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Barcodes or RFID Tags: Key Factors to Consider in Choosing the Data Collection Technology for Your Operation

By Cynthia Bellian

While there are similarities, some noteworthy differences between a bar code system and RFID may be the factors to determine which is better suited for your needs. The right solution for your application will depend on whether your situation better aligns with the capabilities and attributes associated with each data collection technology.work-rfid

Each technology has its advantages and disadvantages. Key considerations include the nature of the processes and supply chain environment, impact in human capital or improving yields, need for data accuracy or item level identification and tracking, service life, and budgets.

BAR CODES: Advantages and Disadvantages

Bar codes rely on optical technology for the data to be read and collected. Today bar codes are simple and universally used because bar codes are inexpensive and a variety of scanners are widely available and affordable. They are ubiquitous in supply chain, distribution and retail applications but due to its physical dimensions are limited in the type and amount of data that can be presented on a bar code. For retail applications barcodes denote only the product type and its manufacturer.

Bar codes require direct line of sight for the data to be read and captured which is generally limited to within several inches in retail applications to a few feet in distance for warehouse applications. Bar codes are read one at a time which can be labor intensive and must necessarily be positioned on the outside of item packages or containers to achieve direct line of sight reads. This introduces higher wear and tear, adversely impacting the integrity and quality of the bar code, and may lead to read failure or interference. Dirty, obstructed or ripped bar code labels cannot be effectively scanned.

Applying a bar code can cost a fraction of a cent or a few pennies. Its form is typically less durable at that cost and can be easily damaged, and may be at risk for counterfeiting since they are easily copied.

Bar codes may be better suited for closed loop supply chains and process manufacturing where liquids and metals are part of the equation since liquids and metals cause interference with certain radio frequencies.

RFID: Advantages and Disadvantages

RFID works on radio frequency technology and can provide unique item level identification. Unlike bar codes which has static data and can only be read, RFID tags are dynamic and can read, write and update, even activating other transactions and events. RFID tags are capable of tracking the lifespan of an item since they have the memory capacity for more data, can be re-programmed and may even be reused. Encryption or password protection offer better data security and are more difficult to counterfeit.

Both Passive and Active RFID options are available. The key difference between these two types is their power source for transmitting signal.

Active RFID tags include a battery that will automatically send the data, whereas passive RFID tags are without power and signals are only activated when RF energy is emitted by a reader in range. Distance can be as far as 40 feet for fixed readers, or 20 feet for hand held readers. Once installed fixed readers do not need human involvement to capture the data, but hand-held readers are similar to hand held bar code scanners which require human labor to operate.

The price of a single-trip and a multi-trip passive RFID tags typically range from $0.10 to $4.00 per piece. Active RFID tags are more expensive, costing as much as $5 to $50 per piece when fully loaded with a broad range of options and functionalities, such as motion or temperature sensors or tampering indicators. They have longer read ranges as far as hundreds of feet or more and last about 3 to 8 years depending on the rate of broadcasts.

RFID formats are more durable and have longer service life where inlays are encased and protected. Some durable passive tags may have a service life of up to 10 years and can be embedded in containers and packaging to perform in harsh environments. There have been advancements in overcoming interference for processing involving liquids and metal through additional protection and positioning, however limitations still exist.

Because RFID has superior read rates, it may be the preferred choice for a more complex supply chain that’s not closed loop, with high volume transactions. If your operation is looking to read multiple items in a single pass and requires identification or tracking of a product at the unique item level then RFID will outperform a bar code system especially when fully accounting for the labor costs, resulting in significant total cost disadvantages.

For a system that automatically captures data through the normal course of operations and processes, RFID is a solution that does not require human intervention, since strategically positioned readers and antennas accomplishes the data capture as events and activities occur. Although RFID tags cost more than bar code labels, moving to an RFID system will eliminate more intensive labor costs associated with individual scanning of items.

