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RFID – Labels At A Glance

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What is the ROI of RFID

What is RFID?

Radio Frequency Identification (RFID) is a method using tags or transponders to enable automatic, remote identification of objects that have been “tagged” with RFID transponders. RFID tags are like little transponders that send out information to a reader, or “interrogator.” An RFID tag contains a silicon chip and an antenna to enable it to receive and respond to radiofrequency queries from an RFID transceiver. The tags are small and can easily be attached to or incorporated into a product, animal, or person. Active RFID tags have tiny batteries in them, while passive tags must usually be “awakened” by a tag reader in order to send information. Active tags can store and send more data and at greater distances than passive versions.

Applications & Benefits

RFID tags are often seen as a replacement for barcodes, with significant advantages over barcode technology. The data capacity of an RFID tag is big enough to allow each tag to have its own unique code. Current bar codes are limited to a single type code for all instances of a particular product. With an RFID tag a product can be individually tracked as it moves from location to location through a process, or through the supply chain.

RFID capabilities

• Since the RFID tag is a transponder, the scanners do not require line of sight access to the tag as opposed to a laser scanner trying to read a bar code. This makes it very easy to read RFID tags on items that are difficult to reach such as cartons on a pallet.
• RFID smart labels can be read and written to through dirt, paint, and many nonmetallic objects.
• RFID tags can withstand harsh environments.
• Tags can be read simultaneously, even through containers and packaging — for example, multiple individual items within one box.
• The RFID readers allow for automatic, unattended scanning. With scanning ranges between 4 inches and 10 feet, boxes on a moving conveyor belt can each be identified individually.
• The RFID chip can hold a large amount of data as well as monitor the movement of the tagged object — acquiring and delivering new information along the way like a traveling database. Greater storage capacity, combined with update flexibility, make smart labels ideal for applications such as product tracking through the supply chain, baggage tracking, or asset tracking.

RFID smart tags can be found in many applications across a wide range of industries.


In the consumer goods and retail industry, RFID technology can provide information about location and condition of an item throughout the entire supply chain, from manufacturing to distribution, all the way to the customer’s shopping cart going through the checkout lane. Information gleaned from the tags can alert retailers to potential stock outs of popular items in time to do something about the situation, validate the authenticity of received goods, and allow retailers to know exactly where goods are in every step of the production and shipping process.

Museums are using RFID tags to guard and track art. Pet owners can have their pets tagged to help identification in case of loss. Attendees at large sports events or concerts can be tagged to prevent security breaches. Keyless car entry, the ExxonMobil SpeedPass and the E-ZPass tollbooth sticker all use RFID technology.

Many hospitals are experimenting with RFID tags in patient bracelets. In addition to storing important medical information, these tags can help track patients as they work their way through the hospital. Doctors and nurses could also be tagged for rapid and easy location in case of an emergency.

Car dealers are using RFID to manage the inventory of cars on their lots. The tags will alert managers whenever a car enters or leaves the lot and when a particular model is in short supply.

Law firms, libraries, and research centers are using RFID tags to track the movement of documents, files, and books, especially sensitive material with restricted access.

RFID tags can be used to safeguard against counterfeit products in the pharmaceutical industry or high-end fashion and consumer goods.

The RFID Mandates

Wal-Mart and the US Department of Defense have published requirements that their vendors place RFID tags on all shipments to improve supply chain management. These mandates affect thousands of companies worldwide. Wal-Mart has required its Top 100 suppliers to apply RFID labels to all shipments to its warehouses by January 2005. By the end of 2006 all Wal-Mart suppliers are expected to be using RFID tags on pallets and cases (RFID Journal, 8/2003).

Similarly, Target, the fourth largest retailer in the United States, has told its top suppliers that they will be required to apply RFID tags on pallets and cases sent to “select” regional distribution facilities beginning late Spring 2005. The company wants all of its suppliers to tag pallets and cases by the Spring of 2007 (RFID Journal, 2/2004).

What is the ROI of RFID?

Major manufacturers, particularly in the consumer-goods market, face intense pressure from Wal-Mart, Target, Albertson’s, and others to get on the RFID bandwagon. But for many other companies, it’s more of a chicken-or-egg game: manufacturers are waiting to see how many retailers install RFID-reading equipment before they invest heavily in RFID tags, while retailers are holding off on such investments until enough of their suppliers start shipping tagged goods. (CFO Magazine, March 2005)

Many major consumer packaged goods manufacturers do not foresee any quick Return-on- Investment (ROI) from adding RFID tags to their packaging and distribution systems. Instead, they see it as the cost of doing business with major customers such as Wal-Mart and the U.S. Department of Defense, which mandated the use of RFID tags by January 2005.

