Inventory Management Using Industrial IoT And RFID

- Oct 16, 2019-

According to recent research, only 33% of manufacturers use inventory management software, and the remaining 67% still rely on excel or paper methods. They spend an average of 18 hours a month writing down the inventory details on paper, and then entering the information for each item into a spreadsheet. However, labor intensity is not the only problem - Marketwatch estimates that 88% of spreadsheets contain error messages.

The good news is that with the Industrial Internet of Things (IIOT) and RFID, manufacturers can solve problems related to manual methods and get a real-time view of their inventory.

What is the level of IoT-driven inventory management?

Smart inventory method: What is behind it?

In an inventory management solution based on industrial IoT and RFID, any individual inventory item to be tracked will be tagged with RFID tags. Each tag has a unique identifier (ID) that contains encoded numeric data about the inventory item, such as model number, lot number, and so on. The tag is scanned by an RFID reader. After scanning, the reader extracts the ID of the tag and transmits it to the cloud for processing.

In addition to extracting the ID of the tag, the cloud also receives data about the reader location and read time. Based on this data, the cloud uses the corresponding ID to indicate the location of the item, visualize the results, and display real-time updates of inventory item movements to solution users, allowing them to monitor inventory from anywhere using a smartphone or laptop.

Let's take a deeper look at the techniques for implementing smart inventory management.


The RFID (Radio Frequency Identification) system consists of three main components: an RFID tag, an RFID antenna, and an RFID reader.

·RFID tag

The ID of the RFID tag contains information about a specific object. It can be attached to any physical surface, including raw materials, finished products, packaging, crates, trays, and more. In industrial environments, passive tags are primarily used, ie those that do not have a built-in battery. This type of tag is cheaper, but requires the energy of the reader to transfer data.

·RFID antenna

The RFID antenna receives the electrical waves from the reader, energizes the operation of the tag, and forwards the radio signal from the tag to the reader.

·RFID reader

RFID readers can be either fixed or handheld, using radio waves to read and write tags. The reader captures the ID information written in the tag repository and transmits them to the cloud along with the reader location and read time data.

Industrial internet of things

The role of Industrial Internet of Things (IIOT) in inventory management can be attributed to transforming the data acquired by RFID readers into meaningful insights into the location, status, and movement of inventory items, and providing users with appropriate output. For example, based on inventory quantity and location data, machine learning can predict the amount of raw materials needed for the next production cycle. (Source of the Internet of Things) The output provided by the IoT system can take many forms: if any single inventory item is lost, it can send an alert to the user and notify that additional materials are needed.

In addition, an industrial IoT-based inventory management solution can integrate with other systems, such as ERP, and share data with other business units.

For example, because inventory value can be an important part of a company's assets, inventory data is critical to the accounting department's ability to ensure that the company's annual reports and tax returns are accurate.

What are the benefits of the Internet of Things approach?

IoT-based inventory management provides a solid foundation for the digitization of manufacturing ecosystems and offers a number of benefits, including:

·Automation of inventory tracking and reporting

With RFID and Industrial IoT, inventory managers don't have to spend time manually tracking and reporting. Every project is tracked and data about it is automatically recorded in a big data warehouse. Automated asset tracking and reporting saves up to 18 hours of work per month and reduces the possibility of human error.

· Continuous visibility into the quantity, location and movement of inventory items

The IoT-based inventory management solution provides manufacturers with accurate visibility into raw materials and components, in-process and finished product manufacturing processes by providing real-time updates of item status, location and movement so inventory managers can view individual inventory items. Enter or leave a specific location.

·Optimize inventory

The more warehouse managers know about inventory, the more likely they are to put the right items in the right place at the right time. With real-time data on the quantity and location of inventory items, manufacturers can reduce inventory levels while meeting customer needs at the end of the supply chain.

· Identify bottlenecks in operations

With real-time data on the location and quantity of inventory items, manufacturers can reveal bottlenecks in the production process and identify machines with lower utilization. For example, if part of the inventory tends to accumulate in front of the machine, the manufacturer will think that the machine is not fully utilized and therefore requires special attention.

·Optimized delivery cycle

Industrial IoT-based solutions enable manufacturers to shorten lead times by providing warehouse managers with available inventory quantities and machine learning-driven demand forecasts. For example, an RFID-based inventory management solution allows Zara to transport a piece of clothing from design to manufacturing and into a smart warehouse in as little as 10 days.

What are the challenges and limitations?

The use of RFID technology may be limited by the following factors:

• Since RFID tags can be attached to items that are still being processed, manufacturers must ensure that the labels do not affect the production process.

• Although RFID readers can scan most non-metallic materials, they can still be difficult to scan for liquids and metals. If you attempt to scan a water tank or metal plate, the label reading may be inaccurate.

Label prices range from 5 cents to $10 per piece, while RFID readers cost as much as $3,000 to $20,000 per piece, including installation and configuration. Therefore, the price of the product should be high enough to allow the tag and reader to recover the cost.

to sum up

IoT-based, RFID-based inventory management and asset tracking solutions provide continuous visibility into inventory by providing real-time information. It helps to track the precise location of raw materials in the production process of finished products and finished products. As a result, manufacturers can balance existing inventory levels, increase machine utilization, and shorten lead times, thereby avoiding hidden costs associated with less efficient manual methods.