Summary: Bar codes and RFID technology each have their fit depending on the parameters of an operation. Some facilities have implemented a hybrid approach which uses bar codes for item level identification, but RFID tags for the bulk or aggregated units, eliminating the need for each individual item on a pallet to be opened and scanned. The strengths of each technology can be leveraged and coexist to enhance visibility throughout the supply chain. The key comparisons following will help you determine a solution.

A DOZEN POINTS OF COMPARISON

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RFID Professionals  - Starport Technologies

Business Benefits from Radio Frequency

Business Benefits from Radio Frequency Identification (RFID)

Executive summary

Today the largest government and business enterprises in the world are developing plans to deploy electronic product code (EPC™)-RFID based solutions across their global supply chains and operations. These enterprises have initial deployments and programs that utilize RFID to build faster supply chains, which provide economic payoffs and greater visibility into merchandise movement.

With many enterprises adopting and mandating EPC-RFID, companies across the globe are posing the question: how do we identify and capture the business benefits of EPCRFID technology? To help companies define and deploy RFID successfully, this paper addresses two topics:

  • Benefits that can be achieved through RFID-based solutions
  • Reviews the solutions adopted by companies in different markets

Screen Shot 2016-12-20 at 8.44.36 AMStructuring Your RFID Business Goals

The first step in measuring the value of RFID is to define a business map of the functional, technical and operational changes the enterprise is considering. Key questions are:

  • How effective and efficient are the existing business processes?
  • What are the effectiveness and efficiency goals for our processes?
  • How can RFID help reach those goals?

This process grounds the RFID program in the reality of your specific enterprise. Creating a realistic business model that represents both the status quo and the economic impacts of RFID is essential.

Over the last several years, consulting firms, academics and individual companies have addressed the issue of defining the return on investment (ROI) for RFID. There is a growing portfolio of assessments and studies concerning how and where the ROI for RFID is generated. The following sections examine some of the value case elements involved.

Cost reduction

The cost reduction value case is a target area of many consumer packaged goods (CPG) companies, retailers and the United States Department of Defense (DoD). These enterprises expect to reduce inventory and inventory management  expenses by billions of dollars over the next several years.

Examples of cost-reduction objectives for an RFID program include:

  • Lower inventory stock levels
  • Reduce waste
  • Reduce manual checks
  • Reduce inventory handling costs
  • Reduce logistics costs
  • Reduce claims and deductions
  • Improve asset utilization

Increase revenue

Both large and small retailers and manufacturers are developing RFID deployments to drive sales. The utilization of RFID empowers these companies to design innovative solutions with tangible benefits, including:

  • Reduced out-of-stocks
  • Improved order fill rates
  • Reduced shrinkage
  • Improved inventory turns
  • Enhanced in-store customer support

Counterfeit product shielding

Quality manufacturers across the globe are losing sales, profits and their quality image from the expanding flow of counterfeit products. Equally important, counterfeits of many products (such as pharmaceuticals, currency, passports and aircraft parts) represent a safety and security hazard for customers across the globe. There are several deployments in place to identify counterfeits using RFID. These RFID tagged products, coupled with real-time databases, represent a viable information platform to prevent the distribution and sale of counterfeit products.

Shrinkage, theft and diversion prevention

High-value consumer and industrial products face the large risk of theft and diversion. RFID has shown considerable progress in:

  • Identifying theft and diversion at the shelf level
  • Identifying theft and diversion points in the supply chain

As the price points of RFID products decline, this technology will provide a widely used tool to prevent theft along the supply chain– from the factory floor to the storefront.