Consumer goods manufacturer Kimberly-Clark Corp. sees RFID as an investment needed to meet supplier requirements. Similarly, Procter & Gamble is still trying to figure out the “value proposition” of RFID and the Campbell Soup Company views the incorporation of the technology as “tactical in nature” to meet the requirements of major customers such as Wal-Mart. (Computer World, March 2004).


The Return-On-Investment for RFID may be longer than some users and early adopters are prepared to wait. The ARC Advisory Group found that 95% of companies surveyed expect a positive ROI for RFID to be more than two years out and that “more efficient warehouse receiving and better management of inbound materials may have to wait until companies have been able to negotiate with their upstream suppliers to engage in more RFID tagging.” ARC interviewed 24 companies actively investing in electronic product code RFID. Respondents found that even at 20¢ a tag, a company that ships 50 million cases a year will incur a $10 million cost. And it’s likely to incur another $1 million in expenses to prepare the infrastructure for RFID. In addition, the labor content of warehouse processes is likely to increase, adding perhaps another $500,000 in operating costs. (Purchasing Magazine Online, 12/2004)

Getting the most out of your RFID investment requires not only a commitment to the technology but a vision to use RFID for collecting business information. To realize ROI from RFID, companies need to see this technology as a way to collect valuable business intelligence that can help increase profits and reduce costs. Before companies start tagging anything, they should first consider their business goals and how information obtained from RFID could help them achieve these goals. A systematic approach is needed for a successful RFID deployment:

• Which problems can RFID solve?
• Which business processes can be improved or enhanced with location identification?

After these questions have been addressed, the available technology can be evaluated, and vendors selected. We recommend first deploying a small, focused pilot program within the company to address one or two goals. When planning an RFID deployment, businesses should also ensure that their computing infrastructure can support the deployment. RFID can produce a tremendous amount of data that can quickly become a burden on a company’s computing infrastructure. Companies need to have robust and reliable back-end systems capable of collecting, filtering, and processing these large quantities of data.

In order to get a real Return-On-Investment on RFID, the collected data should be coming from multiple sources — upstream and downstream. Manufacturers who only use RFID as a high-tech replacement for bar codes will only see limited benefits. Efficient deployment of RFID technology requires that all supply chain partners — suppliers, manufacturers, and distributors — look at RFID as an enabler of doing business differently, and to solve key customer issues or gain a competitive differentiator.

In order to assess the value of implementing the Return-on-Investment, an organization needs to consider not just the cost of the RFID tags, tagging its products, developing an RFID infrastructure, and so on. It is tantamount to assess the benefits that RFID technology can bring. What is the value of better information about the location of products, the product flow, the condition of a perishable product, customer buying behavior? What is the value of being able to
control or prevent counterfeiting or reselling of product? How can this knowledge be utilized by a company to differentiate itself from the competition, provide a better, safer product or service to its customers, and, as a result, increase its pricing power?

Kimberly-Clark Corp., a pioneer in RFID, has dedicated an extensive 5,000-square-foot R&D facility to studying the benefits of RFID and for equipment. According to Kimberly-Clark the recent ratification of a new global protocol for RFID chips should allow more manufacturers to enter into the chip business, and this will drastically bring chip costs down during the next couple of years. However, they feel that investments in “class-one,” or existing RFID technology, will not be in vain. The readers and the software are all upgradeable and will work in the next-generation product. None of the existing technology needs to be scrapped. Assuming that chip costs drop, manufacturers of small goods such as toothpaste and bar soap should be able to place RFID chips into product packaging instead of just on pallets and shipping containers. This, combined with an investment on the retail side in RFID readers that can be used to create “smart shelves,” will allow a product to be truly tracked from the factory straight to the store shelf and checkout line.
(CFO Magazine, March 2005)

While its suppliers are trying to determine a Return-On-Investment, Wal-Mart is already seeing the benefits. In January 2006 Wal-Mart reported a 16% reduction in out-of-stock products at Wal-Mart and Sam’s Club stores. With five Dallas-area distribution centers, nearly 500 Wal-Mart and Sam’s Club stores, and 140 suppliers equipped to handle RFID-tagged shipments as of last October, the retailer reduced the number of product out-of-stocks on store shelves by 16% during a 29-week period last year, according to a study conducted for Wal-Mart by the University of Arkansas. Wal-Mart operates its system of RFID tags and readers on its corporate web-based Retail Link network, providing suppliers, its own managers and employees with web access to data on the movement of shipments. Wal-Mart also reported that the process of ordering and receiving RFID-tagged shipments is three times faster than for non-tagged shipments. In addition, RFID has helped to eliminate excess store inventory due to unnecessary replenishment by suppliers. As RFID tags move toward a price of less than 10 cents this year, Wal-Mart’s RFID project will expand more quickly. Wal-Mart expects to have more than 300 suppliers live with RFID early this year and more than 1,000 Wal-Mart and Sam’s Club locations live by year-end.
(Internet Retailer, January 2006).

