What is RFID?
Radio Frequency Identification (RFID) is an automatic identification method that utilizes wireless communication between readers and small silicon chips embedded in items to be tracked. The technology has been around for some time, beginning with military applications as far back as World War II. Early commercial applications were primarily in vehicle tracking (for example toll collection at NY and NJ ports) and animal/stock tracking. It wasn’t until the 1980’s and 1990’s that significant developments began to occur which allowed development of more applications .
RFID technology transmits and receives data on tags using radio waves and an RFID reader. Readers are linked to hardware, middleware, and software applications specific to tracking the tag data. The advantage of RFID is that items can be tracked real time and on an item level (instead of on a product basis as does the current barcode technology). Most of the major penetration of this technology to date has been in toll passes (fast passes) and security (access card) market, but recent trends include the use of RFID in contactless smart cards and supply chain management. Discussion of RFID as a catalyst for revolutionary change in the retail industry has been ongoing for some time, but the technology just hasn’t taken off as initially predicted. Our paper examines the opportunities and existing applications for this technology in retail, and highlights some of the issues that are holding back adoption.
There are different estimates of the market potential for RFID. Analysts have projected the global RFID market for tags and hardware to grow from $1.94 billion in 2005 to $24.5 billion in 2015, and the market for consulting, implementation and other related services to grow from $443 million in 2005 to $2.1 billion in 2008. Even though the potential size of this market is huge, most of the market is devoted to access applications and toll passes as mentioned above. In fact, only 38% of tags shipped in 2006 were estimated to be for supply chain related applications.
Overview of RFID Technology
In a generic RFID system, a reader sends out a broadcast radio signal. An RFID chip, upon receiving that signal, responds with a broadcast radio signal announcing its unique ID number. This signal is observed by the reader, and passed along to software that looks up the unique ID number in a database to find related information. There are three primary components to an RFID system: tags, reader, and middleware. Most RFID tags contain silicon chips and antennas. They are typically paper thin, ranging from the size of a postage stamp to the size of a postcard. RFID tags can be either passive, requiring no power source, or active, requiring a constant power source. Although passive tags are cheaper, they only relay information when read, while active tags can constantly send out a signal. Tags can be read-only or read-write. RFID readers can remotely read and write to compatible tags. ‘Intelligent’ readers can also filter data, store information, execute commands, and communicate with tags using a variety of protocols. Middleware is needed to interface between RFID readers and existing company databases and information management software.
RFID tags are described by analysts as a ‘quantum leap’ over barcodes . Whereas bar codes can only identify the class of an item, RFID tags can identify an individual item, which allows a wealth of additional information to be incorporated about a product. Furthermore, electronic information can be overwritten repeatedly on RFID tags, allowing for dynamic applications. Durability, small size, and the ability to convey information without line of sight are other advantages that allow RFID tags to increase efficiency in distributing and managing inventory.