Despite the efforts to improve resilience, 90% of supply chain leaders encounter challenges, with inventory management remaining a major concern. Demand volatility, supply chain disruption, complex technology integration, limited real-time data, and inefficient tracking processes make balancing inventory levels difficult.
Radio Frequency Identification (RFID) offers solutions to improve inventory management.
At first glance, RFID inventory management might sound like an overly technical solution. But it has a small learning curve that pays off in the long run when implemented effectively. If you’re unsure where to start, this guide to RFID inventory management explores how the technology works and ways to implement it in your supply chain.
What is Radio Frequency Identification (RFID)?
Radio Frequency Identification (RFID) is a technology that uses radio waves to identify and track objects. It uses RFID tags, which attach to objects to enable automatic identification. These tags have microchips that store data and antennae for communication. Some types also include a small power source to boost signal range.
A typical RFID tracking system has three main components:
- RFID Tags: Small chips attached to items that store identifying information
- Readers: Devices that send and receive radio signals to detect tags
- Software: A platform that processes tag data and translates it into actionable insights
Because RFID systems don’t rely on manual scanning, they provide faster, more accurate inventory management and give supply chain professionals real-time visibility.
With the RFID tag definition out of the question, how does the technology power inventory and asset management solutions?
How RFID Works in Inventory Management Systems
RFID stores data on a small tag attached to inventory items such as raw material components or finished goods. Each tag carries unique identifiers and key information, such as:
- Item number
- Batch number
- Inventory levels
- Storage locations
- Product descriptions and handling requirements
- Manufacturing and expiration dates
- Supplier or origin details
To track inventory, every item is fitted with an RFID tag. RFID readers are then strategically placed around the facility to automatically detect and scan tags without needing a line of sight. As goods move through the supply chain, the system captures their location to provide an accurate and up-to-date inventory overview.
With an RFID tracking system, you don’t need manual counting with handheld readers. Here are some examples of how manufacturers and supply chain professionals are using RFID in inventory management.
| RFID User | How RFID is Used in Inventory Management | Example Applications |
| Manufacturer | Tracking materials and products throughout production | Automatically registering incoming raw materials at receiving docksTracking components on production linesRecording finished goods leaving for distribution |
| Supply Chain Professional | Providing live, end-to-end supply chain visibility | Monitoring pallet movement across warehousesTracking shipment in transitVerifying deliveries at distribution centers |
Types of RFID Tags
RFID tags can be classified as passive or active, each designed for specific applications and performance needs.
Passive RFID Tags
Passive RFID tags are batteryless radio frequency identification tags that draw energy from the radio waves transmitted by the RFID reader. They are generally smaller and less expensive. Since they don’t have a power source, they have a shorter read range, usually up to 10 meters.
Most supply chain professionals use passive RFID for visibility across the supply chain because it allows bulk tracking of items at a lower cost.
Active RFID Tags
Active tags have a power source, which allows them to broadcast signals continuously or at a set interval without needing activation from a reader. They are more expensive than passive tags but provide a read range up to 100 meters.
Since active tags can store more data and send continuous updates, they are suitable for tracking high-value assets across large areas.
Beyond tag types, RFID systems also operate on different frequency bands.
| Frequency Band | Typical Read Range | Suitability Note |
| Low Frequency (LF) ~125–134 kHz | Up to 10 cm | Reliable near metal or water |
| High Frequency (HF) 13.56 MHz | Up to 1 m | Good for item-level tagging |
| Ultra-High Frequency (UHF) 860–960 MHz | 3–10 m (max 15 m) | Ideal for bulk warehouse tracking |
| Microwave (2.45 GHz) | 1–2 m (passive); up to 100 m (active) | Limited use; active tags needed for extended range |
Compared to Bluetooth, which can also reach up to 100 meters, RFID provides flexible options with cost-effective passive tags and extended coverage with active tags.
The Benefits of RFID for Inventory Management
Implementing RFID in supply chain management offers several benefits across industries:
- Improved inventory accuracy: Instant inventory updates reduce mismatches between system records and physical inventory
- Enhanced efficiency and productivity: Bulk scanning at receiving, cycle counts, and outbound gates accelerates processes and saves the time workers spend on manual scanning
- Reduced costs in inventory handling: RFID inventory management cuts labor costs with fewer manual counts and checks, while also minimizing stock discrepancies
- Improved supply chain visibility for better decision making: End-to-end tracking provides transparency from suppliers to customers, enabling faster, more informed operational decisions
- Automation of key processes: RFID portals at critical points of the supply chain reduce time spent on manual scanning and improve workflow consistency
- No line-of-sight requirement: Unlike systems like barcodes, RFID can read multiple items simultaneously without a direct line of sight to improve warehouse efficiency and simplify distribution operations
- Richer data storage: RFID tags carry detailed information beyond product ID to improve traceability and provide deeper insight analysis into inventory
- Unified asset and inventory management: The RFID tracking system consolidates inventory and asset data into a single, real-time system to ensure accuracy across warehouses and support better distribution and reporting
Streamline Your Inventory Management with RFID
RFID inventory management is popular because it gives manufacturers and supply chain professionals complete visibility and helps optimize operations. From tracking incoming raw materials and monitoring production lines to managing storage and overseeing distribution, RFID provides up-to-the-minute insights that support faster, more informed decision-making.
At Surgere, we’ll offer you advanced RFID hardware with powerful software solutions to make your supply chain transparent. With our integrated platform, you can track inventory in real time and turn the data into actionable insights to help you optimize operations at every stage of the supply chain.
Request a demo today to see how Surgere can help you build the right RFID system for your business.