The Future

XIn December 2005, research firm Gartner released its inaugural report on RFID market size, share, and forecast Market Share and Forecast: Radio Frequency Identification, Worldwide, 2004-2010. According to Gartner the RFID market will grow from $504 million in 2005 to $3 billion in 2010. For RFID technology to gain wider acceptance successful implementations are needed; companies announcing large projects with substantial benefits rather than just decisions to deploy. Broader implementations across emerging sectors are likely to become more evident in 2006 and 2007. In addition, the industries in which RFID is deployed will continue to diversify, expanding what may have been a preoccupation with applications in the consumer packaged goods and retail industry. Aerospace and defense, healthcare, logistics, and pharmaceuticals are all ready for adoption. Each of these industries will adopt RFID in a different way and at a different pace as vertical applications are discovered. (

In Conclusion

The next interesting phase of RFID deployment will involve comprehensive implementations with real ROI for all partners in the supply chain. RFID is a significant part of the broad movement toward sensor-actuator, always-on devices; smart tags with capabilities ranging from monitoring the date of perishable goods and automatically reducing the price as the expiration approaches, to sounding an alarm when a forklift operator places a palette of flammable chemicals in a restricted area. Reaping all the benefits from RFID and achieving positive ROI requires more than just tags and readers. A thorough rethinking of how to do business and a restructuring of systems and processes throughout an organization will be necessary. This is a daunting task that most small companies scrambling to meet their suppliers’ deadlines have yet to address.

There is no doubt that RFID will eventually revolutionize business processes throughout the supply chain, and result in greater efficiency and value for everyone. However, simply adding the tags before shipping, as many vendors are now required to do, provides little benefit other than to the companies such as Wal-Mart and Target. RFID requires careful planning and implementation. Companies that take the time to invest carefully and position themselves for the future will be best able to profit when that future arrives.

Another solution for companies that feel overwhelmed may be to turn to a managed-services firm to handle the management, archiving, filtering, and integration of RFID data, much as companies now turn to outside vendors to manage product catalog data or EDI. If there is a need to share information across the supply chain with logistics suppliers, banks, retailers, and dealers, a managed-services provider could give everyone a protected view of only the data they need, in whatever format they want.
(CFO Magazine, March 2005)


Basics in RFID


This white paper describes the basic components of a Radio Frequency Identification (RFID) system and explores the technology, applications, and competitive advantages of RFID technology and its uses for Automatic Identification Data Collection (AIDC).

1. Introduction

Traditional bar-coding technology provides an economical solution for Automatic Identification Data Collection (AIDC) industry applications. However, this technology has a primary limitation: each barcoded item has to be scanned individually, thus limiting the scanning speed. Extra costs are incurred through the use of manual labor or automating the scanning process. And when the scanning is manually performed, there is the added possibility of human error. As a result of these limitations, RFID technology has been making inroads in AIDC applications. RFID offers greater flexibility, higher data storage capacities, increased data collection throughput, and greater immediacy and accuracy of data collection. An increasing number of companies in a variety of markets worldwide are embracing RFID technology to increase quality and quantity of data collection in an expeditious manner, a feat not always possible with barcoding systems. The technology’s enhanced accuracy and security makes it an ideal data collection platform for a variety of markets and applications, including healthcare, pharmaceutical, manufacturing, warehousing, logistics, transportation and retail.

2. Components of an RFID System

A basic RFID system consists of these components:

      • A programmable RFID tag/inlay for storing item data consisting of:
                     – an RFID chip for data storage
                     – an antenna to facilitate communication with the RFID chip.
      • A reader/antenna system to interrogate the RFID inlay.

The RFID Tag

RFID tags are categorized as either passive or active. Passive tags do not have an integrated power source and are powered from the signal carried by the RFID reader. Active tags have a built-in power source, and their behavior can be compared to a beacon. As a result of the built-in battery, active tags can operate at a greater distance and at higher data rates in return for limited life driven by the longevity of the built in battery and higher costs. For a lower cost of implementation, passive tags are a more attractive solution. The RFID tag consists of an integrated circuit (IC) embedded in a thin film medium. Information stored in the memory of the RFID chip is transmitted by the antenna circuit embedded in the RFID inlay via radio frequencies, to an RFID reader. The performance characteristics of the RFID tag will then be determined by factors such as the type of IC used, the read/write capability, the radio frequency, power settings, environment, etc.

