Source: Cranfield School of Management, Cranfield University U.K.

 

Previously published in "Supply Chain Practice Vol6 No2 2004, Cranfield Univerisity, Cranfield U.K."

Introduction

Radio frequency identification (RFID) has been heralded by some commentators as a technology that will have as big an impact on supply chain operations as the advent of computer based planning systems in the early 1970s; others say it is just yet another technology fad that will have gone away in a couple of years. We are continually reading conflicting messages about RFID - this is partly due to the term being misused in some quarters and also because, as with all new technologies, it takes time for all those involved to define a common language. This paper will examine the benefits and barriers to RFID implementation before moving on to discuss applications of the technology and to look at case study examples.

RFID Benefits

 

When compared with other automatic identification systems like barcodes, magnetic stripes or manual data entry, RFID offers many potential benefits; currently the cost of the technology is a barrier but as implementation costs fall this will be less so. Any cost justification of an RFID system should take into consideration the entire cost for the life of the system. Habitually, potential users of RFID tend only to compare the cost of the tag against that of a barcode label which results in the cheaper bar code option being favoured (Harrop, 2000). However if this comparison is made at a system level, RFID can be the lowest cost technology, with tags being reused and operational costs lower due to cheaper maintenance costs and lower labour requirements.

Table 1 provides an overview of the benefits of RFID over barcode type systems as identified by a number of commentators in the area.

Barriers to RFID implementation

Cost of RFID Tags

The cost of the tags is one of the most important constraints for the full implementation of this technology within supply chains (Chomka, 2003). The low cost of the tags will allow their application for single use or for low cost multiple uses where the durability of the tag is suitable. These tags contain data that can be read remotely and cost less than five cents (Harrop et al, 2003), therefore cheap enough to be disposable.