How RFID Tag Solutions Reduce Social Logistics Costs

As RFID passive IoT technology currently offers the best cost-performance ratio on the market, one very important application scenario is logistics. Therefore, this article will discuss in detail how the RFID tag solutions can reduce logistics costs.

In Which Aspects of Logistics Do the RFID Tag Solutions Play the Role?

• Firstly, in logistics infrastructure, such as warehouses, highways, railways, etc. Clearly, the investment in such infrastructure is not much related to RFID.

• Secondly, in logistics equipment, such as logistics vehicles, automated warehouses, AGV, forklifts, and sorting systems, the connection with RFID is also not significant.

• Thirdly, in logistics circulation efficiency and labor costs. The higher the circulation efficiency and accuracy, the more significant the economic benefits for logistics companies. Labor costs also constitute a large proportion of costs in the logistics system. This is the area where the RFID tag solutions can add value.

How Can the RFID Tag Solutions Reduce Costs in the Logistics Process?

• Firstly, saving labor costs. Specifically, in the logistics turnover process, the RFID tag solutions can significantly reduce labor in gate sorting and warehouse inventory counting. Objectively speaking, many warehouse systems in developed countries, including China, already have a high level of automation and thus require less labor. Therefore, the investment in the RFID tag solutions yield less benefit in labor cost savings. However, for many warehouses with low automation levels, the economic benefits of labor cost savings from using the RFID tag solutions are very significant.

• Secondly, reducing loss costs. Regarding the loss rate of express packages, we could only find data from 10 years ago (2014), approximately 20%. We believe that after 10 years of development, this loss rate has significantly decreased. Assuming a 1% loss rate, China's annual express packages exceed 130 billion pieces. At a 1% loss rate, that is 1.3 billion pieces, which is a huge number. If losses can be minimized, the economic benefits for express companies will be significant since they often need to compensate for these losses.

• Thirdly, saving time costs. The RFID tag solutions help companies save time costs, which is a major selling point in the logistics industry. Firstly, in terms of the business logic of express logistics, every company endeavors to greatly reduce package transit times to stay competitive, as a key factor for consumers in choosing a courier service is speed. Additionally, saving time costs allows express companies to better utilize warehouse space, transportation vehicles, and human resources efficiency (HR efficiency), thereby enhancing economic benefits.