The information stored in an RFID chip is defined by its read/write characteristics. For a read-only tag, the information stored must be recorded during the manufacturing process and cannot be typically modified or erased. The data stored normally represents a unique serial number which is used as a reference to lookup more details about a particular item in a host system database. Read-only tags are therefore useful for identifying an object, much like the “license plate” of a car. For a read/write tag, data can be written and erased on demand at the point of application. Since a rewriteable tag can be updated numerous times, its reusability can help to reduce the number of tags
that need to be purchased and add greater flexibility and intelligence to the application. Additionally, data can be added as the item moves through the supply chain, providing better traceability and updated information. Advanced features also include locking, encryption and disabling the RFID tag. RFID systems are designed to operate at a number of designated frequencies, depending on the application requirements and local radio-frequency regulations:

• Low Frequency (125kHz)
• High Frequency (13.56MHz)
• Ultra High Frequency (860-960 MHz)
• Microwave (2.45 GHz).

Low-frequency tags are typically used for access control & security, manufacturing processes, harsh environments, and animal identification applications in a variety of industries which require short read ranges. The low frequency spectrum is the most adaptive to high metal content environments, although with some loss of performance. Read ranges are typically several inches to several feet.

High-frequency tags were developed as a low cost, small profile alternative to low-frequency RFID tags with the ability to be printed or embedded in substrates such as paper. Popular applications include: library tracking and identification, healthcare patient identification, access control, laundry identification, item level tracking, etc. Metal presents interference issues and requires special considerations for mounting. Similarly to the low-frequency technology, these tags have a read range of up to several feet.
UHF tags boast greater read distances and superior anti-collision capabilities, increasing the ability to identify a larger number of tags in the field at a given time. The primary application envisioned for UHF tags is supply chain tracking. The ability to identify large numbers of objects as they are moving through a facility and later through the supply chain, has an enormous opportunity for ROI in retail such as reduction of wasted dollars in inventory, lost sales revenues due to out of stock inventory, and the elimination of the human factor required today for successful barcode data collection. There are large number of additional markets with demand for UHF RFID technology such as transportation, healthcare, aerospace, etc.

Microwave tags are mostly used in active RFID systems. Offering long range and high data transfer speeds at significantly higher cost per tag making them suitable for railroad car tracking, container tracking, and automated toll collection type applications as a re-usable asset.
The table on the following page highlights the different characteristics of the three RFID operating frequency ranges:

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3. Applications

Library Information Systems

Tracking a library’s assets and loan processing is very time-consuming and traditional bar-coding systems help to improve the process. However, RFID technology offers additional enhanced features:

Efficient processing – When each library item contains an embedded RFID tag on a printed label, its availability can be tracked much more efficiently (versus manual tracking). Library items can be checked in and out much faster than manual barcode or human readable data processing. In fact, with RFID, processing returned items no longer requires any human intervention at all. RFID enables libraries to provide certain services around the clock, without incurring additional costs.

Security – If a tagged library item has not been checked out, any attempt to remove it from the library premises will be detected via the RFID antenna at the entrance gate, hence the RFID tag doubles as a EAS anti-theft device.

Inventory management – Book inventory that previously took weeks or months to execute can now be shortened to hours using RFID tagging. Using a portable RFID device, a librarian needs only to walk through a corridor of book shelves to check the status of the books available. The RFID reading device reads item information from the books’ IC chips and then automatically interfaces with library inventory software systems to update the appropriate databases. In addition, it can notify the operator immediately if an item is not in its designated location.

Supply Chain Management

Key challenges faced by companies in their supply chain, is the visibility, tracking and traceability of materials and products as well as the quality and quantity of data collected in real time. RFID’s ability to increase data collection throughput and accuracy enable companies to identify materials, products and trends in supply chain with greater accuracy in real-time, compared to data collection technologies utilized to date. Once RFID technology is fully integrated, minimal human effort is required in this
process thus reducing errors and costs. By providing accurate, real-time data and information, RFID solutions enable companies to capture “live” data, converting it to meaningful information and automating all associated transactions and processes.


Erroneous patient data, including administering incorrect medications or dosages, is a major factor resulting in serious and in some cases, fatal medical mishaps. According to the Institute of Medicine:

• Between 44,000-98,000 Americans die from medical errors annually (Institute of Medicine;
Thomas et al.; Thomas et al.)
• Only 55% of patients in a recent random sample of adults received recommended care with
little difference found between care recommended for prevention to address acute episodes or
to treat chronic conditions (McGlynn et al.)
• Medication-related errors for hospitalized patients cost roughly $2 billion annually (Institute of
Medicine; Bates et al.)

These statistics have dramatically increased the demand for fail-safe accuracy in managing patient care; RFID is providing an effective solution.

In RFID-equipped hospitals, patients wear wristbands with RFID tags containing encoded medical information. All prescription bags contain an embedded RFID tag containing details of the medication. Before any medication is administered to a patient, an RFID reader verifies the information between patient’s tag and the prescription bag’s tag. Information about the patient’s medical allergies or other relevant patient care criteria is also highlighted on the RFID host computer. This secure patient-data
system greatly reduces the possibility of human error thereby preventing a majority of unnecessary medical mishaps.

