Radio Frequency Identification (RFID), the technology of the future, has long established itself in our everyday lives. It is already deployed in various areas ranging from efficient inventory management and road toll collection through to timing the performance of individual participants in mass sporting events. With its enormous potential it is only right that RFID is on everyone's lips.

 

RFID technology builds a bridge between the physical world of a product and the virtual world of digital data. The technology thus meets the demands of companies cooperating in a closely knit value chain and is being deployed promisingly in all sectors of the economy. RFID will soon be considered an indispensable part of the chain.

RFID - An Overview

 

RFID or Radio Frequency Identification is a system that uses radio waves to transmit an object's identity. There are several methods of identifying objects using RFID, but the most common is to store an ID or serial number that identifies a specific product along with other information, on a tag, which is a small microchip attached to an antenna. The antenna enables the chip to transmit whatever identification information it contains to a reader. The reader converts the radio waves from the RFID tag into digital information that software systems can use for processing.

 

Typically, when a reader reads a tag, it passes three things to a host computer system: the tag ID, the reader's own ID, and the time the tag was read. By knowing which readers are in which locations, companies can know where a product is, as well as what it is, and by tracking the tag data by time, they can know everywhere it's been.

Most industry analysts argue that RFID tagging is a transformational software development activity that will ultimately change the way businesses plan, price, distribute, and advertise products. But for the present, enterprise application vendors are extending their products to handle an expected boom in RFID data.

Until recently, a bar coded item used to sit on a retail shelf and did not generate any data until it was scanned by a bar code reader. And then the data was read only once. RFID, on the other hand, is a passive technology that does not require human interaction to scan. A reader can extract location and product description data from a tagged item every 250 milliseconds. Some readers are capable of reading data from 200 tags per second. The result is a data increase of more than one thousand times above traditional scanning methods.

With the rate at which the market competition is rising, inefficiencies in a company's value/supply chain and their continuous efforts to shore up internal security are driving the rising demand for RFID. The retail trade is playing a decisive part in the broad-based roll-out of RFID projects. RFID represents an all-encompassing structural business concept that far transcends simply superseding the bar code. Considering the current scenario, RFID systems are rapidly gaining significance. This holds especially in areas where they can be used to manage processes within the value chain. With this favorable situation, the market for RFID systems are likely to grow globally from EUR 1.5 bn to EUR 22 bn between 2004 and 2010 (average growth rate: +57% p.a.). During the same period, the RFID market in the EU-15 is expected to expand from EUR 0.4 bn to EUR 4 bn (+47% p.a.).

 

RFID is such an intriguing business concept, as it cuts inventory and supply chain costs through its implementation. The ultimate goal is for RFID to replace barcodes. RFID allows for individual product identification, not for product line identification like barcodes. If this takes place, individual products can be read letting stores locate those items if needed. Stores can also track when items leave the store allowing them to easily replace items when one is purchased.

 

Furthermore, shipments can be easily and quickly sorted and accepted by the receivables department. With the reader, products can be received without even opening the pallet cutting logistical needs. Obviously RFID is a great tool for the supply chain and companies wishing to better track their products and inventory.