'RFID carries unconditional guarantee of success' - Study

07 Feb '09

17 min read

Broad variety of RFID systems on the market:
RFID systems differ very significantly from one another in their features. These differences pertain to:
— Degree of freedom (open vs. closed),
— Data storage (centralized vs. decentralized),
— Data processing (real-time vs. batch-processing),
— Physical form (e.g. earmark, ceramic bolus, glass encapsulation for implantation, nail, smart label),
— Storage capacity,
— Energy supply (with/without battery),
— Writeability of the RFID tag (e.g. read-only; write-once-read multiple; read-and-write),
— Radio frequency (from low frequency [LF] to ultrahigh frequency [UHF]),
— Integrated sensor technology (e.g. temperature sensors).

RFID paves way to a host of innovations:
Given this large variety of systems the essence of RFID technology can only be understood in a larger context than as a potential competitor to the bar code. The aim of the RFID basis technology is not simply to crowd out the bar code. Instead, RFID represents a comprehensive concept that is changing the business world through various innovations. One example is that RFID opens new ways to automate value adding processes.

The flows of goods along the global value chain are managed and documented with the help of RFID. This “automation effect”, or “effect of the first order”, boosts the efficiency of innovative businesses and thus improves their competitive standing. In the medium term, RFID will be instrumental in expanding the overall supply of goods and services. This “transformation effect”, or “effect of the second order”, will drive the innovativeness of the economy as a whole.

Technology influences many areas in everyday life:
RFID is found in many areas of our everyday lives – from business (especially production, trade, transport) and sovereign duties (especially defense, border policing, internal security), right up to access controls and leisure pursuits. For example, RFID projects in the distributive trade aim to capture the location of goods and transport containers (e.g. roll cages, containers) in real time. In this way, capital employed can be reduced and planning errors that compound themselves can be avoided.

The aim of reducing capital employed is to be achieved partly by lowering the volume of inventories while maintaining the same degree of availability and partly by raising the capacity utilization of the transport containers. The objective of avoiding planning errors that compound themselves is to be achieved by ruling out erroneous out-of-stock messages. If an inventory management system determines that goods are out of stock even if they are actually still in stock, this erroneous message ultimately leads to high costs not only for traders but also producers in second and third-round effects.

If it were possible to prevent these false missing inventory messages, traders and producers would both benefit. In the worldwide value chain there is demand for cheap handling of the increasing volume of goods being delivered at frequent intervals. In particular, it is necessary to link the flow of materials more closely with the corresponding flow of information and coordinate the processes on the individual steps of value creation with one another. RFID has made a name for itself accordingly in the transport industry, particularly in the following four fields:

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