4. Benefits

The primary benefits of RFID technology over standard barcode identification are:

• Information stored on the tag can be updated on demand
• Large data storage capacity (up to 4k bits);
• High read rates
• Ability to collect data from multiple tags at a time
• Data collection without line-of-sight requirements
• Longer read range
• Greater reliability in harsh environments
• Greater accuracy in data retrieval and reduced error rate

What About Barcodes?

As barcodes approach their “middle ages” (it’s been 40 years since a pack of gum was scanned at a Marsh grocery store in Ohio), they are as “alive” and useful as ever. And while RFID provides advantages, the demise of the barcode is greatly exaggerated. The Auto-ID Center, the research and development group that formulated and standardized much of the RFID technology evolution, did not set out to make barcodes extinct. According to its spokesperson, “The Auto-ID Center does not advocate replacing barcodes as barcode-based systems such as the UPC are a standard automatic identification technology in many industries and will be an important complimentary technology for
many years.”

5. Caveats

The main caveat of RFID technology is the cost of the physical RFID tag. A typical barcode label costs about $0.02, whereas an RFID tag label can costs upwards of $0.10 or more depending on quantity. The initial implementation costs for RFID are also higher, depending on requirements and equipment specifications.

Although initial RFID implementation may currently cost more, the cost will gradually drop to a competitive level in the coming years as companies adopt the technology. Meanwhile, companies that can exploit the strategic benefits of RFID today stand to gain significant advantages over their competitors slower to adopt RFID. Early adopters can clearly benefit from cost savings and intangible long-term competitive advantages which outweigh the cost of the RFID implementation.

6. RFID Summary

Over the past few years, RFID technology has been attracting considerable attention. Giants such as Wal*Mart, Target, BestBuy, U.S. Department of Defense (DoD), Tesco, REWE and Metro Group have announced RFID mandates instructing their top suppliers to start utilizing RFID technology as part of a supply chain compliance program. In January 2005, there were in excess of 400 major companies worldwide required to use RFID technology. As a result of the current RFID supply chain mandate schedules, an estimated 50,000+ suppliers who will ultimately be affected by these plans and RFID solutions are a large driver for future business growth.

The long-term focus in the United States will be on the retail and DoD adopters, who have to be compliant in the near future. Eventually, they will move beyond compliance only, and attempt to use RFID to increase efficiency and start gaining return on their investment. This will almost certainly mean more upgrades and additional spending on enterprise solutions.

The dominant RFID dynamic behind supply chain applications is the EPC standard using the UHF frequency band: 902-928 MHz (North America) and 868 MHz (Europe). EPC Global, a joint venture between GS1, Inc. (formerly EAN International) and GS1 US (formerly the Uniform Code Council [UCC]) is focused on helping supply chains and industry implement the Electronic Product Code™ (EPC) through the development of global standards and support of the EPC global network™. The EPC Global Network ideally intends to transform the global supply chain through a new, open global standard for real-time, automatic identification of items in the supply chain of any company, in any industry, anywhere in the world.

8. General Information

There are numerous sources of information regarding the latest RFID developments. Two good places to start are:


RFID System Components

The basic components of an RFID system are:

  • Tags
  • Reader
  • Antenna
  • Host computer with appropriate application software



RFID tags are tiny microchips with memory and an antenna coil, thinner than paper and some only .3mm across. RFID tags listen for a radio signal sent by a RFID reader. When a RFID tag receives a query, it responds by transmitting its unique ID code and other data back to the reader. There are two types of RFID tags-passive and active.

RFID Readers


RFID readers, also called interrogators wuery RFID tags in order to obtain identification, location, and other information about the device or product the tag is embedded in. The RF energy from the reader antenna is collected by the RFID tag antenna and used to power up the microchip. There are two types of RFID readers.

  • RFID read-only readers: As the name suggest, these devices can only query or read information from a nearby RFID tag. These readers are found in fixed, stationery applications as well as portable, handheld varieties.
  • RFID read-write readers: Also known as encoders, these devices read and also write (change) information in an RFID tag such RFID encoders can be used to program information into a “blank” RFID tag. A common application is to combine such a RFID reader with a bar code printer to print “smart labels”. Smart labels contain a UPC bar code on the front with an RFID tag embedded on the back.


There are 4 major frequency ranges that RFID systems operate at.

  • Low Frequency (LF) 125 to 148KHz
  • High Frequency (HF) 13.56 MHz
  • Ultra High Frequency (UHF) 915 MHz
  • Microwave 2.45 GHz

Generally, low-frequency systems are distinguished by short reading ranges, slow read speeds, and lower cost. Higher-frequency RFID systems are used where longer read ranges and fast reading speeds are required, such as for vehicle tracking and automated toll collection. Microwave requires the use of active RFID tags



RFID Technology for Warehouse and Distribution Operations.

