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Inventory management using Industrial Internet of Things and RFID

Inventory management using Industrial Internet of Things and RFID

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 per month writing down 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 incorrect information.

The good news is that with the help of the Industrial Internet of Things (IIOT) and RFID, manufacturers can solve problems related to manual methods and understand their inventory status in real time.

Smart inventory method: what is behind it?

In an inventory management solution based on the Industrial Internet of Things and RFID, any single inventory item to be tracked will be posted with an RFID tag. Each label has a unique identification (ID), which contains coded digital data about inventory items, such as model number, batch number, etc. The tag is scanned by the 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 position and reading time of the reader. Based on these data, the cloud uses the corresponding ID to indicate the location of items, visualize the results, and display real-time updates to inventory users as inventory items move, allowing them to monitor inventory in real time from anywhere using a smartphone or laptop.

Let us have a deeper understanding of the technology to achieve intelligent inventory management.


RFID (radio frequency identification) system is mainly composed of three parts: RFID tag, RFID antenna and 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, pallets, etc. In industrial environments, passive tags are mainly used, that is, tags that do not have a built-in battery. This tag is cheaper, but requires the energy of the reader to transmit data.

RFID antenna: The RFID antenna receives the radio wave from the reader, provides energy for the operation of the tag, and forwards the radio signal from the tag to the reader.

RFID reader: RFID reader can be fixed or handheld, it uses 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 data of the reader's location and reading time.

Industrial Internet of Things

The role of the 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 corresponding output. For example, based on data on inventory quantities and locations, machine learning can predict the amount of raw materials needed for the next production cycle. (Source 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 the need for supplementary materials, etc.

In addition, inventory management solutions based on the Industrial Internet of Things can be integrated with other systems (such as ERP) and share data with other business departments.

For example, because the value of inventory may be an important part of a company ’s assets, inventory data is essential for the accounting department to ensure the accuracy of the company ’s annual reports and tax returns.

What are the benefits of the IoT method?

IoT-based inventory management lays a solid foundation for the digitization of the manufacturing ecosystem and provides many benefits, including:

· Automation of inventory tracking and reporting

With RFID and the Industrial Internet of Things, inventory managers do not need to spend time on manual tracking and reporting. Each project will be tracked, and the data about it will be automatically recorded in a big data warehouse. Automated asset tracking and reporting can save 18 hours of working time per month and reduce the possibility of human error.

· Continuous visibility of the number, location and movement of inventory items

IoT-based inventory management solutions provide manufacturers with raw materials and components, accurate visibility in the production process of finished products and finished products by providing real-time updates of item status, location, and movement, so that inventory managers can view individual inventory items. When entering or leaving 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 number 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 low utilization rates. 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, so special attention is required.

· Optimize delivery cycle

By providing warehouse managers with available inventory quantities and machine learning-driven demand forecasting, solutions based on the Industrial Internet of Things can enable manufacturers to shorten lead times. (Source IoT Home Network) For example: RFID-based inventory management solution allows Zara to send a piece of clothing from design to manufacturing and send it to an intelligent warehouse in just 10 days.

What are the challenges and limitations?

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

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

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

The tag price ranges from 5 cents to 10 dollars per item, while the price of RFID readers is as high as 3000 to 20000 dollars per item, including installation and configuration. Therefore, the price of the product should be high enough so that the tag and reader can recover the cost.


IoT-based, RFID-based inventory management and asset tracking solutions provide continuous visibility of 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. Therefore, manufacturers can balance existing inventory quantities, increase machine utilization, and shorten lead times, thereby avoiding the hidden costs of less efficient manual methods.



Contact::John Lee




Add:Xminnov IOT Industrial Park, No.943, Tonglong ErLu, Tong'an District, Xiamen, PRC 361100