Competitive advantage

Any business case or profit improvement program is intertwined with a company’s business goals and competitive advantage. Understanding competitive advantage can be reduced to a simple question: are we better than our peers in key performance areas? Several leading companies believe that RFID is the key to increasing competitive advantage. Sources of advantages include:

  • To increase distribution center productivity
  • To increase yield per end user, customer or site
  • To create a flexible, adaptive supply chain
  • To create a cost advantage in logistics
  • To reduce the impact on prices of recycling legislation for electronics
  • To reduce the impact of homeland security measures (e.g., country of origin)
  • To target an additional point of margin by a specific date

Screen Shot 2016-12-20 at 8.44.36 AMIndustry Snapshots – Business Cases

Today there are thousands of RFID deployments and pilots around the world. RFID addresses a global array of business applications. A short list of examples includes:
• Retail supply chain
• Military supply chain
• Container tracking and management
• Pharmaceutical management and tracking
• Automated payment solutions
• Baggage tracking and management
• Vehicle, paper and aircraft assembly
• Asset tracking
• Document tracking
• Reusable pallet and container management

The development of the business cases behind these deployments generally followed several stages. Companies evaluated the benefits carefully with the costs. They defined and isolated the problems to solve and the opportunity to solve them with RFID. Working from business cases, they forecasted the annual benefits that the RFID solution would provide. A number of industries have initiated pilots targeted to specific applications. In this section, we review the highlights of several of these pilots.

Retail

Retail interest in RFID technology is driven by the desire of companies to achieve greater speed and visibility into their supply chains, with the goal of increasing both operational efficiency and store effectiveness. An efficient supply chain operation ensures that goods can be delivered to the place and time when consumers are ready to purchase. Potential gains from the visibility RFID generates include lower inventory levels, reduced labor costs and increased sales, among others as shown in Figure 1 below.

Technology: The RFID Process

Creating more profitable stores is easily facilitated by RFID technology. The combination of focused business objectives and measurements plus RFID technology provides a powerful formula for achieving increased shareholder value.

Several retailers and CPG companies have deployed successful pilots of EPC-RFID. Targeted time frames were announced by several companies to expand the implementations. The number and scope of these efforts are growing as companies seek the exact business and process models that will maximize their ROI for EPC implementation. The following list summarizes several of the benefits that retailers will capture with RFID-based solutions. These benefits can be grouped into issues of speed and visibility:

Benefits of Speed:

  • Eliminate lost sales due to out of stocks
  • Speed up store receiving, processing, replenishment plus point of sale (POS) and returns processing
  • Notification of units needed on sales floor upon store receipt
  • Satisfy customer requests immediately by locating products on sales floor and in the backroom
  • Fast, accurate inventory audits
  • Increased distribution center efficiency and accuracy

Benefits of Visibility:

  • Unit, carton and pallet-level visibility throughout supply chain
  • Immediate identification of exceptions at check points
  • Visibility to replenish the right product to the right place at the right time
  • Block defective merchandise and counterfeit merchandise

Currently, there is an emphasis on using RFID for applications that can track items from the manufacturing point all the way through to the store shelf. This process entails tagging pallets, cartons, reusable containers and individual items to track the movement of goods throughout the supply chain straight through to the sale of the item to the customer.

Manufacturing

Proprietary RFID-based solutions have been used for a decade in the manufacturing space. One of the established uses is in the automobile manufacturing process. Automobile companies attach read/write RFID tags to the car chassis. The RFID tags provide
direction to and record the completion of each assembly process. Other manufacturers are working hard to exploit the potential of RFID in their operations. Example benefits that manufacturers have identified include:

  • Fast assembly
  • Identify and eliminate counterfeit parts
  • Improved accurate/reactive production planning
  • Reduced stock/work in process (WIP), increase make-to-order
  • Reduced efforts on stock counts
  • Reduced product recall costs
  • Correct parts identification, reduced maintenance
  • Accurate and real-time inventory
  • Accurate packing list and invoice information
  • Cheaper disposal
  • Tighter linkage to distributors

Linking the manufacturing floor to the retail floor: real-time inventory

Several manufacturers today are experimenting with RFID-based tagging of higher-value merchandise. Examples include designer apparel, electronics and pharmaceuticals. The concept is to audit the RFID tagged inventory on the retail floor and use that information to drive manufacturing and shipping of completed product.

In summary, RFID gives the producers total visibility into the movement throughout the supply chain. Relationships with retailers provide powerful incentives for offsetting some of the costs, with the agreement to share information with these valued trading partners.

