RFID & Supply Chain

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RFID technology is based on a relatively simple concept. It consists of two elements that communicate through radio transmission: a tag and a reader. The tag contains a small chip and an antenna and can be placed on any object. The information on the tag, such as an identification number, can be transmitted to an RFID reader over a distance of a few metres. The readers are placed in various locations throughout the supply chain technology, such as at the doors of a distribution centre. RFID technology makes it possible to identify and track objects without time delays and without human intervention.

In principle, companies can optimise the logistics process better with RFID than with barcodes, the traditional method of identifying objects within the supply chain.

The information on tags is read when they pass by an RFID reader, and that movement is captured and managed by the infrastructure. In this way, organizations are able to link the physical world to the digital world without any human interaction. Whatever actions are then triggered depends on the individual application, from basic stock replenishment at one end of the spectrum to facilitating the ultimate lean supply chain at the other.

The end result: reduced costs, faster response to changing customer demand, and an improved ability to have the right product in the right place at the right time. The technology is so effective that organizations such as Wal-Mart, METRO, and the U.S. Department of Defense now require their suppliers to deliver goods with RFID tags.

RFID and RFID Packaging Technology and Challenges
A great deal is currently being written and said about the opportunities and problems of RFID technology. Here we will analyze this topic in depth in this section. We will discuss an overview of RFID technology, its integration with existing software applications and the most important differences from barcodes. We also analyze the potential issues that may impact RFID adoption in the retail supply chain technology, including standardization and environmental factors.

RFID Tags
An RFID tag consists of a microchip connected to an antenna. The microchip contains a certain amount of data. Different types of tags are available, which are tailored to different purposes.

Energy Supply: Active vs. passive tags
Active RFID tags contain a battery to provide the microchip with power. This type of tag can send a signal independently to a reader. Passive tags do not have a battery. This type of tag is powered indirectly via the electromagnetic radio waves from the reader. Active tags are often used to track high value goods over a distance of up to 300 meters. However, these tags are expensive compared to passive tags. Passive tags have a limited read range and do not require maintenance.

Changes to the data
Read-only, Read-Write and WORM tags RFID tags can be of Read- Write, Read-Only or WORM (Write-Once, Read Many) type. The data on Read-Write tags can be changed or totally overwritten by any reader. These tags are clearly more expensive than Read-Only tags, which makes them inappropriate for tracking low value products. Read-Only tags are written with a code by the tag manufacturer that can never be changed. WORM tags can be rewritten once by a reader. This makes a WORM tag very suited for establishing a worldwide, unique product code, which can be set on the tag locally (e.g. in a factory). It is suitable for placing on disposable packaging. Read-Write tags, however, are possibly more appropriate for use on pallets/crates that are reused, so that the tag can be rewritten with information such as a shipment number.

Cost of the tag
The cost of RFID tags has fallen significantly in recent years, which is one of the reasons for the current interest in RFID. The business case for many applications is highly dependent on the price of the tag. However, this aspect is less important for returnable transport items, because the tags can be used for much longer, possibly even for years.

Analyses (including by the Auto-ID Center) show that with a volume of 30 billion tags per year, the price of a simple passive tag could, in principle, fall to 0,05€. At the moment, a significant increase in demand is expected, based on mandates from organizations like Wal-Mart, Target, the Department of Defense and the support for RFID from the Food and Drug Administration (FDA). According to these plans, the expectation that a 0,05€ tag will be available in 2007- 2008 is realistic. Until that time, we anticipate prices to go down gradually.

RFID Reader
RFID readers can communicate with tags in different ways. The most commonly used method for reading passive tags at close range is called "inductive coupling". The reader's antenna creates a magnetic field in the tag's antenna, which provides the tag with energy. The tag can then send its data back to the reader.

Software Integration
Integration of the RFID data with existing software applications is an important aspect to the introduction of RFID technology. The data collected by the RFID readers needs to create value, such as more supply chain visibility or better planning.

The fact that a large scale implementation of RFID in the retail supply chain may lead to an explosion of collected data is important in this respect. It creates a need for software to bridge the gap between the RFID data coming from the RFID readers and the existing software applications. It is not surprising that the major middleware suppliers, Enterprise Resource Planning (ERP) and Warehouse Management System vendors have announced plans with regard to RFID.

RFID Versus Barcodes
As mentioned earlier, RFID in the retail supply chain can be used as an alternative to barcodes to identify and track objects. RFID has very different properties, which are summarized in the following table:

Barcodes	RFID Tags
Can only be read individually	Faster reading, as they can be read simultaneously.
Must be visible to be read	No line of sight required.
Cannot be read if they are dirty or damaged	Can deal with rough and dirty environments better, because tags can be integrated into the packaging materials.
Are usually read manually and thus incur labour costs. Automated scanning demands standardisation of barcode location.	Are read automatically so no labour costs.
Information cannot be changed (new label required) Limited quantity of information	Information can be changed, if desired, for example temperature fluctuations. Quantity of information depends on application.