure that the right products are being sent to customers or stores without any discrepancies.

  • E – commerce orders: One area where RFID technology is particularly useful in verifying outgoing shipments is in the context of e-commerce orders. With integrated RFID readers at workstations, packages can be quickly checked to ensure that the correct items are included. This streamlined verification process not only saves time but also eliminates errors, ensuring that customers receive the right products. This is crucial for customer satisfaction and helps prevent chargebacks or unnecessary returns.
  • Shipping to stores: In addition to e-commerce orders, RFID plays a significant role in verifying shipments to stores. By counting and tracking goods at multiple points, retailers can easily identify any suspicious differences or discrepancies. Comparing the outbound count from the DC to the items received at the store enables the detection of any potential issues that may have occurred during transport. This proactive approach allows retailers to promptly investigate and address any discrepancies, maintaining the integrity of the supply chain. Implementing RFID technology in the verification of outgoing shipments enhances accuracy, reduces errors, and provides valuable insights into the movement of goods, ultimately improving customer satisfaction and minimizing potential risks.

Where to start if you think RFID can help

Using RFID technology can help DCs identify losses, minimize inventory discrepancies, and improve operational efficiency. By implementing RFID systems and utilizing real-time visibility, businesses can proactively address potential sources of loss and optimize their distribution center operations. With continuous monitoring, data analysis, and process improvements, DCs can effectively reduce.

The most appropriate place to start is to reevaluate those business processes and internal controls you wish could be automated. By integrating RFIDs with ERP (or WMS) Systems, firms can scan their inventories faster and more accurately – while relying less on manual resources – to provide real-time inventory insights, which allows the organization to significantly increase shipping accuracy 

Our Supply Chain Advisory team has deep experience in reviewing and establishing inventory management and tracking programs using advanced technology (RFIDs) for internal controls and regulatory compliance. 
Contact us today to learn more.

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