Transportation and logistics

The logistics sector is positioned to be one of the primary beneficiaries of the adoption of RFID into the supply chain. It is important to recognize that the RFID compliance mandates generated by Wal-Mart®, the Department of Defense and others address the
receipt of merchandise and assets into these large enterprises.

For the logistics industry, with its position between suppliers and customers, RFID tagging and the underpinning mandates represents a great opportunity to expand the portfolio of offered services. Logistics opportunities include:

  • Work with shipping customers to provide RFID compliance services that solve the compliance challenge
  • Expand service and revenue base to suppliers and customers by using the RFID tags to define new information-based services as a source of competitive differentiation
  • Talk to receiving customers who have issued a compliance mandate; explore the question: could the logistics carrier use the RFID-tagged merchandise to provide innovative services to the receiving company?
  • Look at using EPC in cross-docking operations to increase efficiency
  • Faster delivery turnaround
  • Faster custom clearance
  • Theft prevention

Distribution center operations

EPC-RFID based applications have drawn extensive interest in the operation of the distribution center. Innovators argue that RFID technology can make distribution centers more cost effective. Several studies have suggested the operational improvements available through RFID can be summarized as follows:

Shipping and Receiving:

  • Automated processing of loading and unloading
  • Reduced labor requirements
  • Faster processing
  • Automatic cross docking
  • Automatic generation of 100 percent accurate electronic manifests
  • Storage and Fulfillment:
  • Correct product storage locations
  • Faster product retrieval
  • Fewer order errors
  • Reduced losses and shrinkage of assets
  • Improved order fill rates and times
  • Less safety stock required
  • Task and Resource Management:
  • Automatic updating of tasks for each resource
  • Improved automation and accuracy of flow control
  • Improved real-time monitoring of operations
  • Automatic conveyance and sorting
  • Automated and accurate picking and packing RFID-based solutions need to be kept in focus. A primary objective of RFID-based systems is to provide real-time visibility into all of the supply chain. To achieve that end, the distribution center needs to be part of the real-time, RFID-enabled supply chain.
RFID Applications

With RFID applications used across the supply chain, everyone benefits — from the raw materials manufacturers to distributors to consumers.

Overview of Benefits

RFID is one of the first new technologies of the millennium. There are a myriad of opportunities to pursue using RFID technology.

Summary

A successful RFID business case needs to address several subjects.

Identification of the business objectives and benefits that the enterprise is pursuing

  • Enhanced merchandise or asset management
  • Reduced operating expenses
  • Higher revenues and/or margins

Develop a technology assessment and plan that addresses the available RFID technology solutions

The technology plan should address data collection/analysis and establish the baseline data sources for operations. When a company
evaluates RFID technology, there is a need to understand several key issues to avoid technology dead ends. Those include:

  • EPC-compliant RFID technology
  • Reader platforms that are software upgradable
  • Systems that can manage large volumes of data
  • Applications that can scale as the deployment expands
  • Perhaps most critical, working with a large globally capable partner who can deliver in-depth RFID support The leveraging of innovative applications in business concepts and RFID technology creates the opportunity to drive business success for companies across the globe. As the leading RFID provider in the world, Motorola can make your RFID vision a reality.

Motorola and EPC-RFID

Motorola designs EPC-RFID solutions that integrate seamlessly with other key technology and product offerings, including advanced data capture devices such as bar code scanners and imagers, mobile computers and wireless infrastructure.

Increasing interest in RFID has expanded beyond retail and government. Virtually every market Motorola serves, including manufacturing, transportation and logistics, wholesale distribution and healthcare can benefit from RFID solutions. Motorola’s commitment to RFID products and solutions has been and continues to be a top corporate priority. Motorola’s global sales and support capabilities coupled with our extensive portfolio of products and experience provides customers with a fully capable solution for their RFID needs.

