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RFID Solutions

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RFID Drivers and Advantages

Radio Frequency ID (RFID) is one of the industry's hottest technologies. There are large amounts of information published on the subject, stemming largely from announcements of interest from major companies like Wal-Mart, the Department of Defense, International Paper, and Proctor and Gamble. Radio Frequency ID (RFID) is not a new technology. It has been around for many years, but recently has been given new life and interest. The global market for RFID systems has grown to $1 billion in supplier revenue.

Perhaps the single most important driver for the increased interest and development of the RFID industry is due to Wal-Mart and the Department of Defense. Each mandated that their top 100 suppliers use RFID when shipping products to their distribution centers. By using RFID technology pallets and cartons of merchandise can be tracked throughout the supply chain.

Understanding how RFID works is only half the battle. In order for mass adoption to take place, it is critical to understand why companies across many industries need to implement this technology to remain competitive and successful. In tough economic times, all businesses are looking for ways to cut costs. By automating business processes through technologies such as RFID, companies can reduce labor costs while simultaneously improving productivity and efficiency.

Another adoption driver is the expansion of consumer and regulatory demands that require companies to more accurately track product-handling information. As threats to security continue to loom, regulatory bodies are becoming increasingly stringent in the requirements they place on companies, especially in industries such as food and healthcare. In order to ensure the tightest security and highest standards, companies must know where products are at all times and where they have been in the supply chain. This not only allows for date and lot tracking, but it also simplifies the process in the event of recalls.

Advances in RFID technology itself are also helping to pave the way for adoption. Declining chip and reader prices, along with the growing ability to simply and inexpensively connect devices and distribute information, are making RFID implementation economically feasible for companies of all sizes. These advances, in conjunction with emerging EPC standards, are the key drivers in making RFID the UPC of the 21st century.

Drivers of using RFID from a business perspective are:

  • Lower Cost: According to the National Retail Security Survey put out by the University of Florida, approximately $5.8 billion worth of inventory was lost in 2001 due to administrative errors alone. As evidenced by the fact that labor comprises approximately 30 percent of supply chain expenditures, one of the easiest ways to drive down costs is to increase operational and labor efficiencies. RFID not only ensures accuracy of information, but it also limits the amount of real-time, RFID can further reduce costs by allowing companies to decrease shrink.
  • Increase Revenue: With U.S. retailers losing approximately 3.8 percent of sales per year as a result of out-of-stock inventory, RFID tags allow companies to capture and track a variety of data on goods. This information aids in the development of accurate inventory forecasts.
  • Decrease Stock Levels: Because of the speed and accuracy of RFID, orders can be filled in a shorter amount of time, allowing for quicker product availability. Reducing this order cycle time decreases the need for an over abundance of stock.
  • Reduce Fixed Capital: With RFID, companies can better manage fixed capital by tracking assets such as totes, pallets, etc. This reduces the need for replacement due to lost items and cuts back on the amount of redundant equipment.

According to VDC's end user analysis, end users across all economic sectors are increasingly using and investigating RFID technology. End users state that the significant advantages of RFID systems are the removal of human intervention, read-write capabilities, and the non-contact, non line-of-sight nature of the technology. Transponders can be read quickly and accurately through a variety of substances such as moisture, paint, dirt, oil, and other visually and environmentally challenging conditions where bar codes or other automatic identification and data capture technologies would be useless.

The significant advantage of the system is that there is no contact between the tag and the reader and the system will operate with no line of sight. Tags can be read through a variety of substances and surfaces such as cardboard, plastic, paint, snow, ice, fog, even grease and grime, and other visually and environmentally challenging conditions, where bar codes or other optically read technologies would be useless. RFID tags can also be read in challenging circumstances at remarkable speeds, in most cases responding in less than 100 milliseconds.

Advantages of using RFID Technology

  • Has a long lifetime
  • Minimum maintenance
  • Provides fast and reliable data recording
  • Can work in harsh environments (heat, cold, rain)
  • Tags are difficult to duplicate, so it is secure
  • Does not require Line-of-Sight