Download the PDF Here


1. Introduction

Interest in using radio frequency identification (RFID) technology in warehouse and distribution operations is at an all-time high. Wireless identification and tracking with RFID represents a new way to conduct operations, which creates new bene- fits and challenges. Users need to understand RFID’s capabilities and limitations to accurately assess the impact it can have on their business.

This white paper will provide an overview of RFID technology and how it may be applied to warehousing and distribution operations. It will describe the technology and its maturity, standards and industry initiatives, and will also provide examples of how RFID technology can be best used in warehouses and distribution centers.

2. Overview

You’ve probably heard the acronym “RFID,” which stands for radio frequency identification.You may know that RFID tags can contain unique information that identifies whatever they are attached to, and can share that information wirelessly with computer databases and networks so items can be tracked efficiently.

What you may not know is how far the technology has come and what is being developed right now that could help your warehouse or distribution center. To help decide if RFID would be beneficial, consider if any of the following statements apply to your business:

• Processing speed is essential or could provide a competitive advantage;
• We deal in high-value assets that need to be protected;
• A bar code cannot physically survive our processes;
• Areas of our facilities need to be protected from unauthorized access;
• We need more unique information on each item than a bar code can contain;
• We are highly automated and need to minimize human intervention;
• We could benefit by knowing where products are at all times in the supply chain, in real time.

If any of these statements apply to your business, RFID should be given serious consideration in your system design.

2.1 How RFID Works

Screen Shot 2017-06-12 at 2.18.25 PMScreen Shot 2017-06-12 at 2.18.17 PMFirst, the basics: RFID is a means of uniquely identifying an object through a wireless radio link. The identification is accomplished by an interrogator, also called a reader or “master,” and a tag, also called a transponder or “slave” that has a unique identification code. Data is exchanged between tags and readers using radio waves between the tag and interrogator, and no direct line of sight is required for the transaction.The interrogator asks the tag for the code, or processes the signal being broadcast by the tag, decodes the transmission and transfers the data to a computer.The computer, in turn, may simply record the reading, or look up the tag ID in a database to direct further action, and may also direct the interrogator to write additional information to the tag.

The latest generation of RFID allows the dozens of individual objects within a group to be uniquely identified at the same time.This is in contrast to bar codes, which must be read one by one, and can be very advantageous in high-speed reading, sorting and material handling applications. Because no line of sight is required between the reader and the tag, unattended reading stations can be set up to identify objects on a conveyor belt or within a transport container. Fast simultaneous processing and unattended reading are the main performance characteristics that set RFID apart from bar code.

This advanced functionality comes with a price, which in the past often made RFID systems cost-prohibitive. Today, however, pricing has come down considerably, with many tags suitable for warehouse and distribution operations costing considerably less than a dollar per RFID tags are often reusable and can be packaged to be extremely durable, which helps amortize the initial system cost and provides strong total cost of ownership (TCO) advantages compared with identification methods that must continually be replaced.

2.2 Tags

The lower-cost tags generally are passive (meaning they have no internal power source), have limited data storage capacity (typically 32 to 128 bits), are read-only (not re writable), and have limited read range. Like bar codes, they are usually used as “license plate” identifiers, i.e., they hold little actual data but serve to identify the object to a database containing larger amounts of information. For example, a tag attached to a product in a work-in-process application would uniquely identify the product each time it passed by a reader. The reading, and any work performed on the assembly, would be recorded in a database. In turn, a conveyor-based sorting system could identify the item and receive routing instructions from a data-base application, allowing products to reach their loading destination without human intervention.

Higher-cost tags are available for many more complicated longer read applications.They often have their own power source (these are known as active tags), making them heavier than passive tags, and large data storage capacities (upwards of 1M), making them essentially self-contained databases. These higher-capacity tags could, for example, monitor temperature through a process or give operational instructions to a robotic workstation when they arrive attached to their item, then have updated status information appended to the tag when the task is complete.This flexibility does have a cost, however; the internal power source can burn out, giving these tags a life span of 5-10 years.

2.3 Frequencies

Screen Shot 2017-06-12 at 2.21.15 PMRFID systems are available in a wide range of frequencies to suit various performance needs. Frequency is an important factor in transmission range and speed. However, bandwidth availability is regulated by telecommunications authorities in each country, and not all frequencies are available for use throughout the world. This is an important consideration when planning logistics and supply chain applications. Most tag frequencies share the ISM (Industrial, Safety and Medical) bands. Compatibility problems are gradually being solved through standardization efforts, particularly in standards sponsored by the ISO.

