01/ 10/ 2008
by Kellé Campbell
For many businesses, radio frequency identification (also known as RFID) represents the future for their operations, particularly asset tracking and inventory management. The major advantage of RFID technology is its' ability to count many items simultaneously and in real time.
What is RFID?
An RFID system consists of tags, readers and a type of software called "middleware." A tag contains a microchip, which stores data (such as the number or type of an item) and transmits the information, usually as an electronic product code, via one or more radio antennas. Tags can be attached to a product, its packaging or shipping containers.
There are three types of tags:
- Active tags either broadcast continually or just respond to the reader. They are battery powered, which makes them expensive but allows them to broadcast a signal over a greater distance.
- Passive tags do not have a battery and their broadcast is activated by a reader's signal.
- Semi-passive tags are activated in the same way as passive tags. However, they have a battery, which adds to their range (as well as the cost).
The reader transmits a radio signal, receives an answering signal from the tags and coverts that response signal into digital data. Each reader has one or more antennas, which broadcast its signal.
Middleware programs filter data from the tags and interact with businesses' existing applications, such as inventory management software packages. They can also be designed to monitor the RFID system's functions, manage reconfigurations, verify shipments and receipts, or conduct other needed tasks.
Advantages and disadvantages of using RFID
Currently, businesses are tagging shipment pallets or containers more than individual items; the technology allows businesses to automatically track inventory without the need for manual counts or tasks such as bar code scanning, resulting in fewer errors and lower labor costs. Also, RFID users can immediately and accurately tell how much of a particular item has been sold, the amount still stored in warehouses and so on.
A better understanding of inventory and customer buying patterns leads to more efficient inventory management, reductions in unnecessary investments and overall improved cash flow, which positively affects a company's market advantage and profitability. Organizations can also use RFID to track reusable shipping containers, files or library materials in order to ensure that those items are where they are supposed to be. And since businesses have a clearer picture of what they have in their warehouses or stores and what is due from suppliers, the technology also helps them battle counterfeiting or theft and facilitates verification of warranties.
The biggest obstacle to implementing RFID has been the cost. Readers can cost hundreds or even thousands of dollars per unit, and the software's price can be hundreds of thousands of dollars. However, tags are a major focus of concern because they are not reusable and so have to be continuously produced. While tags do range in cost, experts cite a price of five cents per tag for RFID use to be feasible for the majority of organizations. Vendors believe that that price will be achievable as more businesses adopt the technology, and tech companies are working on advances that may also lower the cost.
In addition, there has been resistance to RFID due to privacy concerns, especially when the tags are adhered to individual products. Therefore, some thought should be given to removing tags after purchase or assuring buyers or suppliers that their information is protected.
One problem for businesses involved in international commerce is that different countries use different frequencies and power levels for RFID systems. In his book, RFID for Dummies (Wiley, John & Sons, 2005), author Patrick J. Sweeney II recommends that companies facing this problem apply for a special FCC license to test European or Japanese radio frequencies so that they know what equipment to buy.
Implementing RFID
Organizations should develop a plan that clearly states the purpose for adopting RFID technology (e.g., inventory management or security) and what items should be tagged in order to achieve the highest return on investment. They should consider supplementary costs such as testing tags, training employees, whether they need to purchase spectrum rights for broadcasting their signal and so on. Also, planners think about future expansion of the system and potential connections with suppliers and clients and ensure that the current deployment can accommodate those future possibilities.
A RFID system should be customized to specific business environments and processes. RFID readers should be placed in areas through which all the relevant items have to pass, for example, dock doors. Businesses should also obtain expert help for evaluating the placement of antennas or design, as well as determining any interference from magnets, electronics or other equipment.
RFID technology can transform the way organizations operate, but careful planning and guidance from vendors and experts are vital for an effective return on an RFID investment
