Several decades ago, the supply chain was controlled by the model of take-make-dispose. Whether packaging (cardboard boxes, plastic wrap, and disposable pallets) is used by companies to package their products and services to retail outlets, it is single-use; companies use them only once and pay to have them disposed of. In the modern world, this model is disintegrating.

The disposable packaging business case is crumbling between the volatile costs of material, new sustainability policies, and the pressure on the business to demand environmentally friendly operations. The solution? The model that is based on an asset pool produced in a circle. There is, however, a historical weakness in this model.

This guide provides the answer to the most important questions regarding the manner in which this new model operates and how the RFID technology is the last puzzle that makes its use profitable.

What exactly is a “returnable asset pool”?

Returnable asset pools are a set of durable, re-packaging which are provided to a group of users in a network. They are not thrown away after one use, and these assets are meant to be used, recycled, or brought back, washed down, and reused hundreds or even thousands of times.

Imagine it was the circular economy at work. One of the leaders in this field, the Ellen MacArthur Foundation, wrote that the principles of designing out wastage and pollution underlie a circular economy.

Common examples include:

  • Plastic Totes: This is what grocery suppliers use to transport produce to the stores.
  • Metal Kegs: These are Kegs used by breweries in delivering beer to bars and restaurants.
  • Durable Pallets: These pallets are used in closed-loop logistics to transport goods in the loop between a distribution center and the factory.
  • Roll Cages/Bins: Roll cages are used in retail and healthcare to make internal distributions.

If returnable packaging is so much better, what’s the big challenge?

The economics has always been very difficult, and the concept is simple. The most vital problem is the loss of assets.

A simple example:

  • A cardboard box of dimensions that can hold a disc is likely to cost $2.
  • A high-quality plastic tote with a durable reusable base could cost you 40 dollars.

The reusable tote will be the obvious winner, provided that it makes over 20 journeys. But what if you can’t track it? Suppose you lose, get robbed, or even dispose of 30% of your 40 totes during the first trip? That so-called smarter system of yours is coming now with an exorbitant price.

This invisibility and lack of control are the very greatest obstacles to the use of reusable packaging. These assets have required businesses to use manual methods to trace the assets using spreadsheets and clipboards, which is a slow, expensive, and error-filled process.

How does RFID technology solve this asset loss problem?

Radio Frequency Identification (RFID) technology bridges the visibility gap that makes pools of returnable assets a risk to them. It generates a digital footprint of all your assets in real time, automatically.

Here’s how it works:

  • Tagging: Each reusable tote, pallet, or keg has a unique RFID tag (designed to survive washing, impacts, and extreme temperatures) affixed to it.
  • Reading: RFID readers are fitted at strategic points of your supply chain- dock doors, wash stations, and receiving customer shipping and receiver.
  • Tracking: When a truckload of tagged totes is passing through a dock door, all of the totes are automatically registered by the reader within a few seconds, requirements being no line-of-sight requirements. There is no manual scanning.

This is an automated data capture that is the game-changer. You start to think that we have 5,000 totes, then think that we have 4,810 totes, 190 of which are at Customer X, and that they are 5 days late in returning.

What are the measurable, real-world benefits of this RFID-enabled system?

With a trusted and automated tracking system, the advantages are much more than just going green.

  • Dramatically Low Asset Loss: You know where your assets are, who they were last under possession, and when they are to be returned. This responsibility in itself substantially decreases theft or negligence loss.
  • Reduced Capital Costs (CapEx): With your pool minimized, due to maximizing its value and the speed of recovery of its assets, your pool can be smaller. A 7,000-run loop will be much efficient as opposed to 10,000 totes that you need to purchase to take into consideration the case of loss.
  • Eliminated Disposable Packaging Costs: This is the most apparent win. Each of the trips used by a reusable item incurs a cardboard box, less than you would need to purchase, to save you money on all of your shipments.
  • Automated & Accurate Billing: It is now possible to annotate the properties of customers or partners who do not hand back their assets so that your asset pool is no longer a cost center, but rather a service.
  • Falsifiable Sustainability Indicators: According to such industry players as Avery Dennison, this information makes the hard facts to be included in sustainability reports. You will be able to demonstrate to your customers and regulators the number of single-use products that you have removed from your waste stream.

Final Take

For years, the promise of returnable asset pools was undermined by a single, critical flaw: without real-time visibility, asset loss would destroy the return on investment. RFID technology decisively solves this problem. It provides the automated, 1-to-many tracking needed to close the loop, eliminate losses, and transform your reusable assets from a costly gamble into a predictable, profitable, and powerful competitive advantage.

FAQs

Is it expensive to put an RFID tag on every reusable asset?

It should be directed towards the overall cost of ownership. It could be a few dollars to buy one durable RFID tag, which is a one-time cost. A cardboard box case that is not set to be used again is an expense that will recur. By doing 50 or more trips with that $40 reusable tote (including the $2 tag), the cost to each trip will be reduced to less than a dollar, saving you a great deal in the long term.

Why can’t we use barcodes to track our returnable assets?

 Barcodes are a 1-to-1 or manual technology. They have the need to have a human operator who is able to locate the barcode and scan it with a direct line-of-sight. They are also damaged, scratched, or dirt-covered easily, and thus cannot be relied on in the industrial environment. RFID is an automated technology that is 1: many. Each scan takes one hundred and fifty tags per second, in plastic, wood, and cardboard, with a 99.9 percent accuracy of one reader. RFID focuses on a fleet and barcodes track one process.

What kind of returnable assets can be tracked with RFID?

Any asset that you anticipate recovery on can be traced virtually. The technology is very multifaceted. It covers industrial assets such as plastic pallets, metal drums, and chemical drums and roll cages; high-value shipping containers, jigs dedicated to specific manufacturing processes, as well as high-value tools contained in a pool of tools-as-a-service.