Most RFID technology used in warehousing and distribution operates at either 13.56MHz (high frequency), 860-930MHz (ultrahigh frequency, or UHF) or the 2.45GHz (microwave) band. Still in use are 125 KHz low-frequency tags, which are used for access control and vehicle identification. Standards that have been ratified or are in deve- lopment for material handling, logistics and supply chain applications are concentrated in the UHF band and 13.56MHz. Wal-Mart, which will begin requiring its 100 largest suppliers to tag shipments with RFID, has specified the use of draft stan- dards in these frequency bands.

Here is a very brief overview of different RFID frequencies and their performance characteristics.

2.3.1 Frequencies – High Frequency

The high frequency, which some call intermediate, band encompasses the 10 to 15MHz range, with 13.56MHz being the most common. Read range with a fixed station reader is around 1 to 3 meters (3 to 10 feet), although the reading speed is higher than the low-frequency band. Sizing of the antennas and tags becomes more critical. More expensive than low fre- quency, this band has the potential to become more cost-competitive through volume purchase of tags.Typical applications here include access control and smart cards.The first “smart labels” which are RFID tags embedded within adhesive bar code labels, were produced at 13.56MHz, but are now also available in other frequencies.

2.3.2 Frequencies – Ultrahigh Frequency (UHF)

Ultrahigh-frequency RFID encompasses the 850 to 950MHz band and is frequently championed for distribution and logis- tics applications.The American National Standards Institute (ANSI) standard for RFID identification of returnable transport items, which complements the ANSI MH10.8 bar code shipping label standard, specifies the 902-928MHz band for item iden- tification.The ePC specification (discussed later) supported by Wal-Mart also utilizes the UHF band.

Read range, which as with all frequencies depends on tag size, power output and interference, is up to 10 feet.

2.3.3 Frequencies – Microwave

Some RFID products are also produced in the microwave bandwidth, typically at either 2.45GHz or 5.8GHz. These pro- ducts offer the highest data read rates, but are also more expensive and have higher power requirements. These are often appropriate in specialized applications.

2.4 Read/Write Capabilities

When considering what RFID technology is right for your warehousing or distribution application, it’s important to under- stand the difference between the various types of writing capabilities available. In general, the more versatile, or the more stand alone a system is, the more memory needed, which increases both the size and cost of the tag. Read-only tags have fixed information securely programmed into them when they are manufactured.Write once, read many (WORM) tags may have data written to them once only post-manufacture and are the most popular kind of tag currently used. Rewritable tags are the most memory- and cost-intensive, but provide flexibility to update data. Rewritable tags have a shorter writing range than reading range, which must be considered when planning the application.


The International Organization for Standardization, best known by its acronym ISO, has undertaken the most RFID stan- dardization projects and focuses on technical standards that are accepted globally. One of its most important subcommit- tees is JTC 1/SC 31 Automatic Identification and Data Capture Techniques, which is working on a series of RFID standards for item management.ANSI, which coordinates much of its work with the ISO is another important standards body and has established an RFID standard for shipping container identification.The Automotive Industry Action Group (AIAG) and other industry associations are also developing their own RFID standards, which are often based on ANSI and ISO efforts.

The Auto-ID Center at MIT led research to create a specification for RFID for item-level tagging in the consumer goods industry, which it calls the Electronic Product Code (ePC).The Auto-ID Center’s work has since been transferred to a new entity, AutoID Inc., which was created by the Uniform Code Council (UCC) and EAN International, which maintain the U.P.C./EAN bar code system and many other standards. See the ePC section for more details and visit the UCC Web site – – for the latest information.

Any technology needs standards to gain acceptance, and RFID is no exception.Working to get standards in place can delay that procedure, but too many conflicting standards can have the same consequence. Such as in the case of the current situation regarding UHF, too many standards can be the same as having no standard at all. Further complicating the matter, there are technical standards, which specify performance requirements for interoperability, and application standards, often set by industry associations, that describe how RFID can be used for a specific function.

AIM Global, the trade association for the automatic identification industry, maintains an updated guide to current RFID standards activity on its Web site. Visit for more information about specific standards and proposals. Check with relevant associations and professional societies for specific information about standards in your industry.

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4. Applications

Applications are constantly being developed and refined as the technology advances and the supply chain industry conti- nues to work for the cradle-to-grave data flow that will streamline the product pipeline. Because of the visibility it can provide, and its newfound cost effectiveness, RFID is emerging as an intriguing option to complement data collection and product identification in the supply chain.

