About 12% of the 275 manufacturing companies surveyed by Managing Automation and ChainLink Research Inc. say they will be using RFID for chain of custody and recall processes. Of these, about half are either pharmaceutical or medical device companies, which have strong regulatory requirements around these processes.
About 77% of these companies plan to use RFID for chain of custody tracking through their distributors and wholesalers. In contrast, only 33% plan to do chain of custody tracking through to retailers. This may reflect the much larger infrastructure investment required for outfitting the entire retail channel vs. wholesale and distribution locations and/or the greater influence manufacturers have over their distributors vs. influence over retailers.
Much of the benefit of tracking chain of custody for both anti-diversion and recall purposes can be realized by outfitting distributors and wholesalers with RFID, without having to extend tracking to the retailer.
Roughly 78% of these companies say they have deployed or are planning to deploy RFID for improving recall processes by tagging of lots, batches, and tracking of chain of custody. RFID offers the promise of making recalls much more precise and granular.
Currently, most pharmaceutical manufacturers know which batches were sent to which wholesalers, but lose batch-level visibility once product is shipped to the retailer from the wholesaler/distributor. This means any recalls must be broad in scope, covering all possible destinations from those distributors.
Item-level RFID can help isolate the specific items from that batch, giving pharmaceutical companies knowledge of exactly which retailers received shipments. And, if temperature-sensitive drugs have a problem in-transit, only that shipment needs to be recalled.
However one pharmaceutical manufacturer surveyed had the following to say about using RFID to improve recall processes: "We work very hard to reduce the number of recalls as close as possible to zero. It's hard to justify large investments in improving a process that we are going to great lengths to prevent altogether."
RFID can also be used to store expiration dates for cases or items. Approximately 70% of these companies say they are using or planning to use RFID for tracking expiration dates and enforcing FEFO discipline (First Expired, First Out). Freshness has become a key differentiator for some retailers in categories like produce. However, expiration discipline is also important to pharmaceuticals, high tech, chemicals and other industries.
Bill McBeath is Chief Research Officer at ChainLink Research Inc., a Cambridge, MA focused solely on supply chain business performance.