Screen Shot 2016-12-20 at 8.52.28 AM

Star-Only

Warehouse Inventory – Case Study

alien

LexarCompany: Lexar
http://www.lexar.com/
Application: Asset and
inventory tracking
Area of Use: shipping dock
Status: Production
Tag and Reader Supplier:
Alien Technology
Frequency: 915 UHF MHz
Range: 8 to 10 feet
System Integrator:
KeyTone Technologies
Challenge
■ Use RFID to efficiently track
digital memory products as
they move from manufacturing
at Lexar to Wal-Mart
■ Replace bar code inventory
tracking system at
Lexar with an automated
RFID solution
Solution
■ Lexar worked with
KeyTone Technologies, to
develop an RFID-based
asset tracking application
■ Toolset includes:
■ Alien ALR-9800 series
readers
■ Alien Gen 2 Squiggle tags
■ Middleware to interface
Alien readers with Lexar’s
SAP system
Benefits
■ Compliance with Wal-Mart
RFID-based inventory system
■ Verifiable inventory asset
tracking in warehouse
■ Faster product distribution:
As short as 96-hour turnaround
from manufacturer
to retail store shelves
■ Increased traceability of
orders sent to Wal-Mart
“Misplaced
inventory that
seven workers
would have spent
four hours
tracing with a
UPC system, the
RFID system can
find in about
45 minutes by
interrogation.”
Lee Mar,
Senior Logistics Analyst,
Lexar

Lexar-gets-clear-snapshot-of-warehouse-inventory-with-alien-rfid

Tracking retail products from the manufacturer’s warehouse to the
distribution center to the retail store shelves can be an inefficient
process of counting, boxing, shipping, verifying and reverifying quantities
and shipments. To streamline distribution and gain efficiencies,
large retailers, including Wal-Mart, have implemented electronic
product code (EPC) initiatives with their major suppliers. The Wal-
Mart EPC initiative, launched in 2005, uses RFID solutions to track
items from manufacturer to distribution centers to its stores.

lexar2The benefit to Wal-Mart is multifaceted: Its retail stores can replenish tagged out-of-stock items up to three times faster than non-tagged items, according to independent research on Wal-Mart’s EPC initiative. Tagging also helps ensure promotional products are delivered and correctly tagged and displayed for sales on an advertised date. And better inventory management systems help store managers avoid stockpiling excess inventory at the store.[break][break]

For the manufacturer, product tagging shortens the amount of time it takes for new items to make it through the distribution channel and onto store shelves. More specifically, RFID tagging aids in proof of delivery and purchase order reconciliation, as products—even ones packed deep inside boxed pallets—can be tracked and counted at every critical point in the manufacturer’s distribution process.

CHALLENGE
One of the key participants in Wal-Mart’s EPC initiative is Lexar, a subsidiary of Micron Technology, Inc. Based in Fremont, CA, Lexar is a leading marketer and manufacturer of NAND flash memory products including memory cards, USB flash drives, card readers and ATA controller technology for the digital photography, consumer electronics, industrial and communications markets. [break][break]Lexar also sells memory cards under the Kodak brand, and it manufactures the popular cobranded Disney my*style USB flash drives and SD cards that showcase favorite Disney television and movie characters.[break][break] As a participant in Wal-Mart’s EPC distribution program, Lexar implemented an RFID asset tracking solution at its Duncan, SC warehouse. For help with installation and testing, Lexar enlisted KeyTone Technologies, a Santa Clara, CA-based systems integrator that specializes in RFID solutions for clients in manufacturing, distribution, and transportation and logistics. Lexar warehouse operators needed an automated way to efficiently track shipments to the Wal-Mart distribution centers and also be compliant with the RFID systems at Wal-Mart.[break][break] The Lexar inventory tracking system has to handle several hundred orders a day headed to Wal-Mart’s distribution centers. Orders fluctuate in size, with the largest being the shipments destined for store shelves by Thanksgiving’s Black Friday, one of the busiest shopping days of the year for retailers. Those large shipments may contain as many as 1.5 million different Lexar products that have to move through the warehouse very quickly—in two to four days.[break][break] The key to better efficiency in tracking inventory at Lexar was RFID. “We needed to create an RFID verification portal in the warehouse where we could interrogate an entire pallet,” explains Lee Mar, senior logistics analyst at Lexar. The Lexar team wanted to keep an accurate running tally of products and orders as they were boxed, loaded onto pallets, and shrink-wrapped for transport to the distribution centers at Wal-Mart.

