» RFID Technology
RFID & Supply Chain
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
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.
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
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 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.
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:
|Can only be read individually
||Faster reading, as they can be read
|Must be visible to be read
||No line of sight required.
|Cannot be read if they are dirty or
||Can deal with rough and dirty
environments better, because tags can be integrated into the packaging
|Are usually read manually and thus incur
labour costs. Automated scanning demands standardisation of barcode
||Are read automatically so no labour
|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