Many hardware and software suppliers are just beginning to explore how RFID technology can tie into warehouse management systems (WMS) to produce a warehouse/DC of incredible efficiency. Several WMS providers now support RFID data entry in their software. Here are some potential RFID applications in warehousing and distribution environments:

• Pallet and case tracking, particularly when the pallets are reused within a closed system.
• Forklift identification. RFID can identify forklift location to allow systems to monitor activity and assign the closest forklift to those pallets needing moved, and serve as a permanent asset ID.
• Access control: Chips embedded in ID cards can control locks and prevent unauthorized entry; chips on products, cases, pallets and equipment can control item movement and sound alarms in case of unauthorized removal.
• Smart shelves: Retailers are experimenting with readers embedded in stocked store shelves to keep track of tagged

inventory and notify either the back room or the supplier when stock is low.The application could be modified for use in warehouses and distribution centers for materials management and inventory control.

4.1 An RFID Enabled Warehouse or Distribution Center

There are several possibilities for how RFID technology can be utilized in warehouse and distribution center, in concert with existing systems and other ADC technologies. Step by step, here’s one example of what could happen:

In receiving, items, cases and/or pallets are read by a portal reading unit placed at the dock door as they are unloaded from the truck. Data are transferred into the warehouse management system (WMS), updating its database.The system reconciles its orders and sends back information that will allow some items to be cross docked for immediate transport, while others can be staged and stored. If bar codes were being used here, all received items would have to be scanned, their labels clearly visible, by workers, making the process much more labor-intensive.

When stored on shelves with readers, the readers automatically record what items have been placed there; when they are removed, the action is also automatically recorded. All of this happens without human hands ever touching a scanner, keyboard or clipboard.

If cases are broken up and items repacked, each item is reassigned to a tagged case by scanning the item’s bar code or RFID tag and the case/pallet tag.That information transfer initiates an assignment of the pallet or case to a truck or dock. Cases/pallets are moved along conveyor belts, triggering readers along the way that track the movement and also adjust conveyors as needed to redirect the cases/pallets.

Should there be a specific item out there that is needed to fill an order, a worker can go through the aisles, with a handheld reader loaded with the needed unique ID, until the unit beeps, locating the needle in the haystack with keen efficiency.

When cases/pallets are loaded back onto trucks, door-mounted units again record the activity, updating the central data- base and also initiating a sequence that produces documentation such as advance shipping notices (ASNs), packing slips, invoices, etc.

4.2 Item-level tracking

Item-level tracking in supply chain applications has always been a coveted thing. Having each and every item uniquely identified, instead of generally identified with, for example, a U.P.C. symbol- opens up a whole new level of tracking management. The Electronic Product Code, or ePC, being developed by the Auto-ID Center at MIT (see sidebar/addendum) is the latest RFID technology proposed for item-level tracking of consumer goods, and other RFID technologies have also been considered for this application.

While the technology is still being developed and tested, there is much speculation on what applications would be best to use the technology with. The Auto-ID Center sees strong possibilities in warehousing for pallet, case-level and item-level tracking as described in the application section. Numerous studies and analysis by the Center and leading independent consulting firms support this assertion, stating that these types of applications can provide strong return on investment (ROI) in most circumstances.

Some estimate that item-level tracking will not happen for some time, up to 10 years. However, analysts say there are clear business advantages in pursuing pallet- and case-level applications now. “RFID projects yield the biggest immediate benefits when they support order fulfillment and logistics,” according to a report by Forrester Research Inc., Cambridge, Mass. “As such, most near-term RFID testing should concentrate on pallets, cases, distribution centers and warehouses – not items and store shelves.”

4.3 Application Planning Considerations

To design a successful system, you must not only understand what you want the system to do (application), but you also must be very clear about what technologies can be used to deliver the performance you seek.When defining your perfect solution, it is important to ask yourself often, “Am I adding this technology to do it better, or am I simply adding technology?” Reading hundreds of tags per second could easily overwhelm a network or software application. Existing identification systems should be retained where they are sufficient, with RFID used to complement them or eliminate blind spots or bottlenecks in processes.

Part of application evaluation necessarily involves defining what the technologies you are considering can and cannot do. Just like any other technology, RFID has its limitations, and it’s important to know what they are.

For example, RFID cannot read tags over great distances, though it can certainly work in concert with technologies that can. Also, because we are talking about radio waves, interference can be a problem, so metal, liquid, and many tags in close proximity to one another or varying orientations could affect performance.Though cost has come down and will continue to decline, an RFID tag will always be more expensive than a paper bar code label, and we doubt you will ever see five cents per tag in low to medium volumes.

Finally, RFID tags cannot replace bar codes. But the two can work together to provide you with an effective, streamlined, highly productive warehouse and distribution management system.

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To remain competitive in today’s global – we-want-it-now supply chain – it is imperative to remain open to new technologies and the improvements they can offer your business. RFID is one useful tool to keep in mind for current and future system design.

For additional information on RFID, we suggest you investigate the following resources:

• AIM Global,
• The Uniform Code Council,
• Material Handling Industry of America,
• The RFID Sourcebook, a guide to RFID technology, vendors and applications,


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