Why RFID Is Integral To Realising Closed Loop Supply Chains

As sustainability becomes a top priority in today’s supply chain landscape, businesses must adapt to meet evolving government regulations and increasing consumer demand for environmentally responsible practices. One transformative solution to this is the closed loop supply chain, otherwise known simply as CLSC, which shifts away from the conventional model which has disposal in mind in favour of circularity—where products are reused, recycled, and reintegrated into the supply chain. However, successfully implementing a CLSC comes with its own set of challenges, particularly in asset tracking. The ability to monitor product movement at every stage has long made RFID in supply chain management indispensable, but now it can also serve another role by optimising for sustainability as well.

Understanding Closed Loop Supply Chains

A CLSC seamlessly merges forward logistics or the traditional movement of goods from production to consumers with reverse logistics, where products are returned for refurbishment, remanufacturing, or recycling. Unlike linear supply chains that end with product disposal, CLSCs focus on reclaiming value from used products, creating a continuous cycle of use and reuse.

For instance, a manufacturer produces and sells a product, which the consumer uses until it reaches the end of its life cycle. Instead of being discarded, the product is collected, repaired, or repurposed, then reintegrated into the supply chain. This approach fosters sustainability and resource efficiency while reducing waste.

Overall, the key characteristics that differentiate CLSCs from traditional supply chains are:

• Value Recovery: Instead of discarding materials, CLSCs extract value from returned products through refurbishment, remanufacturing, or recycling.
• Circularity: Products are continuously cycled back into the supply chain rather than being disposed of.
• Reverse Logistics: In contrast to traditional supply chains that focus on forward movement, CLSCs incorporate the return and processing of used goods.

Asset Tracking Difficulties in CLSCs

While the benefits of a CLSC are clear, managing asset movement—particularly in reverse logistics—presents significant hurdles. Efficient tracking is essential to ensure that products are returned, processed, and reintegrated seamlessly. However, companies often face obstacles such as:

• Traceability Challenges: Once products re-enter the supply chain, tracking their exact condition and location can become difficult, leading to inefficiencies.
• Gaps in Asset Visibility: The absence of real-time tracking capabilities lends businesses losing oversight of returned assets, causing delays and disruptions in the recovery process.
• Manual Errors: Obsolete tracking practices like spreadsheets or manual logging, are susceptible to inaccuracies, leading to unreliable inventory data.

Given these challenges, businesses must invest in robust asset-tracking solutions. RFID technology, in particular, offers unparalleled visibility and automation, helping companies streamline their CLSC operations and maximise sustainability efforts.

In the next section, we explore how RFID systems enhance asset tracking within a CLSC and why it is a game-changer for businesses looking to close the loop efficiently.

Modern Asset Tracking Strategies in CLSC

To address these challenges, organisations are leveraging various advanced asset-tracking technologies available on the market. A few of the most commonly used methods in CLSCs include:

• IoT (Internet of Things): IoT sensors enable real-time tracking of assets, offering valuable insights into their location and condition.
• Barcode Systems: A cost-effective tracking solution, barcodes typically involve labour-intensive manual scanning processes that are prone to human error.
• GPS: This technology is the preferred choice for monitoring vehicles and shipments in reverse logistics as it provides reliable long-distance visibility.

While these technologies improve tracking capabilities, they also come with limitations. Manual processes, visibility gaps, and high implementation costs can hinder their effectiveness in high-volume and complex CLSCs. This is where RFID proves to be a game-changer.

Advantages of Using RFID for Asset Tracking in Closed Loop Supply Chains

RFID technology offers a powerful, automated solution for asset tracking in CLSCs, addressing many of the inefficiencies associated with traditional methods. The following are just a few of the many ways RFID improves tracking the many assets in a CLSC:

• Real-Time Visibility: RFID tracking systems provide continuous updates on asset locations and conditions, ensuring businesses have full transparency at every stage of the supply chain.
• Tracking Automation: RFID tags affixed to products allow for seamless, automatic identification as items progress through the supply chain. Compared to barcodes, these tags do not require line-of-sight to be properly scanned, making it ideal for operations on a larger scale.
• Lower Labor Costs: Automation minimises manual data entry and scanning which frees up labour resources for other activities.
• Higher Accuracy: Asset tracking systems eliminate human error by automating data collection, leading to more precise inventory management.
• Sustainability Support: Enhanced traceability reduces waste and inefficiencies, aligning with the sustainability objectives of CLSCs by ensuring products are effectively tracked from the beginning to the end of their lifecycle.

Conclusion

In an increasingly eco-conscious and competitive business landscape, the closed loop model is emerging as the key to achieving not just sustainability but also cost efficiency in modern supply chains. Although asset tracking remains a challenge, RFID technology is transforming the way organisations monitor and manage their assets within these circular supply networks.

By providing automation, real-time visibility, and improved accuracy, RFID helps companies overcome the shortcomings of traditional tracking methods, ensuring smoother CLSC operations. Moreover, its ability to support sustainability initiatives reinforces corporate responsibility and keeps businesses ahead in a market where environmental consciousness is more critical than ever.