SOLUTION
KeyTone Technologies and Lexar worked together to build an RFID inventory tracking solution in its warehouse using Gen 2 RFID
products from Alien Technology®. Lexar installed 12 Alien ALR-9800 4-port readers operating at 915 MHz, 40 antennas, and 12 printers in its warehouse, creating an RFID verification portal for outgoing shipments that Lexar employees dub “the doghouse.”[break][break]To track its products, Lexar uses EPC-compliant Alien Technology Gen 2 Squiggle® tags. Lexar uses about one million Alien RFID tags a year, according to Mar.[break][break] The Squiggle tag is a high-performance solution that is effective for the fast-moving warehouse tracking needed
during inventory boxing and shipping, and it also works with shrink-wrapped pallets. The Squiggle tag supports global operation at 860 to 960 MHz and sets the EPC Class 1 Gen 2 price performance benchmark. The Alien Squiggle tags and reader combination offer
optimal read range and read consistency performance as the inventory moves through the Lexar warehouse.[break][break]
KeyTone and Lexar also built a reader-to-ERP interface, a middleware application that works with Lexar’s SAP ordering system software.
Installation and testing of the Alien hardware and software in the Lexar warehouse was fast, taking the team about three weeks. “The system was very quick to test and implement,” says Mar.

RESULTS
Lexar’s RFID solution has exceeded expectations. With the RFID in place, Lexar can easily trace daily shipments and order quantities to Wal-Mart.[break][break] “With our old UPC system, we could not confirm quantities inside the cases,” says Mar. If inventory was missing or lost, the warehouse team would have to tear apart the pallets and boxes. “Misplaced inventory that seven workers would have spent four hours tracing with a UPC system, the RFID system can find in about 45 minutes by interrogation,” he adds.[break][break] With the Alien RFID system in place, Lexar benefits from faster deployment of its products from manufacturing to the retail store. Since Wal-Mart uses RFID in its stores, Mar calculated the time for inventory to leave Lexar’s warehouse and arrive on Wal-Mart’s store shelves; he discovered it was an extremely fast 96 hours.

NEXT STEPS
The next phase of the project at Lexar will include installation of more Alien RFID readers to create a “smart warehouse.” With more RFID check stations, operators will be able to check raw, unpackaged inventory as it comes in through the back door, monitor it on the shelves in the warehouse, and trace it as it moves into packaging and shipping.[break][break] With multiple RFID checkpoints throughout the warehouse, Lexar warehouse operators can send the right products to their designated areas for packaging, final production, and shipment.


RFID Professionals - Starport Technologies

RFID vs. Barcode

RFID Barcode
Line of Site Not required (in most cases) Required
 Read Range Passive UHF RFID:

  • Up to 40 feet (fixed readers)
  • Up to 20 feet (handheld readers)

Active RFID: (battery on board)

  • Up to 100’s of feet or more
Several inches up to several feet
Read Rate 10’s, 100’s or 1000’s simultaneously One at a time
Identification Can uniquely identify each item/asset tagged Most barcodes only identify the type of item (UPC Code) but not uniquely.
Read/Write Many RFID tags are Read/Write Read only
Technology RF (Radio Frequency) Optical (Laser)
Interference Some RFID frequencies do not react well with Metal and Liquids. They can interfere with some RF Frequencies. Obstructed and damaged barcodes cannot be read(dirt, tears, fading).
Automation  Most “fixed” readers don’t require human involvement to collect data (automated). Most barcode scanners require a human to operate (labor intensive).

RFID Professionals - Starport Technologies