Business Effect via RFID

What is RFID

Tags

RFID stands for Radio Frequency IDentification

RFID uses radio waves to identify or locate an item

RFID will gradually replace barcodes

RFID does all that barcodes do (and much more), without the limitations of barcodes technology

In a more general sense, RFID is a technology, which provides unprecedented visibility to the supply chain and makes possible product identification and traceability. There are several methods of identification through RFID, but the most common is to store a serial number that identifies an object, and perhaps other information, on a microchip that is attached to an antenna (the chip and the antenna together are called an RFID transponder or an RFID tag). The antenna enables the chip to transmit the identification information to a reader. The reader converts the radio waves reflected back from the RFID tag into digital information that can then be passed on to computers that can make use of it.

RFID vs. Barcode

Capability	Barcode	RFID	RFID Benefit
Line of sight requirement	Yes	No	Orientation independent (box, pallet)
Items read at once	One	Multiple	Instantaneous inventory
Automation & Accuracy	Manual reading Human errors	Fully automated Highly accurate	Error-free data acquisition
Durability	Can be easily corrupted	Tolerance to harsh treatment	Accurate readings in any environment
Capacity	Small	Large	Can hold substantial amount of data
Data transfer	Read only	Read / Write	Continuous update through supply chain

RFID Applications

RFID is fit to boost the profitability and productivity of most major industries including: logistics, healthcare, pharmaceutical, aerospace and defense industries.

The most widely known RFID example is in the Retail Trade and more specifically Wal-Mart (US) RFID implementation which is the largest retailer globally. WalMart since January of 2005 demanded that 130 of its major suppliers tag with RFID their boxes and pallets. By October of 2005 the results were impressive and are summarized below (source: ITRI, University of Arkansas):

26% Out of stock reduction
3 times faster replenishment of out of stocks
10% reduction of manual orders

Based on these results Wal-Mart decided to expand the RFID development to another 200 US suppliers by January of 2006. Other major retailers that have made significant RFID implementations through out their supply chain are: Metro, Tesco, Marks & Spencer and several others.